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Still see correction towards 3,100-3,150 (by a NARROWING margin), as high-yield and VIX term structure remain stubbornly cautious

Last Monday (1/27), we shifted towards a short-term cautious positioning, on the heels of a dramatic widening in high-yield spread (+51bp by 1/27) and the inversion of the VIX term structure (1M > 4M), both of which have a very good track record of indicating de-risking by asset markets.  Hence, over the course of last week, expected S&P 500 to correct towards its 50- to 100-day moving average (3,100-3,200, or 3,150 roughly).  - Falling to 3,150 would be a 2.5% further decline (from Friday's close) and ~7% peak to trough decline. - Instead, the first two days of this week saw S&P 500 rise 2.5% and the S&P 500 is now within 1.3% of its all-time high.In other words, instead of the next -75 points being down, we saw a +75 point rally.Price is no doubt signal.  Particularly given the flood of negative news, the ability for equities to rally suggests that investor positioning was already considerably more de-risked than we perceived.  And as our Global Portfolio Strategist, Brian Rauscher, notes -- the NASDAQ hit an all-time high and "I don't care how it got there"3 THINGS THAT KEEP US IN THE CORRECTION CAMP (BUT NARROWING MARGIN)...Hence, our conviction about a deeper correction has narrowed by a meaningful margin --> ala, let's say we saw a >60% chance of ...

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