It may not be over

Equity correction may get legs

Stock slide resumes

Stock and futures volumes picked-up in early afternoon trading as investors paid greater attention to building Russian forces on the East Ukrainian border. As of 2:10 pm ET, the S&P 500 index has lost 1.1% while an earlier rise in 10-year U.S. Treasury yields has caved in to safety buying among investors.

Market reports continue to pit lingering concerns over the potential for an early rise in interest rates as a primary driver of negative sentiment. If that’s the case, investors now have additional headline risk to fret about as concerns over patients suffering from Ebola virus surface. The CBOE Volatility Index (VIX) has also turned from moving lower to moving higher as investors step up demand for protection against an escalation of selling.

The following chart shows the unusual jump in futures volume around 12:45pm. Gold prices, which had hitherto been lower as stocks sat weaker throughout the day, have since turned mildly higher adding $3.00 to $1291.20. Economic data is also taking a backseat as genuine concerns for a market correction grip investors’ nerves. An earlier strong ISM service report was completely lost as sentiment got the better of risk takers. 

Chart – Volatility reaches intraday high as plethora of risk-off catalysts hit home

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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