The VIX
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
Today, the VIX hit it’s lowest low (a) since July 16, 1999 (b) -two days before (c) the last serious correction. Does this mean the market is definitely headed lower? No, but it does mean that we are overextended and due for a correction. Therefore, look for shorting opportunities in the December S&P futures [SPZ9>SPZ9] but wait for some confirmation to the downside as “overbought†can often become “more overboughtâ€.
The December Bonds [USZ9>USZ9], on the Pullbacks Off Highs List, have once again formed a cup and handle and appear to have stabilized after pulling back. Look for a buying opportunity here.
December Lean Hogs [LHZ9>LHZ9], mentioned last night (see archive for details) and on the Pullback Off Highs List, still look interesting to me. Continue to look for a buying opportunity here.
Futures in strong downtrends often only consolidate for a few days before heading lower. With that said, March Cocoa [CCH0>CCH0] is in day two (or three if you count the low reversal day) of a pullback. Look for a possible shorting opportunity here.
Best of luck with your trading on Monday!
Dave Landry
PS-Reminder: Protective stops on every trade!