We’re still in a consolidation mode and the market is deciding whether it can advance from here or not, but Tony Greer of the Morning Navigator told Real Vision that he is not expecting a waterfall again when the equity market dips during today’s Daily Briefing.

He said things could change, but he thinks the heavy selling has been done and we’ve moved into a phase of longer lockdown rotation.

Greer said that as a trader, he has a positive outlook on the S&P and there’s clearly something going on other than the market reacting purely to economic data. He thinks that “something” is what’s going on at the Federal Reserve.

Greer said the Fed is soaking up all of the toxic debt lingering on bank balance sheets and with its move into junk, it has effectively nationalized the high yield market so that we no longer have to worry about HYG and JNK imploding.

He also believes we are probably set up to see more larger moves on the upside than we are on the downside because of the phase of the breakdown and the phase of the technical cycle we’re in. 

“This thing went down in a straight line so fast that we’re going to see these insane melt-ups just for the tape to get caught up with what’s overbought and oversold,” he said. “There’s a definite disparity between what’s going on in the economy and what’s going on in the tape and it is going to get worse.”

Greer said traders should look at the technicals, consider sentiment, and be hyper aware of the optics of what is going on right now when deciding what to buy and sell.

“To navigate 40 vol you have to start with a plan,” he said.