The S&P 500 closed last Friday at 3,714.24 and closed at 3,886.83 this afternoon. That’s a 4.6% gain. Wow, what a difference a week and the biggest institutional de-leveraging event since March 2020 can make. The S&P 500 put/call ratio got to its highest point since the panicked selling early in the pandemic; it was only about 5% below this one year high, but then it subsequently collapsed quickly.

The current level of nearly 30% off the highs does not support the conclusion that markets are overstretched either, rather it suggests indexes are poised to move higher. When investors are anticipating a crash one is much less likely to happen. There is a lot of downside protection which means when there are downside moves the profits from those moves to those holding protection are swift and often re-invested long. This softens moves downward and helps the market hold key levels.

As my colleague Tom Lee will discuss below, the extraordinary events of last week have resulted in a significant change to our base case and we are calling off the mid-bull market correction we predicted between February and April. We are relieved that the distractions of the last few weeks have subsided, and that volatility has returned to more normal levels. Aside from sensational and very...

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