What Futures Traders Should Watch This Week
By John Thorpe, Senior Broker
Today, as of this writing Friday, the VIX is in the 19-20.50 area, a move above 18 created two sharp selloffs this year and we are in the midst of a correction now, but found resistance at 20 and 22 and failed to breakout to the upside the previous two attempts, giving credence to the idea the bull market was, once again leading to higher equity prices.
Considerable earnings news will be on tap with Alphabet and Microsoft Wednesday, Amazon and Intel Thursday among a cast of 100’s throughout the week, plenty of economic data to stir the drink, and two FED speakers this week post FOMC rate announcement as the black out period ends: Chairman Warsh after the rate announcement Wednesday and Musalem on Friday.
After last FOMC meeting when zero voting members voted to stay the course and they all voted for a rate increase with many considering multiple increases of .25 to .50 over subsequent meetings, that tide has changed according to the CME FedWatch tool as the market is now leaning into a more dovish tone for Wednesday rate announcement with an 84% probability rates will remain unchanged until at least, the final meeting of the year in December.
Back to the VIX I posted this last week and it is worth repeating.
(you can trade the VIX futures with CannonTrading)
The latest available CBOE data I found puts the VIX at 19.66 October 23 Noon Central, with an intraday high of 20.66 and low of 18.87
18–20
First warning zone
A break above the recent 18 area, followed by 20, would suggest increasing demand for downside protection.
22–25
Correction-stress zone
A sustained move into this range, particularly with the S&P 500 making lower lows, would signal a more meaningful deterioration in risk appetite.
30+
High-stress regime
A move above 30 would indicate substantial volatility expectations. Watch for widening credit spreads, weaker market breadth and forced selling.
The energy’s, metals, securities, grains and interest rates are swirling in the uncertainty from a lack of resolution in the attempted unwinding of the Iranian nuclear program.
Don’t let your guard down just yet, the fog continues, tune into the Sunday evening markets to witness reactions to the weekend news streams, manufactured or true.
Plan your trade and trade your plan!
Earnings Next Week:
· Mon. Verizon, Public Storage
· Tue. Visa, Coca-Cola, Boeing, S&P Global
· Wed. Microsoft, Alphabet (GOOGL), T-Mobile, ADP, Phillips 66, Fed-Ex
· Thu. Amazon, Eli Lilly, Intel, Mastercard, Merck
· Fri. Exxon Mobile, Chevron, General Dynamics, Colgate Palmolive
Fed Speakers: (all times CDT)
· Mon. Black
· Tues. Out
· Wed. FOMC Rate announcement 1:00 pm and 1:30 pm Warsh Speech
· Thu. Quiet
· Fri. Musalem 11:30 am
Econ Data:
· Mon. Chgo. Natl Activity Index, Dallas Fed MFG., 3-6 mo. T-Bill auction, 2 yr note auction
· Tue. Building Permits, ADP weekly, Durable Goods, Redbook, S&P Case-Schiller Home px, CB Consumer Confidence, New Home Sales, Richmond Fed, 52 week, 6-week Bill auction, 5 yr. Note Auction, API Crude stock change
· Wed. MBA Mortgage applications, Wholesale and Retail Inventories, EIA Crude Stocks change, 17 week bill auction, FOMC RATE DECISION
· Thu. Core PCE, GDP, EIA Nat Gas Stocks, 4 and 8 week Bill auction, Fed Balance sheet
· Fri. Q3 Employment cost index, Baker Hughes Oil Rig Count.
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