More Volatility

Outlook 02/12: Following last week's roller coaster ride, U.S. stock index futures are up by 1.2%, but it's too early to sound an all-clear on volatility. Another upcoming challenge will be the release of U.S. consumer price data on Wednesday. Economists are looking for "core" inflation to rise 1.7% over the prior year. This expectation is below the Fed's 2% target, but with investors recently attributing higher wages as a sign of inflation to come.

/ES Value: YVAH 2625 YPOC 2604 YVAL 2575

/ES Plan: On Friday market closed balanced but within a lower range (2619-2586). Overnight is bimodal (LIS 2638) moving above Yesterday's value, so we've these options:

A) If market remains above LIS 2638 with bullish internals, try to be a buyer leaning on 2638-2640 towards ONH 2655 LVN 2557 and PBT 2675. 'Look above and fail' is a signal of weakness.

B) If market starts to move below LIS 2638 with bearish internals, try to be a seller leaning on 2638-2640 towards YVAH 2625 GAP 2618 and LVN 2614. 'Look below and fail' is a signal of strength.

Tips: Market is still wild and thin again with currently normal rotation of 7 pts compared to 2.5 pts a month ago. That means that the usual stop of 5-6 pts has a high probability to be filled. If you can't trade using wide stops (15-20 pts), I recommend to trade 1/3 of your normal size or stay aside until the markets stabilize and recover a 'normal' regime.

Today's Economic Calendar

2:00 PM Treasury Budget

Disclaimer: All information on this outlook is for educational purposes only and is not intended to provide financial advice.

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