Thread by @Mayhem4Markets

I've been raising concerns about where we are with markets from a macro, valuation, positioning, and technical perspective for about a week now.

Apparently several leading Wall Street banks are sounding alarms now, too, about a near-term correction or slow decline over months.

I don't feel the end of the bull market is near, but I do think that there's an abundance of signs that the rally is less than healthy: narrow leadership, exuberant retail options and equity positioning, lack of sufficient 'sidelines' capital to buy a sizable dip, stretched techs

The other area of concern is that real rates are rising, and that's often harmful for many risk assets, including growth, tech, crypto, precious metals, junk debt, etc. Basically any competing duration asset becomes less appealing as those rates approach neutral/positive.

We also have growing contagion risk from China's Evergrand bond collapse. It's hardly contained, and these debt calamities often have a way of spreading their potentially deflationary impact.

Next week is VIXperation, and quad witching OpEx. A period of time where volatility tends to increase, and with it selling pressure can sometimes ramp. Especially against more speculative equities.

We also have the Fed meeting on 9/21-22 with their policy decision/taper talk.

Often times around major options expirations we see periods of greater corrective pressure. With trillions in gamma rolling off again, there's no reason to suspect that this upcoming OpEx is going to be a less bumpy ride. In September of 2020 we saw about a 10% drawdown.

Past surely isn't prologue, but I think it is wise to be nimble here. Many of the stocks that have run the hardest of late have been the result of a surge of call buying. These sorts of gamma/delta-driven squeeze events can only go on for so long. Often the reversals are painful.