Republic Risk: The MFI Is Screaming "Defense"

We're overbought, heading into a historically ugly period. White knuckle it or hedge for the post-election liquidity surge.

Equity Storm Watch Is GREEN on the S&P 500 and GREEN on the Russell 2000

Well… here we go. 

We've consolidated so much capital into the top names in the market, like Nvidia (NVDA), that the entire thing hinges on the success or failure of one company's quarterly results. 

This is what crowding and passive investing will do. 

With Nvidia’s earnings report just a day away, traders know that even a slight miss could send shockwaves through the Nasdaq 100 ETF (QQQ). The options market is bracing for a 10% swing in Nvidia’s stock, which currently has an Implied Volatility Rank (IVR) of 68—where 30 is considered high. If Nvidia were to take a haircut, we could see the broader market move lower by a percentage point or two.

As we wait for this earnings spectacle, futures, Treasuries, and the dollar are barely budging. Investors are also eyeing a batch of economic reports due later this week, covering everything from economic growth to jobs. Both will provide further clues to the Federal Reserve's…