Volatility picked up this past week, but it doesn’t really seem like it. The S&P 500 closed right at the new all-time high of 2182.87. But that was less than 10 points higher for the week.
The action did see a drop below 2150 which shifted some traders’ sentiment.
Many of our traders came into Friday with a generally bearish inclination but that changed quickly as the SPX rallied and broke up through resistance.
The VIX fell 8.3 percent to close the week at 11.39, while the VXST, the 9-day Volatility Index, closed at 9.18. Both had the lowest close in two years. This came even as the actual volatility picked up with the movement of the week.
was one of those traders that come into the day bearish, looking to sell rallies “unless and until we get a close on the ES over 2165. If that happens then my daily sentiment will be bullish until the next sell signal.” So clearly his sentiment changed quickly with Friday’s action.
came into the day neutral, but he too had his caveat “I am neutral today, unless the SPX gets above its resistance zone.”
remains bearish on the S&P 500, but is not short. He is generally looking for a sell-off through August before the market starts to run higher again.
Neil is bullish at least in the very short term. He mentioned that he saw follow through on Monday on the S&P 500 to the upside.
was one of the traders that was bullish throughout the end of the week and coming into Friday. He continues to be bullish.
was another trader that was bullish on Thursday (“and long”). She wasn’t willing to commit long term in front of the numbers this morning. And that ties back to an interesting comment she made during one of her Live Trading Sessions.
She brought up the fact that different time frames might was well be entirely different underlyings. It is the reason that asking a good trader whether they are bullish or bearish is such a hard question.
They might be bullish long term, but bearish over the next couple of days or weeks. Or they might be bearish from certain levels or bullish after the pullback.
In the SimplerCast (https://soundcloud.com/user-169864316/simplercast-08-04-16-john-carter
) this week, John pointed out that August is usually a low volume month which can make for a quiet market - or it can see a lot of manipulation as no one is around.
He further discussed Tesla (TSLA), it’s lack of movement on earnings as well as its general volatility and huge short interest. He talked Apple (AAPL) which he compared to a quiet bank stock as it’s volatility has quieted down. He went on to discuss oil and gold – as well as silver - which he is bullish on, as are a few of our other traders.
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This article was written by Simpler Trading's Editor-in-Chief, 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.