- Credit Cycle turned down from top of Risk Range.
- Global Credit Impulse negative, US Systemic Liquidity Flows turning down, Fed 5yr avg . at top of risk range.
- Demand-push at top of risk range, in 40 year downtrend.
- Implied vs. Realized reaching a critical level.
- PC ratio reaching low levels (signals investor complacency).
- SKEW at an ATH . Perceived Tail Risk is at an ATH .
Speculate a correction in equities this Summer, then a large correction EOY-Q1 2022.
Should the deep correction across asset classes occur, Bonds are typically the first to recover, then Gold, then Stocks.
Risk Model suggests possible Long VOL signal:
- Tech shows possible reversal patterns: - Low Market breadth in tech rally, bearish divergences.
- Lumber, Gold, Copper, commodities signal reversal.
- Big VIX call flow.
- Yields and DXY suggest sell.
- Only Oil seems to be holding up markets.
Let's see if there is continuation
Fed raises RRP rates and overnight RRP shoots to nearly $1T,
Margin debt at ATH,
Global credit impulse now negative...
The market will continue to rise. How? Where is the money coming from?
The rally up till now had been fueled by easy lending, but the Credit Cycle has turned down. Liquidity flows are decelerating and being pulled out of the system.
Who now will bid up the assets bought at these lofty heights?
SKEW rises as a result of big players with inside knowledge of a catalyst coming.