FOMO Continues as J. Powell, Weak Data and QRA Drive Risk Assets Higher

Bulls got the trifecta of positive surprises today: weaker than expected economic data and a less aggressive Treasury funding plan (QRA) that took pressure off of bonds, and a more dovish fed. Coming into today option whales had been selling index puts into weakness and buying $VIX puts, a trend that picked up steam this week crushing vol and ultimately the value of put options. As I’ve mentioned since last Friday, the QQQs have bounced off the bottom of the downtrend channel and they continue to move up the channel after closing above key resistance today at $355. Next resistance is the 50 DMA around $365 where the last major call wall also stands. A rejection there could send the index back towards the 200 DMA at $340, a line it has yet to test. Could the current formation be a bull flag that breaks out to all-time highs? Not clear yet, but I plan to use the 5 Day Risk Models as we get closer to resistance to determine if a breakout or breakdown will occur. Technical analysis alone is interesting, but unlike the risk models it provides zero historical context.

Since going full bull last Friday results have been good (cautious bull as of yesterday), the new 5 day risk model view that was most bullish on QQQ delivered (even better than I expected), and yesterday’s fun stat that was posted while futures were negative played out well. Today will cover Apple ahead of their results, another juicy fun statistic about comparable days to today, select DeMark charts and the core SPY 0.00%↑ risk models, so let’s dive into today’s data!