Scott Burrill - Market Notes

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Scott's Market Notes

What a Difference a Week Makes

Jun 9, 2019

Good Afternoon:

Last week Market Indices violently bounced off of extreme oversold Levels surpassing the option implied move by two sigma. The implied move was 58 points and we moved around 121 points, with Technology leading the way.

As we begin a new week, Futures are modestly higher in Globex on the US-Mexico News.

Looking forward, there is a lot to consider this week.

The Option Implied Move in the SP500 is + / - 47 points or an upper edge of 2920 and a lower edge of 2826. As usual, we will look to the Weekly Magnet to also guide bias, which is markedly Up.

Trends have also flipped back into the positive; however, governing challenges to new highs may be the Financials, particularly depending on what Bonds do. I can't stress enough the interplay between Bonds and Financials to the overall health of the Market at this juncture.

We better get indications of an ease in interest rate policy next week, and signaling of a future cut in Fed Funds. July's meeting on the 31st is forecasting a cut now at 77%. The question the Market is awaiting now is the magnitude and number of cuts in 2019.

For those that don't have access to a Bloomberg, the Daily Treasury Yield Curve Rates is a quick place to keep track of rates.

There are a lot of different Yield Curves to focus on, but convexitymaven.com had a great chart last weekend demonstrating that pros are willing to purchase 5-year bonds, five years from now at a rate below the current risk-free rate.

Something is rotten in the state of Denmark, and as a former Bond Geek, this is the smart money tipping their hands and worth watching as we just may be in store longer-term for unprecedented volatility.

This is an important week for Economic Releases with inflation results and JOLTS. The Fed is in a quiet period awaiting the latest FOMC Meeting on the 19th.

With Implied Correlation more relaxed, Conferences and those presenting companies may provide some catalysts.

Updated Levels.

Have a great week.


All the best,

Scott

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