Market Volatility Ahead … Are You Ready?

In this evening’s TradeFinder LIVE webinar, Rob Roy told attendees that he is expecting markets to, once again, become more volatile in coming weeks. As you can see in the chart below, the VIX had settled down to the level of 20 after spiking up to 37 in early February. As you’d expect as option traders, we like volatility… and our trade activity tends to increase in more volatile periods.

In fact, at the beginning of February we closed out 7 profitable trade during the elevated volatility. As the VIX dropped back down to 20, our trade activity has been quiet… in fact we didn’t close out any trades until the 19th of Feb when volatility started to tick up again.

So what’s the point of this discussion?

The significant point is that as a subscriber, its time to get ready to expect a number of new trade alerts! (And if you’re not a subscriber then might be a good time to join). If Rob is anticipating greater volatility then we should expect to see more trade alert activity.

Rob pointed out the fact that today, despite falling below the 10-day moving average, the market re-tested the Fibonacci level at 381 and even ended slightly up after a pretty ugly open (see chart below)

With interest rates having jumped significantly, we now wait to see if the Fed keeps pumping in liquidity via more stimulus. If there is stimulus, how will it be received and how will the markets react? Will it be enough to build confidence and see the market resume it’s upward grind? … or will it be seen as inadequate in the face of other economic pressures and result in a bear market so many are expecting?

Either way we can expect a volatile time in the market … and that spells opportunity – so expect increased trade alerts in March!