Market Journal: Bears are (Still) Weak

Decisively weak USD today could be the “tell” of the day, with Timiraos coo’ing and better than expected Core CPI on deck.

Discussion

There was nothing bearish about that EOD move lower. Purely skittish selling ahead of the weekend. HY CDX and VOL stayed red, breadth positive, and defensive sectors’ relative strength firmly negative. The only potential “tell” is VVIX being less red than VIX. But that’s a reach.

Decisively red USD is very interesting to note as well. Timiraos won’t stop talking on Twitter about improving data, which very much fits with Brigden’s observation that the Fed is hesitant to hike in September because it likely bakes in a hard landing.

Add it all up, the SPX response to a better than expected Core CPI print Wednesday could be explosive.

Exhibits