Consider Futures To Combat Market Volatility

2021-12-08

A mid-week stall hit the market after a two-day rebound and bullish traders are recognizing the volatility in this environment.

While the overall market regained its footing by market close, the morning pullback was enough of a pause to draw concern from traders.

Simpler’s traders are still exercising caution in this wild market, especially when volumes are this elevated. Taking a step back to review the overall environment allows time to strategize how to trade various assets as the market takes a breather.

Something to consider in the middle of all this market movement is the volume weighted average price (VWAP). This is a trading benchmark that shows the average price a security has traded throughout the day. VWAP is based on both volume and price, and appears as a single line on intraday charts. Simpler’s traders are looking to see if VWAP stabilizes above key levels, allowing the resistance level to become the new support level.

With so many twists and turns in the market, having another point of reference like this is important.

With all the turmoil in the indices, Simpler’s traders aren’t favoring recent moves as a time to short. The Dow appears to still be in the bullish hemisphere. Simpler’s traders are looking to buy at support or exhaustion levels.

In the futures arena, beans, corn, coffee, and natural gas appear to have potential for buying long as Simpler’s traders await timely setups. Traders are eyeing natural gas futures contracts for energy puts that they can hold onto through the first quarter of next year.

Crude oil has still not given our traders the signals they need and they are still waiting to see how crude oil plays out. Buy signals in the dollar and anticipation of a bounce in gold have traders giving those more consideration.

For Simpler’s traders, current volatility means adapting to market conditions as a trading strategy while considering futures into the new year.