Discussion
As discussed last night in The CASP update, suspiciously weak CDXs were behaving as if another move higher in stocks was in train and a move higher we got. Breadth is 10/1 on the day led by RSP and IWM, and CDXs are down big - unequivocally bullish cross-asset market price action. The only bearish inklings are big outperformance by Utilities and respectable strength from Staples and Healthcare considering the risk-on advance, as well as VVIX > VIX. From here, it’s all about how the Fed responds. If the Fed doesn’t want housing to reflate - as the parabolic reacceleration in DHI vs. SPX implies - alongside the broader economy, they will push back in some fashion. But if they do not push back, after perhaps some consolidation around OPEX on Friday and into next week equities are likely to move higher into EOY.