[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] We opened with a huge move to the upside this morning. The market’s liking what it’s hearing right now in terms of cooling off the trade war and Elon Musk leaving D.C. to go back to Tesla (after one hell of an earnings miss yesterday). The VIX dropped below 30 and stayed there for the first time since early April – more warm, fuzzy feelings for a market that’s been put through the wringer. But by mid-morning some of the air came out of the tires and the market started to drift lower – still up, but the selling was unmistakable. Folks, this rally has all the hallmarks of a rip-your-face-off event; it looks a lot like a bear market rally. Correlation? Check. Stubbornly high volatility? Check. Let’s look under the hood and see what’s really happening here – this

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] Stocks notched a nice recovery rally today, with the indexes up around 2% to 2.25% in late trading. But to be clear, I’m not inviting everyone back into the water just yet. I need to see more from the tech sector before making that call. Sure – tech, as tracked by the XLK ETF, is up close to 1.9% on the day, but zoom out (as always) and you find the sector is off more than 12% for the month and more than 20% from its 52-week high. The sector is nowhere near resuming the leadership position I like to see it hold in a bull market. What’s most interesting to me right now is the action in Bitcoin. It’s up more than 8.6% against the greenback this month, but here’s the thing: more than 4.7% of that gain stacked

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] Normally, bond and gold prices move in tandem. For instance, if the Fed, say, cuts interest rates and expands the money supply, gold will advance as short-term bonds rally on the cut in rates. Now, there are times when the prices diverge but right now we’re seeing something pretty extraordinary: Higher bond yields failed to attract any interest, and the increased selling today was met with even more vigorous buying in gold. This sort of dislocation has a lot of traders wondering: “What’s the endgame here?” Can gold prices keep going up forever as bond prices keep falling? Here’s where the tariffs come into play. Any attempt to move production to the United States is a direct threat to the dollar as a reserve currency. See, with 50% of available dollars held abroad, any increase in the selling of the

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The VIX dropped more than 8% today, which probably felt great to traders who’ve been put through hell… one 5% daily swing at a time… this month. The cherry on top? They get the day off tomorrow. Calm, right? All good, right? Back to normal. Nope. There’s virtually no volume today and it’s the same with liquidity – that’s been a problem all week. The market’s perched at the edge of its expected move which, in my experience, means we’re one Tweet away from mayhem. Volatility is far from dead. Every single one of the structural issues – the volume, the liquidity, the uncertainty – is still there. Not only that, those problems are getting bigger. So, hey, enjoy the break, because it won’t belong before all hell breaks loose… again. Here’s what to do about it…

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] Reliable bullish setups are a little thin on the ground right now; setups that have the potential to hand us reliable income in the form of solid dividends are even more rare. But that’s exactly what I’m looking at right now – and what you’ll see in just a second. See, there’s a very high level of correlation in the markets right now. That means, in plain English, that stocks that normally wouldn’t have much to do with each other are moving together – usually because of, you guessed it, headlines. Well, just now there’s a broken correlation underway in two big sectors – utilities and energy, as tracked, respectively, by the SPDR XLU and XLE ETFs. One’s up slightly over the past few sessions, the other is down. But both have setups that are paying high short put premium

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The fireworks seem to be over, for now at least. There are still some underlying issues in the market, some uncertainty. A look at median spreads shows they’re some of the widest in years right now, which says liquidity is low and suggests market-makers are cautious. No surprises there. That said, there are some real bright spots in this tape; technology and semiconductors are showing some strength, and, as I’ve said before, it’s tough to marshall the bulls if tech isn’t leading. The trillion-dollar question is whether this near-term trend can last. If it can, then the bulls may be able to capitalize and make a run higher. If not… look for volatility to surge again. In any case, don’t try to be a hero in this market. Focus on the setups that are working best. Take precious metals, for

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] All Quiet on the Western Front was a semi-autobiographical novel written about World War I from the perspective of a young German soldier who dies a month before the end of the war, on the very same day his superiors report “all quiet on the Western Front.” As I think about the bulls’ perspective on today’s trading, I get a similar feeling: There’s nothing to report. Besides, how do you regard the S&P 500 rising 1.5% and the VIX dropping seven points to around 30? Volatility is calming down but the /VX term structure in backwardation still points to near-term risks in equities. How would you report on a market that is driven so wildly by changing events from day to day? Apple (AAPL) is squarely in the crosshairs one day, when the next day sees tariffs on phones being

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The markets closed up today, nearly 2%, which would be nice if this were anything like a normal market. But I’m here to tell you, these gains – 2%, 1%, 5% – don’t mean a thing. We’re going to spend some time talking about price action, sure, but that has to take a back seat to volatility. Volatility’s the name of the game. Understanding why this market’s doing what it’s doing, understanding what it is that’s actually blowing up like a hand grenade and posing risks to everyone – that’s much more important right now. Because if you’re only reading the VIX, you’re only seeing a fraction of what’s happening here. I’ll show you what you need to know and what you need to be watching to get your money through this. I’ll be straight with you: Not everyone is

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] There’s a lot to talk about tonight. Earnings, for one; we’ve got some big, systemically important banks set to report starting tomorrow. And unless you’ve been hiding out up on a mountain somewhere, you know this earnings season is going to unfold against a historically volatile backdrop, with some of the biggest moves we’ve seen in years, if not decades. Double-digit drops and recoveries followed by even more volatility. If that weren’t, economists are raising the odds of recession on us. Austrians, Keynesians, and everyone in between agree that some kind of slowdown is due, if it’s not underway already. We’re going to check in on sector rotation to make up our own minds – and pick the juiciest targets. So, take a deep breath – we’ll be okay – and let’s dive in…

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] “A 90-day pause” on tariffs was the secret sauce. That was all it took for majorly beaten-down stocks to go ballistic this afternoon, anywhere from 6.4% to 9.3% by 3 PM. (Don’t get comfortable – more on that in a minute.) More than 75 U.S. trading partners caught a break, but there’s one country that didn’t get to sit in on the love-fest. A certain gigantic Asian commercial superpower… was hit with even more tariffs – 125% for those of you who are still counting. That didn’t seem to faze the traders who’ve been starving for news for more than a week, but I’m here to tell you… China is actually the piece of the puzzle that matters most right now – and here’s why…