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Discussion
In yesterday’s pre-market note I posited that perhaps the FEDeral government put strike price is -10% from the highs, not the 2.5-5% I have laid out since December. But how dare I question election year market incentives: Treasury Secretary Yellen just sold a put by green-lighting Asian currency intervention.
With tactical equity market indicators firmly in the zone of local low, this is precisely the type of put sale that can catalyze a quick 3-5% rally in SPX.
These put sales don’t always work immediately, so there could be some chop today; but make no mistake, one does not want to be tactically short of equities with the most powerful policymaker in the world calling “time” on a sub-5% SPX decline.