S&P 500 is up 18% from recent lows, but sentiment and positioning remain depressed. Extreme shorting has yet to trigger major covering. With low leverage, cautious sentiment, and strong retail inflows, there's room for more upside if momentum builds.
This is the rally few wanted — underweight and de-risked, macro bears are now being forced to buy back into MegaCap tech strength. Volatility control funds have puked equities and could unleash $30B+ in demand if volatility cools, fueling the forced re-risk fire.
The 6-day SPX streak has actually been rather impressive — since 1970, this kind of run has only happened 13 times. But with the death cross still in place and 5500 the must-hold level, this rally might be running on fumes...
VVIX implodes as early long vol positions start to look attractive again, while exploding Google searches for “buy gold” mirror the frenzy in spot. At the same time, foreign investors stay on strike, deepening pressure on a dollar already strained by twin deficits.
After weeks of extremes, key market indicators are quietly slipping back toward neutral. Risk appetite, fund flows, correlations between assets, and even macro volatility measures are all reverting rapidly — signaling a major cooling off from previous extremes. Let's look more closely at this broad normalization.
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