Price action in US equity markets is rather boring today. FAANGs are retracing as per our earlier note, while the Dow and SPX remain flattish. Note that VIX trading at 21 here, is pricing approximately 1.25% daily moves for the SPX, despite holiday season approaching soon.

The Dow Jones is not doing much at all. The big range continues, and as of writing this, the index is practically unchanged.

Despite markets trading relatively boring, the Transportation stocks are once again down, and the TRAN index is actually breaking down, trading at levels last seen in December 2017. If this is due to an economic slowdown or not, we leave to pundits to debate.

The spread between the TRAN index and the SPX has spiked massively over past sessions. The spread is trading far out on the normal distribution.

US GDP forecast (white) versus the TRAN index (orange).

VIX and VXN remain rather elevated. Financing theta with these vol levels is not an easy task, given realized close to close volatility over past days.

Credit, CDX IG, has come off during the past sessions and is trading at 7-day lows. The bigger move higher is still something to “worry” about, but for the shorter term view, last time US credit traded here, the SPX was at the 2710 level.

Below chart shows the SPX (orange) versus credit (white inverted).

Credit stronger, TRAN index weaker, pick you trade.

Source; charts by Bloomberg