Non-commercials just switched to net long e-mini S&P 500 futures after remaining net short for 14 weeks in a row. They are likely to do well on this switch – at least near term.
Considering that nearly all of the delta on the S&P 500 is negative, a significant amount of put value will be lost tomorrow. The decay in premiums will likely force market makers to buy back S&P 500 futures.
DXY/ZN Ratio Chart (USDollar Index against 10Y US Notes) Is Pointing Much Lower, which can keep USDollar under bearish pressure from technical and Elliott wave perspective.
There is no doubt that the market doesn’t like tariffs; stocks sell off every time Trump announces a new round, but so far, the effect hasn’t lingered.
The S&P 500 trades at elevated multiples. Earnings expectations for this year and next are very high. Enter macro uncertainty surrounding the fiscal/tariff policy of the Trump administration.
A little over a month ago as Donald Trump was about to take office as President, the 10-year Treasury note yield hit 4.80%. Almost every economist was writing that the 10-year would hit 5% due to inflation from tariffs. Some disagreed - and still do.
Since September last year, 23 – or thereabouts – has posed difficulty for volatility bulls, and this trend prevailed this week as well.
VIX for now is probably headed lower.
