Volatility trading is the term used to describe trading the velocity of movement in price of an underlying instrument rather than the direction of price. For example, you could trade the value of an equity index, but volatility trading typically means trading the expected velocity of movement.
Are you sad to see April go? I’m not because April showers usually lead to May flowers. Am I in the Twilight Zone or did I actually see the two leaders of the Koreas hug this week? That’s incredible. If you think about it, how many times have I come here in the past year warning about some geopolitical problem on the peninsula that could blow up the stock market?
Pre-signals for a reversal rally higher in the S&P 500 emerged in related symbols’ charts today. Also, some reversal candles exist intraday below my projected weekly reversal zones/lows. Do be aware of trending S&P pivots’ opposition to reversals for this entire week and that no S&P 500 signals exist yet.
Last week we had one of the better jobs reports in recent memory with 313,000 new jobs in February in the United States. More important was the reaction as traders overlooked the potential for rates to rise. It was likely a given already as Powell warned they would do so. Nevertheless, the long bond maintained the low and the relief for longer-term rates has sustained since Feb. 21.
It looks like the S&P 500 Index may be on or near its weekly lows, although above my projected range. I want to explore the trade idea of going long the S&P 500 here at 10:45 a.m. Central on Thursday. Reasons I contend this is on the price lows, including that price being supported at the daily 20-period simple moving average (SMA) and weekly camarilla pivots, as well as transient intraday signals.
After a year of record closing highs and little to no volatility, it was expected that the stock market would need to blow off some steam. Last Monday, the CBOE Volatility Index, or VIX, surged nearly 116%, its biggest one-day increase since at least 2000.
Last week was one of those weeks where I was completely dialed in and laid out the roadmap very close to the way it worked out. If only I could do that every week. Of course, it helped to have the aid of the time windows. As you know markets peaked in the 610-day window to the August 2015 bottom, which is the Dow bottom.