Let's begin with this chart of the SPX:
The lowest print for April was 4069.84 on the SPX. Today we closed at 4071.63, effectively testing the bottom end of April's range for the SPX.
With the threat of an earnings catastrophe after the close paired with the worst demonstration of price action today in sometime, it became a natural reflex for investors to grow pessimistic as the selling progressed throughout the day.
The equity put/call ratio pictured below is a glowing testament to the infectious nature of the short-term pessimism.
We have to go back to the March lows when the SPX hit 3808 to find a equity put/call ratio that exceeded what we experienced today as we basically tested the levels that marked the March HIGHS.
Needless to say, today's price action ahead of GOOG and MSFT earnings trapped a significant population of investors into thinking that this week would be like last week.
We found out after the close that GOOG and MSFT are not NFLX and TSLA.
We will further find out in the days ahead that AMZN, AAPL and META are also not NFLX and TSLA.
While I expect this week to remain volatile, the volatility should give way to a steady rise once mega-cap tech earnings are fully digested past Thursday's close.
Risk on remains the default stance for sometime to come despite the market's insistence to convince you otherwise.
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