Market Journal: The Week Ahead
Market Journal: The Week Ahead
Election Day.
Disclaimer: For informational purposes only.
Please see here and here for more information about The Weight of the Evidence.
Discussion
For context, this Week Ahead builds on the last three:
We are on a version of step 3 outlined in the path below on September 1.
I say a version of step 3 because I believe the Fed’s aggressive defense of SPY $540 likely takes $510-520 off the table. Likewise, the “extreme chop” scenario for step 3 as discussed on September 16 was likely taken off the table as well as a result of SPY’s vertical move post-FOMC right into September OPEX.
As such, the tactical outlook from here is straightforward: grind down to SPY $540 ahead of Election Day to price in a Trump/Harris coin flip, the Fed steps in with guidance that it will cut by 50 again in November, and the combination of the lifting of election uncertainty + the Fed speeding up its descent to neutral underwrites a year-end rally to SPX 6000+.
Frankly, calling for SPX 6000+ into year-end is the easiest call in the world, so given the material overvaluation of SPX it would not surprise me at all if SPX fails to fulfill what now appears to be its moral obligation to breach 6000 on bullish EOY flows. But easy calls have a way of playing out, so at minimum one *likely* should not be short of SPOOZ post-Election Day.
Below I discuss the election threat to SPX and how I’m currently positioned.