So That's What Risk Off Looks Like!
Yesterday we saw the market take in the combination of a worried Fed and a potential second wave of Coronavirus in many places.
If you throw in a USA in turmoil and an administration that is having troubles prioritizing and building unity, we saw the following:
WTI Brent oil down close to 10%
S&P 500 down close to 6%
VIX index up to 48, almost a 50% move
We saw big moves in the smaller currencies and the USD bounced.
We look for a bounce to sell into today, and feel that the closing levels today will be important.
Volatility seems to wearing a new hat these days. Looking back to 2012, and further, volatility has been relatively tame with spikes every so often that saw the VIX index bounce to the 30 level. But these bouts of risk off usually dissipated relatively quickly and with rates being lowered and QE we saw the VIX remain between 10 and 30 for the most part a stable vol environment. We find it interesting that even during the recent strong equity market rally since the lows in March, volatility managed to hold above the 24/25 level. Yesterday saw a large bounce on the back of an almost 6% drop in equity markets. We know where we have the Central banks of the world and we know what fiscal policy will look like globally, so what is the market worried about?
S&P 500: We had 3,000 as target on our sell recommendation yesterday, hit that, would like to see bounce to sell into.
On the daily we see good support at just under 3,000. Would rather sell if it breaks through, or on a bounce up to 3,050
Support 3,000, 2,980, 2,850 – Resistance 3,050 (sell level) 3,110, 3,210 * key level, negates down move started yesterday.
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price||% Change|
|LONG Austevoll Seafood ASA (AUSS:xosl)||2020/06/02||76.75||72.00||SPREAD TRADE||79.00||+2.93%|
|SHORT Leroy Seafood Group ASA (LSG:xosl)||2020/06/02||56.75||SPREAD TRADE||SPREAD TRADE||58.50||-3.08%|
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