Some reflections from last week:
- Congress was effective in pushing the Debt Ceiling debate into 2024. The next hurdle is the week of January 17, which just happens to be Jan OPEX. More on that to come!
- RVOL (Relative Volume) continues to decline. This is effective in producing more erratic price action and massive gaps like we saw post CPI last week.
- Equities participants have largely weathered any significant risk this fall and barring more aggressive Fed hawkish talk at the mid December FOMC meeting, we are primed to drift higher to close the year. This doesn’t mean we might not see some liquidation, it’s just that any liquidation is unlikely to get a follow through.
- Crude pushed into the key 74 composite levels and closed back above it. Carry that forward as an area of defense among buyers.
Some insights for the coming week:
- Equities begin the week in a balanced posture. This makes the 5D the key reference. Given where we’re come from, expecting buyers to continue to hold court above the 5D.
- Crude is back the pWVPOC and is now likely to rotate around composite nodes until it can return to a balanced posture. Watch 76 and 78 for more balance
- It’s a Holiday week. Best chance for movement is on Monday if we are going to get some liquidation. Otherwise, RVOL will continue to diminish into Wednesday. Treat Wednesday like you would a Friday.
- Friday markets will be open, but only for half a session.
- Personally, I would love markets to continue to drift higher this week, then we are likely to see some nice liquidation at the start of December.
Here’s the outlook:
VIX Curve: Maximum complacency for the end of the year. We are likely to get some hedging, but at this point, like the summer, we can continue in a period of extended complacency as we are now at a place where we have escaped most of the macro headwinds and many participants want to kick-selling to 2024. Why sell in 2023 and pay taxes, when you can sell in 2024?
Upcoming Development Lab:
Most developing traders we encounter are decent at finding “triggers” that pull them into auction activity. What many lack is a way to identify likely targets for their trades. It’s our conviction that if you don’t have a target…you don’t have a trade. So, we’re hosting a lab to walk through examples for finding auction targets:
Stay up to date with us via our Twitter posts this week.
Define your risk and trade well!