2015 Similarities

There are growing parallels to 2015.  First, you have the big inflows into Europe on optimism in the Eurozone.  That helps rally the euro off low levels and drags down the Bunds and Treasuries.  Then the risk parity cracks begin to emerge as stocks and bonds start selling off more frequently, and often on the same day.  Also, the momentum tech stocks outperform the broader market.

Not everything is the same, you don't have the Chinese stock market crash or yuan devaluation, or any worries about Greece.  But you also have much higher prices now compared to 2 years ago.  And volatility was definitely higher and markets choppier in 2015.  That is the one fly in the ointment.  The super low volatility is unlike any long lasting top I have ever seen.  I don't think you can just blame vol sellers for that phenomenon.  Realized vol is still significantly lower than implied vol.   So that takes away my conviction on a long term top, but I think we can definitely have an swing top with these low vol conditions.

I do think as volatility increases, we will revisit that 2480 area again a few times.  But I remain a better seller of rallies and will be reluctant to buy dips.  Yesterday's sudden selloff even caught me off guard, as I expected a quiet day after the first hour was basically actionless.  But there is a lot of complacency out there and air pockets underneath.  Expect to see more of that type of price action in the coming month.