Hello everyone,
Here is the message I shared yesterday (Monday 7/22) with paid Subscribers: (link)
Please reference my view on equities here:
These levels in ES are very dynamic and based on an intraday mean reversion model I run through the Globex session. Notice that we came right up to this level intraday in ES:
We just gapped down at the futures open and are likely to hit 5,540 this week. If you want to dig into HOW to model these intraday dynamics, check out the primer I wrote on this:
Extracting returns from this type of edge is incredibly difficult and you need to be very precise.
Donโt miss the forest for the trees though. We remain in a Goldilocks regime where equities are skewed to the upside. We are in a positioning unwind and when my ES strategy triggers a long, I will publish it for paid subscribers. Seeing these tensions in real time is incredibly helpful though.
Notice that the Nikkei was down during the Asia session overnight and then as we moved into the US session this morning, NQ was down with the Russell up. This is the rotation I mentioned in the report (link).
We are seeing implied correlation unwind marginally and this is unlikely to be over. Implied correlation needs to be mapped against broad market breadth.
I broke down how implied correlation works in the equity report:
Fundamentally, we are managing the position risk and SPEED of rate cuts by the Fed for trading equities right now. This is because real growth is still positive.
Even in a bull market, there are always risks to manage. No matter how you take risks in life, always remain in a constant state of adaptation.
โWhere you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt.โ
Paul Tudor Jones