RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Chasing blue waves, red waves, and other nonsense…..

Well, our Implied volatility signals wound up being correct – ahead of the election Tuesday, we saw MASSIVE implied Volatility PREMIUMS in the stock indices. For those that have been following for a while now, know that when you see IV Premiums, it’s a strong indicator that suggests investors/Wall Street was heavily hedged for the downside. If we know anything about markets, it that they tend to please the least amount of investors. We saw a strong move lower in stocks last week, only to see a massive reversal back higher with the ATHs back within reach. On the other side of that, the Bond market has been showing a massive short position being built in over the past month, typically another counter indicator (at least in the short-term), Bonds made one of their largest percentage moves EVER inside of a day on Tuesday night.  Now what are we looking for moving forward? We’ll wait and watch to see if the IV Premiums sweat off (they already are), and turn into DISCOUNTS which is a classic complacency signal, usually coupled with an immediate overbought condition. 

Commodities:

Nearly the entire complex is signaling immediate-term overbought.  Grains, including Soybeans, Corn, Wheat are all trading at the top end of the range, and we expect buying opportunities will present themselves from better prices. Our Natural Gas position, unfortunately has been front running this OB condition in equities, we’ll address this later – but NG immediately oversold right now (again). 

3 Key Markets to Watch:

Gold/Silver– big upgrades in the charts following yesterdays break-out. Platinum prices are also beginning to join in, following there immediate oversold levels last Friday. 

Oil- signaled immediate-overbought yesterday, but we’re looking for signs of a bottoming process here. Oil has been certainly the lagging commodity since we went bullish on Commodities back in June. 

US Dollar– pounded to the low end of our range, and now immediate oversold. You could easily see a correction in commodity assets in the next coming week or 2 just based off of the immediate-term oversold status of the Dollar. This is important to watch. 

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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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