In the immortal words of Ron Burgundy, “that escalated quickly!”
Sure, the algos weren’t happy with the phrase “mid-cycle adjustment.” But, you can’t help wondering how many algos and carbon-based investors were disappointed that with 3.7% unemployment and 2.1% GDP growth the Fed saw the need to cut in the first place.Maybe the Fed knows something the market doesn’t. Maybe the rosy economic statistics don’t tell the whole story. Or maybe, just maybe, all the market cares about any more is how vigorously the Fed will support equity prices.
In any case, futures have bounced back 27 points from yesterday’s lows and are back atop the SMA5 200. All is well, right?
Not so fast. The knee-jerk pop in USDJPY has already reversed, oil’s protective pop is unwinding, and VIX seems to have more room to run.
Our analog pointed to July 30 as a cycle high. But, we’ve been within 1% of our upside target 7 of the 13 sessions since July 15 when we first pulled the trigger.
Again, when we’re only 1% away, it could turn at any time and may indeed have turned already. I’d be very comfortable being short here at 3017.
This is not like every other “buy the dip” setup.
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