US markets are still in sector rotation mode. These new highs in the Dow and S&P 500 are highly speculative with no fundamentals to back them up. US volatility is again near historical 10-year lows while international markets are getting hit.
Looking at the global markets, it feels more like a robbing Peter to pay Paul scenario. Interest rate increases are on the horizon so how long will cheap money continue to prop up the US markets? Who is going to blink first?
Are there trade setups for the week? Perhaps, but this is the week to start paying attention, it could be the precedence for the week to come.
The US market seems to be holding all the cards, but if you look across the globe, many markets are wiping out the last 6 months of gains in only a few days. It’s only a matter of time before the bearish moves across the globe come home to roost in the US. Most of the gains in the S&P 500 and the DOW are coming from sector rotation and not new fundamentals. An interest rate hike in December and uncertainty should start to develop as we near near 10-year historical volatility lows in the US.
This is not the time for buy and hold investors, but traders have lots of opportunities in these markets!
Global markets are in a correlated downturn. Many have broken key support levels and starting new tradable downtrends. I’m taking the cautious approach and waiting to see if they continue after the US election.
Volatility is at an all time high and I share how I’m trading it since these kinds of trades only come by a couple of times per year.