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Futures Market Insight w/John Caruso – 10/16/2018

Posted 10/16/2018 8:18AM CT | John Caruso

Bull and Bear Market

First look at markets-

US Equities:
Can earnings save the broader stock indices?  Expectations are quite lofty, and on the back of 9 straight quarters of expanding corporate profits and earnings growth can we reach a record 10 is what everybody wants to know.  All I know is that the y/y comps are only getting more difficult from here on out.  Thus far, the earnings data has been very mixed over the past 24hrs, and stocks are bouncing off of yesterday’s lows (SP500 +0.64%, NQ +0.92%, and Russ 2K +0.60%.  All in all, the price action is consolidating in a tight(er) range following last Wednesday and Thursday’s washout in US equities.  All of your FAANG components are now signaling bearish trend (AAPL is the lone component still signaling BULLISH trend but barely).  Another flurry of earnings data will hit the board prior and post market hours today, as always, we’ll keep you updated on anything noteworthy.

VIX:
Market vol has cooled off since last Thurs-Friday, and the VIX is beginning to pair back inside of 20.00. Manage the range in the VIX that we provide you.  One of my favorite indicators over the past several years has been when the top of our VIX range pairs/correlates with the low end of our SP500 range and vice versa – very strong correlation for a reversal of the immediate trend. 

Bonds: 
Flat to lower this morning.  I must say, the price action following the stock market retreat was quite disappointing.  When I reviewed my analysis, one thing hit me – we’re still operating on Q3 data and the Fed is still working from a very hawkish viewpoint on rates. Yesterday’s Retail Sales data was quite disappointing for economy bulls as we saw a m/m deceleration to 0.1% vs expectations of 0.6%.  Prior to that, we saw inflation via PPI and CPI also decelerate last week.  So, some of the data is beginning to manifest that supports our theory (even sooner that we thought) of a growth/inflation decel environment.  Bonds into year end and thru Q1 ’19 is still our call. 

Oil:
Off 0.60% this morning to 71.35. We expect a test under $70 a bbl in WTI, before seeing a rebound. Tensions bw the US and Saudi’s over the disappearance of the Washington Post reporter Jamal Khashoggi as top level officials on both sides have scheduled a sit down to iron our any misconceptions that there may be. 

Gold:
Flat to higher. We have now moved to trading Gold with a bullish bias, however, from the right price. Our call is “do nothing” in gold for the time being and we’ll be sure to signal you when the time is right.  Manage the market ranges that we give you. 

 

Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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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. Prior to becoming a broker he did some individual trading on his own, where he first began to study and interpret different market strategies and ideas. In 2006 John moved over to Lind-Waldock where he began to service clients as a professional broker. He joined RJO Futures in 2011.
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