Election

Election Day is understandably front and center today and of late, even when it comes to markets and interpreting the various moves by markets (in this case, the frequent rallies) as being politically-motivated. 

Still, I keep returning to the fact that we have an overlooked FOMC later this week, with the decision released on Thursday afternoon. After a good bond auction this afternoon rates on the 10-Year Note are back slightly below 4.3%, though still considerably higher than the September 18th FOMC when Powell cut 50 bps (around 3.6% back then). 

Seeing as a 25 bps cut is widely-expected on Thursday, and Powell's Fed, if nothing else, prides itself on not surprising markets, that looks to be in the bag regardless of this morning's hot ISM number, for example, on top of the move higher in rates the last six weeks.  

Thus, the volatility unwind this week, so far, coupled with the rally in risk (PLTR earnings helping to stoke that today) seems to be a bit too much front-running, with market pundits recalling prior elections with the post-event volatility crush and trying to be the first-movers on that trade this time around. 

So now the "crush" is being aggressively front-run, creating a potential rug-pull at the FOMC later this week, especially if The Fed's forward guidance is less dovish than expected about future rate cuts. 

To keep this actionable about stocks, I continue to view the semiconductor index, updated below, as the leading sector--It clearly led to the upside for the better part of fifteen years, and now it is on the brink of finally losing its 200-day moving average in what I believe will not be another dip-buying event.