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We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. See actual trades here.
Updates 12:00 AM EST - Monday 9/27/21 Quick Take Long term: the bull market that started on 3/23/20 is still intact. Short term: The bottom for September dip came last Monday. But there is likely to be some retest of key support levels this week. This coming week Here's the economic calendar for the full week. Monday: Durable Goods Orders Tuesday: Consumer Confidence Wednesday: Pending Home Sales Thursday: GDP; Jobless Claims Friday: Personal Income & Outlays; ISM Manufacturing Index; Construction Spending; Consumer Sentiments Wall of worry Market is still worrying about the same issues:
Of the above issues, inflation is the biggest worry. Here's the latest from WSJ: Fed Officials See ‘Transitory’ Inflation Lasting Quite a While. The outlook from central-bank policy makers is speeding up plans to raise interest rates....With unemployment expected to fall to 3.8% by next year and 3.5% by 2023, the economy will be operating with little or no spare capacity, conditions that typically cause inflation to rise. Fed officials think inflation risks are to the upside; a majority said so Wednesday. Six of 18 Federal Open Market Committee participants think core inflation will be 2.5% or higher next year. Volatility So far $VIX daily chart pattern is not morphing into a scary setup. Volatility has been dropping and is likely to continue. This should provide bullish tailwinds for stocks. That does not mean $VIX $VX $RVX are likely to just keep dropping straight down. They will make their typical moves: spike up a little; drop down some more; repeat. That is how they coil their ways downward. Bulls should hope that this pattern emerges. $VIX should not spike up above 21.5 this week in order to maintain the bullish momentum. And volatility needs to start dropping below these key levels: ... Subscribe now to read the rest of this post. Subscribe at our introductory low rate of only $39 per month!
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We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Updates 1:00 AM EST - Monday 9/20/21 This coming week Here's the economic calendar for the full week. Monday: Housing Market Tuesday: Housing Starts & Permits Wednesday: Existing Home Sales; FOMC announcement Thursday: Jobless Claims Friday: New Home Sales; Powell speaks Wall of worry Market is still worrying about the same issues:
The debt ceiling issue has not been resolved yet, and one way or another it will cause some short-term sharp moves in the market. This is a wild card to keep an eye on. But the main event for this week will be FOMC announcement on Wednesday. The Fed is unlikely to start tapering right away, but their words and their tone will be carefully dissected for hints of "how soon" and "how sure". ... Subscribe now to read the rest of this post. Subscribe at our introductory low rate of only $39 per month! We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Updates 12:30 AM EST - Tuesday 9/14/21 Inflation The CPI report comes out at 8:30 AM EST on Tuesday, and the numbers will be carefully analyzed and parsed. According to the NY Fed Survey, Americans see inflation a year from now at 5.2%, up from expectations of 4.9% last month. Three years from now, it is expected to be at 4%, up from the 3.7% expected in July. Expectation is not the same as reality, but expectation can drive a lot of decisions and factors into pricing mechanism. According to Atlanta Fed President: “if businesses and families are starting to make decisions, taking on board these higher levels of inflation as something that is potentially more permanent. If those sorts of behavioral changes start to play out, then that’s something I’ll have to take on board”. The talk of inflation runs hand in had with the talk of tapering. Next Wednesday 9/22 is FOMC announcement. Here is an in-depth look at what the Feds are planning possibly. Here are some key charts that we are monitoring. They provide mixed messages right now, but keep an eye on them anyway. $VVIX: Volatility of $VIX The most important chart is $VVIX. We will rely on it for signs of capitulation as explained below. When the volatility of $VIX maxes out is when market will calm down again. Subscribe now to read the rest of this post. Subscribe at our introductory low rate of only $39 per month! We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility. Updates 12 AM EST - Monday 9/13/21 This coming week Here's the economic calendar for the full week. Monday: Treasury Budget Tuesday: CPI Wednesday: Industrial Production; $VIX Expiration Thursday: Retail Sales; Jobless Claims Friday: Consumer Sentiments; Quadruple Witching Wall of worry The big three worries below are part of the reasons behind the recent analyst warnings of a slow-down in the stock market this autumn.
In addition, market is nervous about the approaching debt ceiling. Traders will be closely eyeing the Treasury Budget report on Monday. It is eye-opening to look at the numbers. Now that Congress has missed the debt-ceiling deadline, Treasury will have to start emergency cash conservation steps on Monday to avoid busting the Federal borrowing limit. (And you think you have a problem with overspending on your credit cards!) To add to the doom-and-gloom mood, don't forget it's VIX expiration and Quad Witch this week. To get an in-depth understanding of why expiration week can generate a spike in volatility, we recommend that you read this Twitter thread about the effects of the options market, gamma, vanna and charm on stocks. Good News?
Volatility The following charts track different aspects of volatility. They are all showing similar theme though. There is a high probability that $VIX $VXN $RVX will all spike higher some time this week. Subscribe now to read the rest of this post. Subscribe at our introductory low rate of only $39 per month! We trade 3x ETFs such as TQQQ TNA SOXL LABU UVXY using proprietary analysis of volatility.
Updates 1:00 AM - Tuesday 9/7/21 This coming week The economic calendar this week is light, but there are a few reports that may move the market a bit. Wednesday: JOLTS report (job openings and offers rates on hiring and quits) Thursday: Jobless Claims Friday: PPI (Producer Price Index) This is still a bull market that's climbing a wall of worry. So let's look at the current worries and their implications. Wall of worry: slowing growth WSJ Saturday headlines read "Delta Variant Throttles Job Growth". That pretty much summarizes the current economic situation. There are traders arguing that COVID cases have peaked for this year, that bad news is good news, and that the stock market is going to melt up for the rest of this year. However, with a large population of students going back to school full time unvaccinated, and the cold weather arriving to send more people indoor, and the natural disasters putting large groups of people into enclosed and unsanitary conditions, it's unrealistic to expect COVID cases to drop from current level. If anything, they are more likely to rise. According to WSJ, hiring in August was weak in service sectors, while retailers cut jobs. The economy is losing some steam. Consumers are more cautious about spending. And business is willing to pull back on hiring. The silver lining in slowing job growth is that there is now less of a case for the Fed to immediately launch into tapering. So the easy money may still stay in the system longer. Wall of worry: inflation The PPI report this coming Friday is important. Producer prices have exceeded high estimates in each of the last five reports.
These numbers are certainly concerning, but the Fed is still messaging that inflation is temporary. And interestingly enough, the chart of TIP (Treasury Inflation Protected bond ETF) has formed a double top and appears ready to drop. This means the bond market isn't too concerned about spiraling inflation. Fireworks likely next week As we said above, this is still a bull market climbing a wall of worry, and participants are still buying the dip. However, as we also mentioned before, there are events coming up next week that are likely to cause some sharp moves in price. 9/15: $VIX expiration 9/17: Quadruple witching 9/22: FOMC announcement We will discuss price levels for $SPX $NDX IWM further below. Subscribe now to read the rest of this post. Subscribe at our introductory low rate of only $39 per month! |
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