Scott Burrill - Market Notes

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Market Note

Bitten by a Tweet

May 5, 2019

As I type this, Markets are down nearly 2% across-the-board on President Trump's Tweet to increase Chinese Tariffs by $200BB.

Starting the week, the SP500 Weekly Option Implied Move was + / - 34 points or a lower edge of 2911, and an upper edge of 2979.

We have already moved two times that this evening in Globex. Whether we close out the week, much less the day outside of these expected moves, time will tell, but the short-term bias is down with the Weekly Magnet of 2936.50, and price currently at 2893 (-1.85%).

Below we observe many references when also compared with our Levels where volume shelves should provide support and potential targets to trade towards or away from this week.

That said, with Implied Correlation, in the midst of Earnings Season, focusing us on idiosyncratic (single stock) factors, I am treating this more as an aberration.

Trends remain Up across weekly time frames; although, it's prudent to dust off the adage that one day does not make a trend; however, it can certainly change one.

In the midst of increasing volatility, we will look at the lower fractal dimensions for propagation outwards, as well as the term structure of volatility and our favorite short-term indicator, Volatility of VIX (VVIX). Recall, our key markers of 100 and 110 demonstrating urgent demand for volatility product.

With Fedspeak, inflationary data and continued earnings releases, the market will look for confirming narrative such as found this evening.

Updated Levels.

If Markets become more violent, we will be back with revised Levels and relevant updates; otherwise, have a great week.

All the best,

Scott

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