Here Comes PPI
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.
At the time this is being published, the S&P Globex Futures are trading 1.00 points higher and the Bond Market Futures are trading up 1 tick.
Heads up, the PPI is scheduled for release tomorrow morning. With all the focus on inflation, this will likely cause volatility in early trading in both the bond and stock markets.
Tonight, we have three indicators pointing lower on the Market Bias Page combined with an overbought McClellan Oscillator. This suggests a downside bias for tomorrow. Therefore, you might look for shorting opportunities on the December Dow Jones [DJZ9>DJZ9], S&P [SPZ9>SPZ9] and Nasdaq 100 [NDZ9>NDZ9] index futures.
The December Swiss Franc [SFZ9>SFZ9], mentioned last night and on the Implosion 5 and Pullbacks From Lows Lists, continues to consolidate within last Thursday’s wide range day down (a). Continue to look for a possible resumption of trend and shorting opportunity here.
Volatility Watch
December Corn [CZ9>CZ9] remains on all three Volatility Explosions Lists. Continue to watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
January Soybeans [SF9>SF9], remain the Volatility Explosions-Multiple Days List. Watch for a larger-than-normal move (in either direction) as volatility reverts to its mean.
December Bonds [USZ9>USZ9], are now on the Volatility Explosions Low 6/100 List*. This combined that forming a handle after a low level cup formation suggests that the move may be higher as volatility reverts to its mean. Look for a buying opportunity here.
Best of luck with your trading on Wednesday!
Dave Landry
PS-Reminder: Protective stops on every trade!
*PPS-The good news is that Bonds usually make a significant move within a few days after a low volatility situation. Therefore, you most likely won’t have to read about them every night like corn.