Meta Strategy Derivatives Portfolio – Probability Map Update.
— Updated December 9, pre-market —
The battle between strong breadth and excessive sentiment — the big counterpoints in the current market — is getting closer to a tipping point.
Several signs of exuberance have now reached worrisome levels, but the timing of a potential pullback is difficult to anticipate, as it goes against strongly bullish end-of-year tendencies, which may manage to neutralize the threat for some time yet.
Patience has paid off, as the S&P 500 finally filled our main long target area last week. We were able to take profits on a majority of our long position.
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.