The Trump Rally never made sense to me [see: Why the “Trump Rally” is a Fraud.] Yet, breakouts are breakouts, even if they’re driven by algo trickery and trend followers.
SPX’s breakout in November was driven by exuberant spikes in USDJPY, DX and WTI and a historic suppression in VIX, which is at a crossroads. If it’s to continue driving stocks higher — or even offset economic news that would see them correct, it must plumb new all-time lows.
Our recent bottom call on oil [see: June 20 Update on Oil] was offered with the understanding that it has a natural upper bound — particularly over the next month. And, the US dollar…well, it is flirting with danger. It dropped below very strong support yesterday.
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