Discussion
Make no mistake, today was bearish. But there were three moderately bullish factors to keep in mind ahead of Powell next week, who will absolutely come out dovish if risky assets are weak ahead of his press conference.
HY CDX spiked lower into the close despite SPX closing near the lows.
Breadth improved a bit over the course of the afternoon.
And VVIX was flat on the day despite a decidedly risk-off tone beneath the surface.
Ideal scenario is a highly divergent move to 4600/4650 into Powell. The set-up is there with correlations low and VOL near the lows, but we’ll play it by ear.