Markets were relatively quiet overnight after a big risk-on day yesterday:
- Asia followed Europe and the U.S. higher from yesterday, closing broadly green, though the Shanghai index still hovers at 3 year lows
- Europe and SPX futures are up about 0.5%, with a small range overnight between flat and up
- Dollar is slightly lower and commodities are slightly higher across the board
- Yesterday’s Draghi comments have sent Italian and Spanish yields down about 0.75% in the past 2 days, with speculation for a restart of the bond buying program
- U.S. GDP comes out at 8:30 am
I mentioned this in QuickHits yesterday, but yesterday’s rally was not nearly as strong as the indices indicated. NYSE advancers closed at 2241, whereas a strong +1.65% move in SPX usually corresponds with at least 2500 advancers. IWM also underperformed SPY by 0.8%, another indication of weak breadth. At the end of the day though, I am obviously betting on lower prices. I point out the weak breadth because I do think this rally is a one-hit wonder.
My main concern with my current positioning is that my premium is concentrated in August. I think a down move is imminent, but I might start to roll my positions to September if we don’t start to move lower by the end of next week.
Finally, we’ve received a lot of questions on why AMZN is not down. Your guess is as good as mine. The blind faith that investors seem to show in this name has always surprised me. Earnings are always right around the corner. And each year, the turning the corner is one year away. Still a long day however, and AMZN can move quite a bit intraday. We will update the trade at some point today.