Nikkei down small, but note the big pop higher in Nikkei VIX. VNKY up by 12%.

EEM reversed right on the 50 day on Friday. If you trade it or not, it is an important factor for the entire trade war China sentiment. It did follow the intraday px action of the major indices. Note Tencent is down some 4% in Asia, another big sentiment driver of the Asian play.

In case you missed it, VIX vs net non-commercial longs. Massive short VIX has flipped to slightly net long.

Oil is down some 17/18% from recent highs. We are approaching the trend since 2016.

European Brazil “plays” have been muted when it comes to reacting to the Brazil bull that started in Sep. This has lately been changing. Several of the names like San, Tef, Map have been rising in tandem with the EWZ.

It is noteworthy to see how one of the reasons people “blame” the sell-off on is the imploding Emerging markets. Sure, on a longer-term chart the EEM vs SPX has been a bad trade.

Foreigners net buy/sell of China stocks rises to record levels.

S&P 500 ETF Short Sellers Ran for the Hills Last Week

Short covering may have played a prominent role in the S&P 500’s three back-to-back 1%+ rallies last week, which is a reason to be cautious in making a call for a bottom.

Shorts had built quite a position in the SPDR S&P 500 ETF (SPY). At 5.75% of shares outstanding as of last Tuesday, that was the biggest short bet in two years, according to IHS Markit data. Two sessions later, that had shrunk by 206 bps. That was the second-largest two-day drop in 4 1/2 years, superseded only by the taming of the short sellers at the end of 2017 (just before the January levitation in stocks).


Risk appetite to bounce, but expect the rebound to be smaller than usual

These guys nailed the sell-off, but are a bit late on this one, still worth a read. Risk appetite to bounce, but expect the rebound to be smaller than usual.

We are ripe for a bounce in risk appetite. That is the conclusion we reach when we compare the current situation to the 2015/2016 roadmap for equities. Equities are oversold and a rebound is likely short-term. They key word is through short-term. Downside risks are more material now compared to 2015/2016, as i) central banks on aggregate support risky assets substantially less through balance sheets and ii) the fiscal stimuli in the US could abate rather swiftly in a hung-congress scenario after the midterms.


Usually, equities rebound after the mid-term’s election, but the rebound could be smaller than usual this time around. (NDA Macro)