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Market Volatility Bulletin: Back In The Kennel

The Balance of Trade profile picture
The Balance of Trade


  • After last week's attempted breakdown, SPY is substantively higher and volatility has fallen rapidly.
  • There's quite a bit of action in a variety of markets in today's trade.
  • VIX term structure takes on an odd shape.

CNBC: 10:52 EST

S&P (NYSEARCA:SPY) futures opened bullish in the overnight session, and have remained so the entire pre-Holiday session. There was a very interesting end-of-quarter drawdown in the major indexes that took place in the last ten minutes or so of last Friday’s trade; that said, shares quickly rebounded. The Nasdaq (NASDAQ:QQQ) is basically flat, while the DOW (NYSEARCA:DIA) just hit an all-time high.

Oil (NYSEARCA:USO) is continuing its strong upward trend of the last week or so; precious metals (GLD, SLV) are getting hammered on the continued increase in treasury yields and concomitant dollar strength (NYSEARCA:UUP). For a holiday week, there’s actually a pretty decent amount of activity in the morning session so far as moves are concerned!

CNBC: Friday Close

After rather range-bound action, US stock indexes closed mixed on Friday as the Nasdaq and Russell (NYSEARCA:IWM) just barely moved. The S&P rose slightly, led by rebounds in both Industrials (NYSEARCA:XLI) and Consumer Discretionary (NYSEARCA:XLY).

On a weekly basis, the S&P lost about 14 points as only Financials (NYSEARCA:XLF) gained meaningfully, perhaps on the sharp increase (bullish) of 10-year US Treasury yields. Technology (NYSEARCA:XLK) took a drubbing last week, which largely acted as a counterweight to the strong gains experienced by Financials. Given oil’s big week, Energy stocks reacted in fairly modest fashion: up less than 1%.

Source: Bloomberg

Likely the largest “mover” for the market this week is the jobs number come Friday morning. We also have the Fed minutes release, which can be a market mover from time to time (August 2015, May 2016, even April 2017 come to mind).

Given the strong run-downs and subsequent rebounds to oil, it will be interesting to see how the commodity responds to this week’s Petroleum Status Report.


Today’s mention goes to a piece penned by Silent

This article was written by

The Balance of Trade profile picture
Adam Zingg, CFA offers both practical and theoretical perspectives that will benefit readers who wish to learn more about how to execute  on views or strategies that interest them.  Whatever your overarching philosophy or expertise, I believe there is value in understanding how trading works. This is perhaps especially true for investors, who often take a more philosophical, less mechanical view when it comes to their processes. It is not my goal to:1) convince you which side of the market to be on2) establish your trading time frames3) have you directly follow any specific trade ideasInstead, I aim to demonstrate how complicated sounding ideas can be simplified and accessible.  My hope is to grow your tool kit of resources, and give you healthy confidence to execute your own personalized strategy.  Trading and investment are fascinating, applicable across a wide variety of fields and disciplines.  Greater focus on targeting, execution, and exit strategies build transferable life skills.  In reading my work, it is my goal that you will consistently glean useful insights and build skills that enhance your ability to trade and make important decisions.

Analyst’s Disclosure: I am/we are short SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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