Simpler Sentiment – Weekly Wrap Up 10/28/16

After gapping higher on Monday, we have seen four straight days of selling in the S&P 500. We were on pace to close flat on the week above 2140 but then the news hit midday and we slipped down to 2120. We have regained some of that ground, but will still close lower on the day and the week at current levels.

The Nasdaq 100 followed a similar pattern, as did the Russell 2000, but the latter is at the lowest levels since early July. The VIX pushed back above 16, topping 17 at the worst of the selling today. The VXST, the 9-day Volatility Index, was up near 19 and is now around 17.

This could be a very interesting weekend and next week also has several economic numbers to factor in, as well as the Fed meeting.

Chris said he thinks the S&P 500 will be off by 50 points next week – of course that was when the SPX was up at 2140, so he is already making up some of that ground already.

Tucker still doesn’t see much happening between now and the election. He does add thought, that “one thing that could change that is if the Fed announces next week that they will raise interest rates. “Most people believe that they will wait until after the election to make that announcement.”

Tony was riding high on this bearish trade in the treasuries this week. “I am 100% flat over the weekend and I do not have a clue … Looking to sell ZNZ (10 Year Treasury Futures) above 13000 again.”

Interesting links from the week:

There was an interesting story about options trading going into the election, but that may be beside the point after today’s news… (http://www.reuters.com/article/us-usa-election-options-analysis-idUSKCN12O001).

There was a great interview that touched on the intersection of philosophy and trading, my two favorite subjects (http://www.bloomberg.com/news/articles/2016-10-17/what-slavoj-i-ek-can-teach-you-about-playing-poker-and-trading-the-peso)

There is another new index from CBOE – this one based on the smile, which I will talk about in Monday’s Sentiment email (http://ir.cboe.com/press-releases/2016/10-25-2016-202356984.aspx)

And Barrons had an interesting basic post on how to use options (http://www.barrons.com/articles/how-to-use-options-to-beat-the-market-1477415121).

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

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