This is an abridged version of our Daily Report.
A record reversal
The Nasdaq 100 fund has never enjoyed as large a recovery as it had on Tuesday. The QQQ fund opened Tuesday’s trading down more than 1%, then reversed to close at a 52-week high, something it’s never done before. The underlying index has had several large recoveries, leading to minor short-term dips.
Black Swans might be on sale
The SKEW index is showing that options traders expect a high chance of a big move, pricing in a near-record probability of a 2 standard deviation move in stocks during the next 30 days.
Longer-term options are not showing any kind of similar concern, leading to an extreme in the ratio of the SKEW to the VIX and the CS Fear Barometer.
The yield on 3-month Treasuries is now higher than the dividend yield on the S&P. That’s the first time since 2008, leading some to worry about stocks. But since 1971, stocks have rarely yielded more, and on average the 3-month has offered investors 2% or more than the S&P’s dividend.
Since Staples had become so out of favor in May, they’ve been on a slow but steady rise. The XLP fund on Tuesday closed above its 200-day average for the first time in 102 sessions, tied for the 3rd-longest downtrend since its inception in 1999.
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The post titled Nasdaq's Record Reversal As Black Swans Go On Sale And Yields Rise was originally published as on SentimenTrader.com on 2018-07-18.
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