Now, the markets are certainly nervous … There is the Delta variant, no new stimulus, the debt limit holdup and China’s well-documented equities collapse. Let’s take a look at the data that tells me the market is going back up …įirst, is the money supply, which is bank deposits held at the banks, along with reserves held at the Fed on behalf of banks.īoth trends continue on a steep slope higher, and for more than 20-months they have told the bullish story for the markets … Now this may not be anything but a one day snapback, but it was a classic whipsaw … Notice the massive spike in put volume, along with the spike in the implied vol premium over historical vol: The chart below shows the price, volume and volatility stats for SPDR S&P 500 (Ticker: SPY). The market continues to whip back and forth … I don’t think we have seen the real money flows enter the market yet and yesterday’s option internals showed that. Today I’ll show you the supporting data and the stock I think offers the best value right now.
The equity markets may ultimately correct 20% or more next year but there is way too much money flowing for that to happen now. This, along with the highest put volume in 18 months, told the story of yesterday’s trade. One thing did stand out, however, and it was the jump in the implied volatility premium to 10 points above historical. Even leveraged loan defaults are below pre-Covid levels No signs of trouble in the funding markets or corporate credit spreads. If you’re missing out, call our Customer Care team at 1-88 to see what works for you.) (The bad news for some is that Macro Monday - and many other features - are exclusive to Trading Legion and pro members. The good news? There are none to be found. In my Macro Monday show yesterday morning, we went through the normal signals of imminent trouble in markets.
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