The Market Brief: Equities Reach All-Time Highs, But Are There Cracks?

Where Markets Meet Macro

Following the modestly-mild consumer price index (CPI) print, equities hit all-time highs as bears were turned into rugs.

The problem with bears are that they're generally always bears and always short on a fundamental basis knowing damn well markets are mechanically driven and narratives supported.

Bears were positioned for the “sticky and hot” CPI print to the upside, and anything but a huge beat markets were going higher.

Unprofitable puts were sold back which enabled dealers to repurchase their delta hedges of the underlying; and that drove the markets much higher. Positive feedback loops iniated.

The huge gain in the SPX pushed dealers near their upper-gamma threshold, and there's a huge call wall at 5300. This could create a drag on the upside potential.

Our gamma bands for SPX at 5340/5280 (currently 5320). Near-term and intermediate trade range is 5380/5109 and 5351/4865, respectively.

As euphoria overtakes the market, there are some cracks beginning to show…