Scott Burrill - Market Notes

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Scott's notes
Scott's Market Notes

Not All Clear Yet

Jan 21, 2019

For the shortened week, the option implied move is + / - 41 points or an implied volatility of 13.89%.

That implies a range of 2629 to 2711 in the SP500, or back within the volatility box (~2600 to ~2800) we identified back in early December from which the breakdown (Act II) precipitated the collapse and ultimate new, Fed Talking Points (aka Powell Put).

Tactically, inside the volatility box is ideal for Level-to-Level trading, as we demonstrated in September through November.

It's an active week for potential catalysts from Earnings Releases to the on-going geopolitical news.

While the Weekly Trend is now positive on one of my trend models, I am cautious since 96% of the SP1500 is above its mid-Bollinger Band -- the second highest reading in 20 years. This suggests short-term overbought conditions and a pause at 2700, or ideally a short-term correction, to enter into on a pullback provided the Weekly Trend remains Up.

Price logically should stall and reverse at 2685.50, just as it should have at 2627 last week; however, a violent negative gamma squeeze propelled the market higher Friday. Above 2685 targets another pause at 2700. The opposite is more short-squeeze, propelling the market higher. Recall, if what we anticipate fails to occur, then the opposite is more reactionary.

All the best,

Scott

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