Inside Markets — Risk Factors

There’s never a shortage of risk factors and next week’s Trump-Xi meeting is the near-term wildcard where we see risk/reward skewed to the downside. To be clear, there are no current technical signals that indicate an imminent reversal, but a disappointing US-China trade outcome next week would produce equity downside.  In the near term, the SPX needs to hold trend support in the 6340-6600 range to keep its bullish shape.  Closing levels below 6340 would likely lead to an increase in realized volatility and leave the index vulnerable to a pullback to ~6300 and potentially even 6147, which we use to define the current bull market.