Meta Strategy Derivatives Portfolio – Probability Map Update.
Strong breadth versus sentiment:
These are the big counterpoints in the current market. Signs of exuberance are on the rise, but the key question remains; How long can that rise continue, and when will it flip?
Growing confidence is typical for a euphoric bull market, and strength underneath the hood lends long-term support.
The art now lies in striking the right balance in interpreting the data: When will growing sentiment likely cease to be supportive of rising prices, making the market fragile and prone to flushing out its excesses?
As usual, I map my current data-driven estimates of the probabilities for future returns of the S&P 500 over the short, medium and long term.