We’re going higher.
One of the big factors in markets is posting your flag down on a chart when a key event occurs.
A key event IS occurring right now, that has actually sort of gone under the radar.
This whole government shutdown, we reckon, has been a problem for the market.
And look at the current response from the ES.
See, I like to have marks down where potential issues are removed.
I’ve referred to this many times as the path of least resistance.
Markets are always looking for the path of least resistance — well, equities are, anyway.
And we have a little view on something called FOMU…
Basically, funds that have underperformed through the year (how, I don’t know?) who now will have a last chance to maintain AUM into year end…
Which means they will have to chase into year end to stop investors withdrawing perhaps!
But remember we also talk about vol control funds.
We think over the next week there will be another big chase higher as these kick back into buying stocks.
We see the VIX flattening further here (vol down)…
And the term structure supports this…
No one is rushing to buy any form of protection here, so VIX futures now are cheaper than VIX futures further out (no one is buying protection right now on volatility).
Again, this adds to a level of path of least resistance.
Where will you benefit from being positioned under these circumstances?
Big tech.
Tesla, Google, Meta, Apple.
Don’t be too smart about the year end chase.
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