Sentiment May be More Troubled than S&P 500 Technicals Suggest
• The winds of risk aversion picked back up this past session and many assets are closer to the edge than the SPX
• China's trade figures may have been 'better than expected', but it was the FX pressure that improved most
• Oil has extended its incredible tumble to an even deeper trough of sentiment with multi-year lows
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Risk aversion was one of the most present fundamental themes in price action this past session. A drop in sentiment-linked assets was uniform and substantial. However, when we look at the sparse rise in the VIX or the S&P 500's distance to major support at 1,850, the sense of pressure is not that severe. Yet, when we look around, the technical considerations from other benchmarks is on the cusp. Global equity indexes (DAX, FTSE100, Nikkei 225) and Yen crosses (I prefer USDJPY, GBPJPY and EURJPY) are standing right on the ledge. We should not consider the measuring stick more important than what we are measuring. Meanwhile, the most prominent motivator for sentiment - China - actually saw pressure ease while commodities continue to pain traders in the space. We discuss all of this and more in today's Trading Video.
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