As you know by now, I tend to be more bearish than bullish.
But over the past week, especially since Friday, the S&P500 continued to push higher DESPITE the DXY moving from under 105 to 106.80 now. At this point, US futures market are pointing red but it wouldn't surprise me if we see strong exuberance continuing to push the market into the green at the close once again.
I cannot explain it, not by fundamentals but there is a force that is seemingly strong. Usually when the AUD is down, DXY is up, US markets are on the backfoot. But you don't see VIX anywhere higher than 20 over the past week. The bears will say complacency, the bulls will say we are on a new bull trajectory. Short positions are still extended so it is not surprising that they continue to unwind because with every passing day, short positions hurt and even the most bearish funds would have to call it quits (shorting).
Corporate earnings in the US and locally have not been all bad, and markets may have overshot in their estimates of how bad they were expected to be. The bears will say poorer results are ahead, the bulls will say we might not have a recession after all.
Only time will tell. Will certainly be more optimistic if we can pass September unscathed.
