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.

Now what:

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?

Maybe the new normal is 25 to 45 in the VIX ?

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.

USD index working on a bottoming formation:  Support 96.60, 96.49  –  Resistance 96.85, 97.25

Brent Crude:  Support  37.25, 35.00  –  Resistance:  37.75, 38.15, 39 20

Contact us if you are interested in receiving real time trading signals. In doubt? Check out our track record below!

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
LONG Austevoll Seafood ASA (AUSS:xosl)2020/06/0276.7572.00SPREAD TRADE79.00+2.93%
SHORT Leroy Seafood Group ASA (LSG:xosl)2020/06/0256.75SPREAD TRADESPREAD TRADE58.50-3.08%

Visit our Position Tracker to look at all of our realized trades and proven track record! 
2018: 45 Trades, Hit Ratio 53,66%, Profit +35,87 %
2019:   31 Trades, Hit Ratio 45,16%, Profit +26,97%

– Mark W

Share if you found it interesting!

Leave a Reply

11 − seven =