Hi YXI friends,

Investors haven’t been used to seeing a sea of red in recent months, with just a handful of days on which there was uncertainty and doubt.

My interpretation is that we are seeing heightened downside hedging, but not panic, going into Jackson Hole. This is not unusual after equities still made ATHs after a poor set of Nonfarm Payrolls.

For now, we are still risk on across risk assets, and happy to change our mind when our models and charts tell us otherwise.

Table of Contents

• 1. YXI Dashboard

• 2. SPY, QQQ

• 3. FOMC Projections

• 4. Summary Of Today’s 4-3-2-1 Ratings

• 5. USO

• 6. 30-Year Treasury Yield & TLT

• 7. Bitcoin (BTC), Ether (ETH), Coinbase (COIN)

• 8. Gold (GLD, GDX)

• 9. Magnificent 7 Stocks

  • Apple

  • Amazon

  • Alphabet

  • Meta

  • Microsoft

  • Nvidia

  • Tesla

• 10. Other

  • SOXX

  • PLTR

• 11. Trade Updates & Monitoring

• 12. Notable ETF Flows From Previous Day

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

Please check out our glossary for explaining the acronyms, financial terminology, and economic data.

1. YXI Dashboard

Tuesday was unnerving for the bulls, as equity indices rolled over, with QQQ down over 1%.

Mag-7 names were down across the board, although mostly within 1 SD. PLTR lost 9% on Tuesday, a negative 2.1 SD move that suggested unusualness.

Click here for the past YXI article explaining many of the components of the dashboard.

2. SPY, QQQ

SPY Intraday

SPY was pretty weak after 10:30 am ET, underwater throughout the rest of the day.

Interestingly, Tuesdays have been bearish in terms of the distribution of outcomes in the past 12 weeks (more dots landing below the 0% line than above).

So where are we in the bull market?

Here is an interesting review of SPY’s historical performance. The top pane displays the current percentile compared to the past 2 years, specifically focusing on the “rally from 52-week low”. Near the 52-week low, the percentile would be near 0, but the further away we are from the low, the higher the percentile.

The bottom pane looks at the percentage of days SPY spends at ATHs. We see that entering about 0.2 (20%) invites higher risks of corrections. We are currently not there yet (but we were at the end of last year).

Looking at both metrics, neither appears significantly extended currently. That suggests to me we are still in the middle, rather than towards the end of a bull market. That doesn’t mean we won’t get corrections - in fact, I expect a wave 4 pullback sooner or later in this run. But it does mean we are unlikely to see another bear market run in the coming weeks.

SPY (https://www.tradingview.com/x/O33UkYkY/)

I do think that we could test the trend line support near $630 in the near term. Breaking below it would open the door for wave 4.

In options (https://optioncharts.io/options/SPY), we are seeing high put call ratios for SPY, suggesting the market is leaning more bearish here, but the current implied volatility does not indicate a panic.

QQQ (https://www.tradingview.com/x/FGWHaq9T/)

QQQ is very likely to test the trend line support this week. Breaking below $560 would suggest we could be starting the wave 4 pullback here.

QQQ is also seeing a high put-call ratio, suggesting that the Big Money leans cautious here going into Jackson Hole.

3. FOMC Projections

We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.

The FOMC projections are little changed in the Fed funds futures market.

4. Summary Of Today’s 4-3-2-1 Ratings

SPY, QQQ, BTC, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR, TLT

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