Have Markets Topped?

Getting close…except for the Dow.

Yesterdays close on the SP500 was a continuation of sideways movement that we have seen for the last three days. SP500 has been one of the most shorted indexes out of the three US index.

SPX

• Slow Stochastics is at 81 and showing signs of weakening.

• MFI is at 55 and edging downward.

• A break below $4220 would be a break below the 13 day EMA. Not good.

The question I have is what news will cause this and the other US indexes to break lower and retrace some of these gains? Fed meeting next week? CPI or June 16 OPEX? Could be anyone of them. What is concerning to me is how fast this will break lower. Looking at the suppression of volatility is concerning.

Looking out on the VIX curve, the VIX seems to have a lot of upside potential which is bad for equites. Based on the VIX close at 13.94 and January 2024 VIX futures contracts, there is a 58.53% upside to the VIX as of last nights close. That gap can quickly be filled with the amount of volatility suppression that is in the system. Being conservative could serve you well.

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