Called 6400. Now What?
Mid-Week Thoughts
Good morning from Le Sud!
We nailed it…
On Monday, I said ES would trade back to 6400. It did, and still positioning remains neutral. The pullback flushed some dead weight, but structurally, nothing broke. The trend re-engaged exactly as expected.
Systematic flows held, CTAs and vol control kept buying. Mega-cap earnings digestion turned into further flows. And yet most guys were still calling it a "top. Pure disbelief, and disbelief is a good source of fuel.
The psychology here is textbook. When you've been wrong for months, every bounce off a puke looks like a dead cat, and every pullback feels like vindication. But markets don't care about your P&L pain or your need to be right. They follow the path of least resistance, and right now that path might still be higher.
The beauty of Monday's action wasn't just the technical follow-through. It was watching the same analysts who missed the entire rally from the 5000s double down on their bearishness at the first sign of weakness (classic recency bias meeting sunk cost fallacy). They're just anchored to their previous calls instead of reading what's actually happening.
But here's what's really happening now and nobody's naming it: FORT… Fear Of Right Tail. And I've never seen this dynamic play out so cleanly in over a decade of managing money.