In today’s post, I’m looking very tactically at the S&P 500 sitting on its support trend line. Is this a buying opportunity or not? And no, just drawing a line on a chart is not an edge—sorry if you thought so. Instead, it only indicates that the market has deviated a bit from its historical trend. Now the real question is assessing the risk/reward of a long or short position here.
I’ll also discuss my view on the market over the next 3 to 6 months. I believe we’ve entered a new phase where macro risk will matter again.
Speaking of macro, don’t miss my latest post, where I lay the groundwork for my view on the economy, where the job market is heading, and how I’m trading it through bond exposure. Link here:
Where is the fear?
The S&P 500 index is sitting at the support of the bullish channel. This is the “Buy the dip” area for any market tourist:
Are we seeing any sign of fear?
VIX is at 19.50, it is trending up but not spiking => fear is building up but far from extreme
VIX future term structure => we are still in contango, holding a VIX future is costing you money as the remaining maturity decreases through time. I start to see fear when the term structure is flat, we are not even there.
VVIX is at 105.71, that is a median reading => it confirms the absence of spike in the VIX and leaves the door open to more fear
