Month End Shaping Up for a Battle
Powell comments push equities to new highs late in the day
For those that received our late day chart of the SP500 showing a late Powell nudge higher, we can’t help but think the algo’s are driving prices higher just so they can sell them into month end. Now we know there will be an obvious battle between month end window dressing and month end rebalancing. The only question is to what effect will it have. We pose three scenarios:
The obvious - Mega re-balancing from the massive run up off the equity lows since March until now should see a decent chunk move into bonds and out of equities.
The somewhat obvious - Month and Quarter end window dressing could propel the equities to put in a slow death grind higher all day as fast arbs try to front run rebalance, to only find a constant and annoying bid to contend with which would end with point #3
The not so obvious -Equities absorb any rebalance, grind it up all day which would lead to a further grind higher as weak shorts bail into the close. This activity may come with a corresponding bond bid higher, which may be led by the short end as it was today.
So that is what we are looking at for the SP500 chart wise:
Russell2k had a massive rally today off the lows running up 60+ Points!
With month end and 4th of July coming, we suppose illiquidity may drive price action so expect some price swings!
The Global Futures Benchmark Positions Tracker was hampered today by the energy complex today as well as the bull steepening of the US treasury curve:
Here are today’s settlements in the markets we follow:
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