Patience, Grasshopper 🦗
August 21, 2026 at 9:02 AM EDT
Justification
The market is priced for a flawless outcome at a moment when the macro backdrop is anything but. The trailing P/E (price relative to reported earnings) sits at the 90.4th percentile of 240 months of history — a level that has rarely been sustained without a catalyst to justify it. The VIX (a gauge of expected market volatility) at 15.41 makes protective puts cheap right now. RSI (a momentum gauge) cooling to 51.18 from 62.91 removes the overbought signal but not the valuation risk. With Energy the only green sector and healthcare reversing sharply, favor trimming cyclical exposure and using low-cost puts on broad index positions as a weekend hedge.
Since the Last Issue
- RSI (momentum gauge) slipped from the prior issue's 62.91 read to 51.18 today — the sharpest intraday cooling this week, removing the overbought overhang but not the valuation concern.
- Healthcare reversed hard: after leading with a 3.5% surge in Wednesday's issue, the sector shed -1.87% today, with LLY down -2.81% and JNJ down -2.21% confirming the rotation was not an all-clear.
- Energy held as the lone positive sector (+0.27%), with AMZN dropping -2.16% dragging Consumer Discretionary (-1.61%) — cyclical breadth narrowed into the weekend.
- The big picture is largely static: trailing P/E remains at the 90.4th percentile, the 10-year yield is flat over 10 sessions, and the Fear & Greed Index is unchanged at 52.
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