Good morning, everyone, and Happy Wednesday to you. After yesterday’s Chinese wipeout, I was eagerly anticipating the opening in Hong Kong to see how much of a recovery/dead cat bounce was on its way. Sure enough, the market went green, but for about five minutes. It soon eroded back into the red and flopped around there all night, although just fractionally. Hey, I’ll take it. Red is red.
Interestingly, the lowest lows in FXI yesterday got taken out handily. Things stabilized a bit, but as we approach the opening bell here in the U.S., I can say that my put options for JD, YUMC, and PDD are looking good.
In sharp contrast to this, the American superhero Nvidia has been blasting higher for an entire week without a single downtick. AI Mania has seized the public’s imagination once more. I haven’t had a position in Nvidia for weeks (or months) although I am still long AMD and ARM puts.
There are two charts in particular I think merit careful observation, particularly with the CPI coming out tomorrow, pre-open. The first is the VIX, which this year seems to “poop out” in the very low 20s, with the one exception being the August 2nd/5th “killed all the brokerages” sell-of. It would be a shame to see this slither back to the teens.
What will answer that question is the /ES itself, which, on the one hand, has broken above its triangle pattern yet, on the other, has a breakout so sputtering and uncertain as to cast real doubt that it’s actually going to follow through. It would take a lot of very positive energy at this point (like a ceaseless string of positive earnings shocks) to really get this thing cooking higher, whereas a failure of that ascending trendline would finally give us the one and only rock-em sock-em selloff for 2024.
