According to BlockBeats, geopolitical tensions did not escalate over the weekend, and the oversold positions led to a risk rebound, resulting in a comprehensive rise in the risk market yesterday. Fixed income investors seem to be adopting a wait-and-see attitude ahead of Friday's PCE data, the FOMC meeting in eight days, and the busiest earnings week of the quarter for SPX. Despite the positive price trend, trading activity remains relatively light, with fixed income trading volume only at 60-70% of normal levels. 44% of SPX companies will announce their earnings this week, including five of the 'Magnificent 7'. Tesla will announce on Tuesday, Meta on Wednesday, and MSFT, Google, and Amazon are scheduled for Thursday.
Following last week's bond sell-off, stocks continue to be relatively expensive compared to fixed income at historically high levels (based on implied yield). Despite this, Wall Street believes investors are still comfortable going long, with the long position indicator expected to reach a four-year high, and the SPX/Nasdaq short ratio expected to reach a near 10-year low.
However, last week's negative price trend has caused some technical damage to stocks. SPX futures have already fallen below the 55-day moving average, and are more than 5% away from the next 200-day moving average support level. From a weekly perspective, the slow stochastic indicator has turned negative and is accelerating downwards. Meanwhile, the SPX monthly K-line could potentially form a bearish engulfing month line at record highs, something to be cautious of during the earnings season.
In terms of cryptocurrencies, based on CME futures contracts, JPM believes that BTC positions are also overweight, and ETFs have seen outflows for two consecutive weeks (although on a smaller scale), indicating a significant weakening of mainstream momentum. Monday saw a slight rebound in inflows to +6.2 million USD, but this had no impact on the market. We will continue to closely monitor market trends.