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Futures Market Outlook For Oct 29,2020

RJO Futures

Contributor:
RJO Futures
Visit: RJO Futures

By:

Senior Asset Manager

US Equities took a nose dive yesterday with the SPY and Nasdaq shaving off 2.8% and 3.0% respectively.  Commodity prices also got whacked with Oil -4.0%, and down another 5.0% this morning.

More….

Soybeans -1.7%,

Copper 0.60%,

Gold -1.7%

Silver -4.3%

You get the picture.  More downside follow through overnight, placing just about every asset class in immediate oversold territory.  Clearly risk off yesterday, and more to come at the opening bell today.  Scenario 4 day yesterday, and more today.  Our probability remains at Scenario 3 at approx. 52% probability – it’s a tightrope.  

Data: 

Jobless claims fell to 751K vs 770K estimate and Q3 GDP jumped 33%.  The GDP data was better than expected, but it’s a backwards looking number, and still below pre pandemic levels y/y.  Big Tech earnings after the bell today – why they’re all reporting on the same day is ludicrous in my opinion.  MSFT reported and beat expectations on Tuesday, and still sold off.  Clearly investors are nervous headed into today’s events, and perhaps booking gains in FAANG in preparation for a higher cap gains tax in 2021?? 

Gold: 

News that Central Banks were net sellers of Gold in Q3 was not taken too kindly.  Gold’s set-up is fairly gruesome, and supportive of more downside in coming weeks ahead.  We didn’t pull the trigger on Gold yesterday, many of you asked – the break below 1875 in our eye’s is an important message the market is sending us.  A break of 1850 could take us down to as low as 1776. 

Oil: 

Covid-19 has sparked renewed demand worries in energy.  OPEC likely to extend production cuts, and next weeks election results (if we get them in a timely fashion) will also be very important for Oil prices.    

here’s 2 ways to look at this tape, opportunistically or fearful – Embrace the uncertainty. We’re going to trade this.  Stay tuned. 

MarketTrendRange LowRange HighNotes
     
SP500Bearish32423423Back to Bearish trend, immediate oversold today
Nasdaq 100Neutral11,05411,613Elevated Volatility component – VXN >39.00
Russell 2000Bearish15271604Back to bearish trend
10yr YieldBearish0.71%0.87%closing in on the low end of the range
VIXBullish29.8940.85Immediate OB – Volatility is fractal, non-trending, and episodic – embrace the uncertainty
OilBearish34.739.67Trend Breakdown
GoldBullish18511916Ugly set-up, we can easily bounce here, but near  to intermediate term suggests lower prices ahead
USD (Cash)Bearish92.6294.13Has a little more room in the range to run
EUR/USDBullish1.16921.1883closing in on the low end of the range
Yen FuturesBullish95.0596.04approaching the top end of the range

Originally Posted on October 29, 2020 – Futures Market Outlook For Oct 29,2020

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