SPX Update: Monday 13 July 2020

· Global Equity Market Sentiment is ‘Off-the-chart’ but “Who cares?!” seems to be the market’s response…

· State-based model outputs:

1. Composite Long-Term economic/market cycle: “Buy the Dip”

2. HMM Market Regime: “Buy the Dip: Amber Alert”

· MT cycle switches from strong tail-wind to slight head-wind tomorrow…this lasts until early August;

· Scenario summary has seen the ‘Consolidation’ options drop off:

1. Bullish: Ephemeral, minor weakness post 4th of July and then the market takes off like a bat out of hell (sentiment picture suggests this is the least likely);

2. Consolidation 1: The market remains bounded between the major 2980/3170 levels through most of July and then takes off;

3. Consolidation 2: Similar to Consolidation 1 but the resolution includes a head-fake to the mid-2800s before taking off;

4. Bearish: A sharp move possibly to 2840 to clean out the bullish froth

· So are we about to have a ‘long gamma’ event?

· The sentiment picture STILL pushes me to favour Scenario 4 over 1 nevertheless my position remains bullish, albeit less than two weeks ago.

Perhaps AMZN provides a clue to what is going on…a blow-off top with a mid-point ~2850/3000…in other words THE TOP is not even close yet…eek!