The Blow-Off Top: "More S&P Delta Was Bought In Last 2 Weeks Than At Any Point Since 2007" | 10/9/2017 | Staff
Last week, BofA chief investment strategist Michael Hartnett summarized the current market as follows: the "best reason to be bearish in Q4 is there is no reason to be bearish." He also observed that tha market's "blow off top" phase, which he dubbed the Icarus Rally previously, had been activated and was approaching its final thrust, with BofA's Q4 targets for this final push in risk assets as follows: S&P 2630, Nasdaq 6666, 10-year Treasury 2.85%, EUR 1.15.

And yet, some have argued that Hartnett's designation is not accurate, as there simply is not enough exuberance and euphoria to defined this phase of the market as a blow off top. Which, of course, is also debatable: for one, CNN's frequently noted Fear and Greed index closed last week at a level of 95, indicating of near widespread euphoria.

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Then, over the weekend, Morgan Stanley's Chris Metli, executive director of the bank's Quantitative and Derivative Strategies (QDS), showed another indicator of just how deep in the blow off top phase the market was.

Metli - Notes - Aftermath - Week - NFP

Metli notes that in the aftermath of last week's NFP report, which was hopeless distorted by hurricanes, yet in which investors focused on the one-time spike in hourly earnings (largely a function of overtime pay in the utilities sector, at least according to the BLS), the more bullish sentiment and positioning, particularly at the index level in the options and futures markets, makes the outright buying of equities riskier now, and as a result "QDS suggests investors sell equities and rotate into long call options – in other words, stay long...
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