There is very little fear in the markets at this point of time. Clear price action, option market activity and VIX all indicate to a relaxed market.
Under normal and rational conditions, one would have taken theis at face value but not at a time like this. We are going to look at some other inter market relations to understand the developing trends.
The aussie continues to show the way. Even though SP500 still is not ready to give way, given that SPY has never rallied without the aussie assisting it, we will look to the AUD/USD pair to show guidance.
The AUD/USD is now running close to the 200dma which was broken last week and has not bee regained since. The 200 dma comes in at 1.0377 vs 1.0396 last week. The Oscillators are negative with a trend down while daily stochastic are weak below 20. Even with RISK ON trade in SPY, we are yet to see any kind meaningful rally in AUD/USD.