The Morning Hammer: Another Day, Another Record, Another Yawn
Yesterday, the S&P, Dow, and Nasdaq all made new record highs as the most boring bull market ever just kept on chugging.
The S&P has now gone 24 days without a 1% move.
Bulls obviously won't argue with the results.
Bears are sweating like crazy because they're playing the “what goes up must come down” game. But sometimes, what goes up stays up much longer than seems reasonable.
It's been an especially bad month for traders buying puts, because there's nothing worse than a slow grind up with declining volatility — you just get eaten alive a penny at a time.
Getting wiped out in a spike high is actually better because at least you know it's over and you can move on.
That said, I am long VIX calls, which means I'm speculating on a significant volatility spike. I may have gotten into this trade a little early, but I still believe the odds are on my side.
Overnight, Euro-area GDP came in as expected, though Italy's was weak. The UK also reported weaker-than-expected construction spending in June.
So while economic data around the Brexit was actually generally decent relative to expectations, it's now falling off a little bit. This lends some credence to the Bank of England's massive reduction in its GDP forecasts.
And China's factory output, retail sales, and fixed-asset investment all missed expectations.
Today, SPX futures are flat as an ironing board, and there's not much movement elsewhere. The dollar's flat, commodities aren't doing anything dramatic, and European stocks and bonds are roughly flat.
There's some movement in Europe, but overall, the world is falling asleep.
Sentiment is still somewhat bullish, as judging by the steep VIX curve, Investors Intelligence Survey, and CBOE equity put-call.
Permabears are saying everyone's complacent, but I wouldn't go that far. I'd say we're at about a 7/10 in terms of crowd bullishness. (with 10 out of 10 being psychotically bullish)
On today's calendar, we've got retail sales, PPI, U. of Michigan Sentiment, and the Baker Hughes Rig Count. Maybe retail sales can shake things up a little bit.
JC Penney (JCP) just reported a small sales miss, which is a little disappointing after the beats from Macy's (MC) and Kohl's (KSS) yesterday.
I'd watch the usual suspects today — oil, biotech, small caps, and high-yield. These are the key attack areas for the bears if they're ready to rock.
Good luck friends.
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