Rates Bite, Momentum Limps, and Puts Are Still on Clearance

The market is flashing a classic late-cycle warning: valuations stretched, rates rising, and momentum fading — all while options remain cheap enough to make protection affordable. The trailing P/E (price-to-earnings ratio) sits at the 75th percentile of its own 20-year history, and the 10-year Treasury yield has climbed 15 basis points over the past two weeks to 5.01%, raising the hurdle rate for every equity multiple. The VIX (a gauge of expected market volatility) at 15.34 keeps put options inexpensive, making this an ideal window to buy protective puts rather than sell them. Watch the S&P 500 at 7,620 — a break below the prior week's low would confirm the momentum deterioration already signaled by an RSI (momentum gauge) of 46.69.