In this weekend's 468th edition of Turning Points we have a 15 page note discussing the ramifications for the weeks/months ahead of the significant volatility experienced this past week; market price structure; what the volatility index seems to be hinting; significant allocations shifts in Zenolytics Portfolio.
What follow is a brief preview from this weekend's note:
For all the chaos that was this past week, the SPX closed down 2 points, basically unchanged on the week.
However, beneath the surface, the market is very clearly telling investors that we are entering a period of volatility that will be both violent and unpredictable.
Whether this volatile period lasts weeks or months remains unclear. What is abundantly clear, however, is that the market is making every effort possible to shake loose as many participants as possible.
Just looking at the fundamental picture, whether it is recessionary fears that have you lying curled up in the fetal position, or a tense election season directly ahead, there is no shortage of monsters in the closet, frightening investors out of the market.
It doesn't end with an uncertain fundamental backdrop, however. The technical backdrop - in other words price action - has suddenly decided to match the uncertain fundamentals after an extended period of fairly serene trading.
There is an abundant amount of information to be gathered during volatile periods in the market. During every large move there are intentions at work that can deliver valuable insight as to what lies ahead.
As an example, this past week saw the market expend a significant degree of energy in shaking loose as many investors as possible prior to the SPX delivering its largest one day gain since November 2022 on Thursday.
In the Monday, August 5th edition of Turning Points I discussed the market “forcing the issue” for the remainder of the week, following the surprise, out of the blue futures ramp directly following the regular session close.
We saw a tremendous amount of force used from Thursday-Friday to basically recalibrate the markets off of an overly-bearish setup that had been weeks in the making.
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