Now we find the floor.
We came in long and the market never looked back. Every target we published was gone by Tuesday. New map below. Friday decides the rest.
We came into this week already long, carried from last week’s table at an effective 7,436, and Sunday said the job was holding rather than shopping. The market gapped Monday and never looked back. At Wednesday’s settle that carry is 313 points open and every published target was gone by Tuesday afternoon.
Corporate credit didn’t widen. Through a week where single stocks moved 17% in both directions on earnings and an AI fund’s entire public book got sold to one buyer, high yield spreads went from 287 basis points to 273. Investment grade went 81 to 78. Both tighter.
Equity volatility tells you what stock holders are afraid of. Credit spreads tell you whether lenders think anyone’s going bust. When the two disagree, believe credit, because a bond either pays or it doesn’t and no story fixes that. Violent rotation with calm credit is a repricing. Violent rotation with widening credit is a downgrade. This week was the first one, and it’s why we didn’t get defensive into Wednesday’s reversal.
Below: the seven levels with what the option market pays for each, the position that’s working and where two thirds comes off, three names sitting on their averages, and the risk that replaced the strait.
