For two weeks straight, the rest of the world channeled overnight risk to the U.S. which was assiduously bought with both hands. Then late last week, the overnight gaps mysteriously abated. Why? Because the global casino (ex-U.S.) was finishing the last leg of a broadening top.
The daily downside gaps translated into rising realized volatility for the S&P 500. The past few days was the last chance to get Goldman Sachs clients out the door...
Broadening top:
"In the broadening top formation five minor reversals are followed by a substantial decline."
"It is a common saying that smart money is out of market in such formation and market is out of control. In its formation, most of the selling is completed in the early stage by big players and the participation is from general public in the later stage."
In other words, the past two weeks was a warning that the two years of bliss is about to end....
The problem of course is that they don't see it coming...
The other problem is that there is no place to hide...
Of the top 20 largest stocks in the S&P 500, only one (Home Depot) made a new high today.
This is the Nasdaq 100:
The carry trade did not come along for today's ride. Confirming that global risk is coming off...
No Central bank meetings until mid-December
There's just a generation of gamblers who have no idea what "RISK OFF" even means...
