Traders should expect more volatility in the upcoming week. Here is the backdrop and upcoming events to be aware of:
Backdrop
-Last week’s volatility was driven by; slowdown in manufacturing and services, solid jobs and unemployment numbers
-Overall global slowdown
Upcoming events
-Q3 earnings season is kicking off. Earnings expectations are “Dim” according to the WSJ, bad news will be punished.
-China trade talks resume Thursday/Friday. Positioning ahead of the meeting is not good. Breaking headlines will cause dramatic market reactions.
-FOMC minutes will be released on Wednesday, 10/9/19, there is growing consensus that the Fed “has to” lower rates, given the weak manufacturing/services data last week and fed watchers will be poring over every word looking for evidence of that thesis.
Here is this week’s video update:
How should traders take advantage?
-Shorten time-frames. Take profit earlier than normal and expect volatile moves
-Tighten up risk management, take smaller position sizes
-Be willing to sit things out if technical setups are not present
-Watch sector rotation very carefully and look for individual stocks that are not moving with the indexes
As always, I welcome your thoughts, comments and feedback.
Dean