RJO FuturesCast

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Indices

Possible Tariffs Affecting S&P Volatility

Posted 09/18/2018 12:55PM CT | Greg Perlin

The S&P E-mini is beginning to show some volatility as tariffs, once again, are on trader’s minds. Yesterday afternoon, President Trump tweeted that after the close he was going to announce new tariffs on China. After the tweet came out the market sold off as expected but did rebound into the close.  Early last night President Trump did in fact announce additional tariffs against China. Coming into Tuesday morning, the S&P was up $4 and is currently up $17 as we speak. China did retaliate Tuesday and announced new tariffs on the US. This back and forth continues but the market seems to be ignoring it.  Another important development is the yield on treasuries have continued to climb with the 10 yr. note sitting at 3.01%.  The high of the year is 3.12% and if we can breach that level it could halt the rise in the stocks rather quickly.   Rapidly rising rates could negatively affect stocks.

Talking techinicals, the market is overbought and we see some resistance in the Dec ’18 E-mini at 2620 and more at 2625.  Traders should continue to monitor any fresh news that comes across the wires on trade and be alert to the possibility of the Vix to spike at any time.

E-Mini S&P 500 Dec ’18 Daily Chart

E-Mini S&P 500 Dec '18 Daily Chart

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Greg Perlin

Senior Market Strategist
Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.
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