The markets have put on a huge rally lately.
With correlations at extremely high levels, pretty much all indices have rallied hard, and now start entering the resistance levels.
With short interest at elevated levels, we won’t be surprised if the markets tops out with a false and volatile break to the upside, in an inverted shake out of shorts, before the leg down resumes.
For great reading on volatility, check last week’s post from Artemis Capital Management.
Some charts resemble very much the last nasty sell off in 2008.
What many forget, is that actually many indices are rather flat compared to mid August levels.
We have been building up dynamics for a big move, that should start occurring soon.
Full Chartology below.