Volatility Setting Up
The big stock indices are trading more narrowly, compressing into micro-triangles that suggest a big move is imminent.
Your first signal of this was yesterday’s 6/100 Low Volatility
reading on the
December Nasdaq 100 futures
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PowerRating). Although volatility setups do
not suggest direction — only a big move — dual readings in directional
indicators suggest a volatile end to trading in the last hour Friday. For
not only do we have all three major stock indexes on the Momentum-5
List, there are also five down signals from the Market
Bias Indicators Page, contracting each other. Experience has shown that
conflicting signals such as these suggest that whichever way indices
breakout of their micro-triangles, they could reverse, trade through their
micro-triangles and close strongly in the other direction.
This setup is occurring on options expiration,
another harbinger of volatility.
The Dow is down 49 at 9823, the Nasdaq is down 13.24
at 1887.33, and the S&P 500 is down 9.54 at 1132.48.
In economic news, industrial production took its
biggest drop in 11 years, and the consumer price index fell .3% in October,
consistent with views that the economy contracted last month amid deflation.
Airlines
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after the Senate passed a bill putting airport security under their control
of the government for the next three years and assigning armed air marshals
and more secure doors on cockpits. From the index, US Airways
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U |
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the most on a percentage basis, up 16.5% to 6.64. And KLM Airlines
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KLM |
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and United
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After a three-day loss of nearly $5 a barrel,
December crude
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PowerRating) is consolidating losses at contract lows ahead of
an announcement from non-OPEC oil exporter Norway. OPEC said it would not cut
output, in essence mounting a price war, unless non-members colluded to hold
oil off the world market in an effort to control prices and drive them
higher. Crude is currently trading at $17.95 a barrel.