Submitted by Eric Peters, CIO of One River Asset Management

"That sell-off in Q4 of last year was real," said Roadrunner, the market largest trader of S&P 500 volatility.

"It was an engineered move, driven by the Fed and the Chinese trade conflict," he added, looking left, right, up. "It got the Fed to cut rates despite the economy’s strength."

The market is priced for a 25bp cut July 1st, and there’s roughly a 1-in-4 chance of 50bps. “Most investors are underweight risk assets even with stocks at new highs. And now I’m starting to see the kind of activity that you see before big rallies, not after them."

"On Friday’s close, someone bought 23,000 Facebook calls and pushed their price from $0.60 to $2.10 without the stock moving,” continued Roadrunner.

“And when the S&P grinds higher, more people are buying puts than calls," he said.

“When vol gets bid up as the market rallies, I get comfortable going short the market.” But that’s not happening.

“Grain prices are rallying. Farmers are feeling better. Everyone else is flush. It’s a booming economy. And this is before rate cuts kick in, before we get a China deal, and Trump destroys the dollar.”

"He’ll sell his China deal as the greatest thing ever. But it’s all smoke and mirrors with him. All he wants is stocks higher heading into the election,” said Roadrunner. “And when the dollar falls, stocks go up, gold, Bitcoin too,” he said. “Doesn’t feel like this is over. I feel myself getting bullish which is the opposite of how I usually feel after a big rally,” said Roadrunner, looking around for a trap.

“It just appears we’re headed into a FOMO period. Every day it gets harder to buy the S&P. Everyone is underperforming. Yet it drifts up and up."