Scott Burrill - Market Notes

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Scott's notes
Scott's Market Notes

Markets aren't buying Truthful Hyperbole

Aug 26, 2019

We've reached peak absurdity in President Trump's Truthful Hyperbolic B.S. first posited from The Art of the Deal and now hoisted upon Corporate America ordering them to find alternatives to China.

Markets are having none of it and the sell-off from Friday continues in Globex on a retaliatory increase in tariffs.

Energy is building as we've effectively been boxed in once again, as the top winds ever-tighter. Once this kinetic energy is released, we will travel at minimum the range of the box. I'm targeting a quick 2682 in the SP500.

Add this to a Treasury Market accelerating yields to the downside while Safe Havens breakout. We are setting up for a violent resolution.

Make no mistake, the Equity Market is going to get Fed Chair Powell's attention to cut rates in September with Fed Fund Futures pricing in a cut with 100% probability, and a 50 basis point cut exhibiting a 28% probability. I would anticipate this well in advance of the September 18th FOMC Meeting.

Moreover, pros, as demonstrated by the Volatility of VIX (VVIX) and the Volatility Futures, are aggressively telling us risk is here, and it's prevalent right now.

Additionally, as we would expect, Implied Correlation keeps us focused intently on Macro Factors.

Turning to market-generated information, the SP500 Weekly Option Implied Move is + / - 70 points. The Upper and Lower Bounds are 2917.23 and 2776.99, respectively. Given the intraday ranges, particularly when factoring in overnight trade and comments coming from China and the nightly Yuan Fix, we could easily double that implied move.

The Weekly Magnets provide our initial targets for bias, as these are often tested early in the week. Clearly, our Bias is currently Down.

The Weekly Trend is also Down.

We have an active Economic Calendar this week and next.

Use the Updated Levels for high probability targets and reversion zones.

Have a great week.

All the best,

Scott

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