Some thoughts to start the week:
- When an auction fails to get follow-through (Thursday’s sellers) it can begin a chain reaction of chase and cover as we saw on Friday.
- The VIX curve is back to full complacency as we head into CPI, PPI, & OPEX. Expecting some contraction which will likely stall the rally higher for the week.
- The Debt Ceiling is back in play this week, but looks to be able to push toward January, which is why we’ve not heard much about it, nor will it likely impact markets until 2024
- If you don’t know what “reflexivity” and “option convexity” are, it’s probably a good time to start learning. It’s of my opinion that even if you don’t trade options, you’d do well to understand the interplay of options on directional markets. We are living from OPEX to OPEX these days.
Here’s the outlook:
VIX Curve: In two weeks, we’ve gone from the verge of a full inversion to as much complacency as we’ve seen all year. It’s another poignant example of reflexivity and options convexity in play. Now, with OPEX on deck, we are likely to see some tightening for the week with CPI and PPI on deck. However, the holiday week behind that is likely to then burn it off.
Stay up to date with us via our Twitter posts this week.
Define your risk and trade well!