Emerging Narrative
March 8, 2022
Today: This morning’s intraday equity reversal follows a specific headline, but exacerbated by an oversold technical dynamic in our ~4,100-4,300 support zone. Nearly 50% of NASDAQ Comp constituents are down 50% or more, liquidity conditions are thin (short gamma) and equity sentiment sits at bearish extremes. Also, the market narrative has almost entirely shifted to price action, which is often a sign of exhaustion at extremes.
SPX: We look for the S&P 500 (SPX) to continue tracing out a bottom in the ~4,100-4,300 range. Equity market volatility remains elevated with the VIX currently at 34.25. Periods of elevated realized volatility tend to obscure internal and cross market indicators, but our higher Treasury yield outlook keeps us biased toward cyclical/value sectors once volatility cools (VIX below 20).
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