Summer Complacency Not in Its Nascency

Both a green VIX and U.S. Dollar this morning seem to be lurking behind the curtain as we kick off what is traditionally a rough stretch of the trading year, from now until around late-October. Some heavyweight tech leaders like AAPL MSFT TSLA ZM, however, are back at it again and masking the more pedestrian action in the small caps and other Dow components, for example. 

Thus, the air of complacency surrounding large cap tech is still in effect, though it seems to be growing long in the tooth by the day, especially with Fed head quite vocal now in the media, opining on public health policies regarding the virus and lockdowns. 

As it has been said, "power corrupts, and absolute power corrupts absolutely." With The Fed enjoying increasing power over the last two decades but especially since this pandemic began, equities may very well be reflecting that perceived power as The Fed members bask in its glory. Indeed, they are not likely to relinquish said power until something across global markets comes along which truly scares them straight, be it a currency or bond crisis, or perhaps just an outright crash where their policies no longer seem to work. 

Until then, it will be interesting to see whether capital tries to sustain sector rotations within equities whenever the large cap QQQ trade takes a breather or if an outright euphoric phase lasts until it organically burns itself out, Fed power or not. 

Elsewhere, natural gas is surging as we have a busy hurricane season heading into the heart of the annual cycle. On the UNG ETF daily chart, it has been a long time coming but we can see the inverse head and shoulders bottom confirmed today. RRC reports tonight, but keep an eye on COG and SWN for longs related to natty.