Market to reverse as everybody long and (soon) wrong?
As we have written over the past sessions. Market is trying to break up, but lacks the conviction, while trading on very light volumes. Santa rally is fading, but has attracted many new longs, that wish not to be long. Volatility has collapsed, and people are once again starting to believe, “this market is so boring and will not move“. These are classical signs of people “giving up”. Too many have been too bearish, all predicting the end of the Eurozone. With the past week’s market action, people are slowly giving up on the bear argument. When liquidity dries up, volatility collapses and bears become bulls, things could suddenly change. Today was such a day, with a rather big reversal.
All we need is the junior quants to start telling us Vol is staying low, because it is now in the short term Garch model.
Some random charts to enjoy, before going to long….
EU stocks underperforming credit
QQQQ ratio at very low levels.
Credit vs SPX.
Charts courtesy Credittrader and Macro Story
How do we have to read the “credit vs spx’s” chart.
Each time 10 year yield goes down the spx too.
So if I understand, now the 10 year yield is very low so it should go up & the spx too…
Tell me where is my mistake!
Thanks.
Credit is driving, and lately big divergences have occurred. Let’s see.
Ok, does this mean that there could be now an inverted relation???
Thank you.
I you see the divergence, one market is “wrong”. It needs to correct, so pay attention to what market will be the leader.
Many thanks for your answers and your help!
Great!