Market Journal: The Week Ahead
Powell and CPI ahead this week with cross-asset market signaling pointing to a period of tactical risk-off for equities.
Discussion
Big week ahead with Powell testifying before Congress Tuesday/Wednesday and June CPI on Thursday July 11. With the mini-IG CDX fever now broken and VVIX starting to turn up following a third higher low, the set-up for more sustained downside volatility is in place.
Frankly, I think BTC is a bigger tell here than it’s given credit for. Much like the late October 2023 “inexplicable” rally in BTC ahead of a major SPX low, I think BTC on the lows here could end up being a major tell with the benefit of hindsight.
Of course, equity shorts are strongly ill-advised here with Yellen’s $1+ trillion liquidity bazooka sitting beneath the market. But aggressive upside positioning is also not advised - better to sit back and wait for the market to show its hand: either a tactical topping process is in the works, or perhaps more melt-up before a tactical pullback to 20/50dmas.