Well, welcome to Q4 2020 I suppose….

Yesterday our Implied Vol signals were flashing -6% in the Nasdaq which put it in the 95% percentile of “complacency” on a 10yr look back. Volume also declined on yesterday’s punch higher in stocks, another signal that the “big” money had little conviction at those price points. The President contracting Covid-19 or not, we still think there was a high likely hood of waking up to a morning such as this. Copper prices fell -5.5% yesterday, along with Oil’s -3.5% plunge – two economic bellwether commodities collapsing like that intraday is usually a sign of trouble. We bought bonds yesterday, rather than shorting stocks – which was the correct call. The 10yr yield has backed off approximately 6 bps from yesterday’s open, giving us a nice bounce in the 10yr Notes.  Albeit, not a good thing having the leader of the free World Covid-positive, we still think the stimulus bill is likely a more important factor for markets in the near-term. Yesterday we took our first steps in positioning for “Risk-off” in Q4 2020.

Sept Non-Farm Payrolls aka Employment Report: 661K jobs created vs 868K expected; 7.9% UE rate vs 8.2% expected

Global Equities:
USA: Sp500 -1.47%; NQ -2.08%; RTY -1.68%

EUR: GER -1.10%, UK -0.88%, FRA -0.88%

Asia: Shanghai -0.20%, KOSPI +0.86%

VIX: Signaling immediate overbought overnight to the top of the range.  >10% bounce in the VIX last night. 

Commodities Overnight:

Metals: Gold/Silver flat following a volatile overnight session. Gold may have some more “gas” in the tank, however we still are of the strong opinion that the US Dollar may attempt to reverse higher in the near-term providing us better entry points in Gold. 

Copper: The “Dr” got trashed yesterday -5.5% signaling impending doom – and it was correct. Copper is a top long in Scenario 3, but that’s in the past now. We expect Copper to underperform going forward. 

Oil– down -4.29% overnight to 37.00, now signaling immediate oversold, but flipped back to BEARISH TREND yesterday

Agriculture:
Soybeans down -0.88%

Corn down -1.18%

Coffee down -0.93%

Sugar down -1.60%

Looks like a risk off equity/commodity basket to me.  Good Luck today, plenty to do.  We’ll be in touch.

800-669-5354312-373-5286Series 3 Licensed

John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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