Likely Volatility
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 2.50 points lower and the Bond Market Futures are trading down 5 ticks.
Heads up, tomorrow the CPI is scheduled for release. The well watched and anticipated number will likely cause extreme volatility in early trading in the stock and bond markets.
Tonight we have 3 indicators pointing higher and an oversold McClellan Oscillator on the Market Bias Page. This combined the fact that the index futures recovered from lows (see below) suggests an upside bias for tomorrow. However, if we get a bad CPI then all bets are off.
There are only two markets that look interesting to me tonight.
The December S&P Futures [SPZ9>SPZ9] sold off to new 50-day lows today (a) but recovered to close well (b). This may have the last of the shorts trapped on the wrong side of the market. Look for buying opportunity here but heed the above warning about the CPI.
February Pork Bellies [PBG9>PBG9] hit new 50-day highs today but reversed to close poorly. This may have breakout players trapped on the wrong side of the market. Look for a shorting opportunity here.
Best of luck with your trading on Tuesday!
Dave Landry
PS-Reminder: Protective stops on every trade!