Futures Trading Update

Futures Market Insight w/John Caruso – 10/22/2019

Posted 10/22/2019 11:19AM CTJohn Caruso

A couple of notable developments recently that you won’t read in the WSJ or see on CNBC – Implied volatility is now signaling complacency by the bulls and capitulation by the shorts in the stock market. The VIX short position is now rivaling a 3-year high.  What could happen from here? Well, we’re on the brink of a Fed meeting on Oct 30th.  I think there’s a rising probability that they attempt to pull-off a “Hawkish Rate Cut”.  That’s where the cut the Fed Funds BUT signal a pause in the rate cut cycle. I think that would be quite the “trick” and not a “treat” for markets.  So be on guard for that – AND yes I will short the S&P 500 if we see 3030.00. 

Gold- interesting spot we’re at. We might be at the crossroads in the near-term. Long-term we’re bullish, but near-term action will be predicated upon risk sentiment in markets and ultimately the U.S. Fed. Will they be dovish enough to scare out more of the dollar bulls? I think the next big move in gold happens when their a concerted effort by the Fed to devalue the dollar and press the stimulus button a little harder so to speak.  Until then I’ll continue to manage our risk range. 

Oil-  a little jumpy this morning +1.36%.  You know we like oil, and are currently carrying a small long position, and will officially hit the buy button and move to full position if we see a pull-back to the low end of the range. Demand is likely to fall more in line with supply as we move into the tail end of the year and out into 2020 and with the new IMO laws going into effect, along with the Saudi Aramco IPO, we feel Oil can benefit from those too headline driven events.  Geopolitical risk is still very much being discounted as well.

Bonds- It’s quite possible that the cycle lows are in – a matter of fact it’s probable.  BUT, a trade higher is still very much probable with the complacency/capitulation signals we’re getting in the Equity space. 

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. 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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