Morning Update

Good Afternoon Friends,

That JPMorgan Collar on the SPX is keeping us range-bound, and we are feeling a bit of reverse to the Volatility Means, so many of the underlyings should be near the center of the Bollinger Band. Which is a good set up for the next leg down. The JPMorgan Collar could cause us to drift towards the 4000 SPX strike, so many people are selling into last week’s bullish activity, so the “short cover rally” could be a let down.

Last week we had some really important data come out, but with all the other weirdness we just glossed over it. The S&P Global Manufacuting PMI came out, and it was projected at 57 but came in at 51, and the most important aspect of this is that this is really a forward looking data set. The data shows that inventories are way larger than projected and that many more retailers are exposed to this problem, not just Target and Walmart, so earnings will flush that truth out for us.

And though 55 is usually the normal rate, 51 is actually a pre-recession indicator. We have been seeing a very low demand for services, which is one area of the market where we need to see demand increase, but it never bounced back after lockdowns.

Morning Update – June 27th, 2022

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