Possible "local" peak in VIX raises probability of rally on Friday post-Aug jobs report

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The chart in this report is only accessible to members
The chart in this report is only accessible to members

On Friday, August jobs report is released at 8:30am ET, the first of 3 key Sept macro events (CPI next week, FOMC week after). For reasons discussed below, we believe there is a high probability of a rally post-Jobs report.

Foremost, we believe we saw a possible "local" top in the VIX, which surged to 23 this week. Currently, the VIX stands at 20 but the key is the term structure inversion:- the peak of the inversion was Tuesday at -0.50 - currently at -0.04 and could flip positive today As shown below, since 2022, the peak inversion of the VIX has marked a tradeable bottom in stocks. Thus, this local top corresponds to the local bottom taking place now. Second, the incoming jobs data this week points to an "OK" jobs market and less likely one that is "too hot":- a too hot report (>200k) likely triggers fears Fed backpeddles on cuts- any figure 200k or less is considered a middle road and positive- a too weak figure below 100k is also not ideal But odds favor a figure between 100k to 200k and this would be likely to be seen positively for a "soft landing" scenario. And we are likely in a situation where good news economically is good news for stocks. Just as long as it is not too good. Third, history suggests a rally Friday. - Since 1928, when S&P 500 is down -1.5% o...
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