Will the wild ride continue? Only time will tell.
Correction? Or no correction. It's too early to tell if the frantic selling, and buying, we saw last week will continue. We may have seen the worst of it, but I would not place any wagers on whether the selloff is over.
The benchmark index SPX closed up 38.55 points yesterday, a gain of 1.5% to finish the volatile week at 2619.55. It was hard to judge intra-day price action, as the index had a 100+ trading range. Yesterday's recovery from the wild week still resulted in the index finishing the worst week since January 2016, with a loss of -5.2% for the week. Last week saw the highest overall volume since August of 2011.
SPX 6 month chart
The "fear index", VIX, dropped by 13.2% Friday to close at 29.06, after spiking to a high for the week of 50.3 on Tuesday.
VIX 6 month chart
When I saw the VIX jump to the high of the week, the old saying came to mind: "Be careful what you wish for". Last month we were looking for a rise in volatility to improve the option premiums for the positions we trade, and look what happened. I am looking for the VIX to drop to a level of around 20 before even considering entering back into the market.
I am not in a hurry to jump back into the market and recommend trades, but will continue to be grateful to watch the battle between the bulls and the bears. We will see how next week goes and observe the price action and volatility. More to come in the mid-week update on Wednesday.
Next week's economic news is summarized below:
Monday, February 12
No significant reports
8:00 am Fed's Loretta Mester speaks
8:30 am Consumer Price Index
8:30 am Retail Sales
10:00 am Business Inventories
10:30 am EIA Petroleum Status Report
8:30 am Jobless Claims
8:30 am Philadelphia Fed Business Outlook Survey
8:30 am Producer Price Index
9:15 am Industrial Production
10:00 am Housing Market Index
8:30 am Housing Starts
8:30 am Import/Export Prices
10:00 am Consumer Sentiment
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,