Market Journal: “Be Water”

The risk-off window is opening.

Discussion

The combination of 2s stickiness, HY CDX on the move here intra-day, decisive defensive sector outperformance, and VIXperation points to an opening of a risk-off window.

Is this conclusion inconsistent with stopping myself out of the near-term pullback thesis? Not even remotely. Since I wrote the below yesterday morning SPX was up probably 100 bps at the peak this morning - doesn’t sound big, but I’m trying to dodge and weave my way into a large short position that I plan to cover into weakness, go long for the final blow off, then go short again for the ultimate decline into September/October.

“Be water.”