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Market Outlook: Mar. 4, 2021

Contributor:
RJO Futures
Visit: RJO Futures

By:

Senior Asset Manager

Volatility

While vol tends to sneak up on most, I can’t say that we weren’t ready for it.  Recognizing some key players in the FAANG stocks breaking down over the last week, AND the drastic w/w change in our IVOL signal, I actually rented a modest short position over the past few days in “growth” aka NASDAQ.  As I mentioned in yesterday’s letter, we remain bullish on the cycle, but with the VIX and VXN (NQ volatility) breaking to bullish trend in the last 24hrs, I need to stop and respect that signal.  Whether we hold bullish trend for more than a day remains to be seen (I don’t think it will).  Keep an eye out…the Russell 2000 has me interested, but wait for me on this. 

Commodities

Buying/trading opportunities lay ahead.  

*We’re housing some Silver on our books that’s moved against us for a couple of days, but honestly, I see no imminent signs of trouble here.  Silver remains bullish in the model, and more importantly, bullish trend.  If we see a trend breakdown here, we’ll respect that bull to bear phase transition and exit with no questions asked. 

*Copper and Platinum are both correcting, very intriguing dips to look at buying here.     

*Oil/Energy – no dip here.  Despite the massive build in inventories of CL yesterday, we’re +5.00% over the past 2 days. 

China Stagflation?

Something to consider in regards to commodities, is China looks to be moving into a Scenario 3 set-up.  They are likely to begin to see some ‘stagnation’ in growth.  Of course China is the worlds largest consumer of commodities globally. This is something we’re monitoring closely, Shanghai -2.05% breaking trend last night. 

MarketTrendRange LowRange HighNotes
     
SP500Bullish37863876IVOL went back up overnight AFTER the big stock swoon. 
Nasdaq 100Bullish12,59313,298Same thing as SPY, IVOL back up to 23% from 9% yesterday
Russell 2000Bullish21732265IVOL 25% vs 23% yesterday – Russell remains the strongest of the major indexes
10yr YieldBullish1.30%1.55%Still has more immediate upside.
VIXNeutral22.0328.74Neutral trend, caution for stock bulls immediate term
OilBullish58.9563.66had a modest 2 correction, not gunning for the top of our range again. 
GoldBearish17031785Nothing but ominous skies here – could bounce, but won’t get too far.
USD (Cash)Bearish90.2191.41Manage the range – we got you out yesterday. 
EUR/USDBullish1.19861.2157upside down of the dollar.  Manage the range – may be trying to probe lower ground for a few weeks.
Bitcoin FuturesBullish46,32956,957textbook bounce from the low end of our range yesterday/day before

These are proprietary trading ranges from RJO Futures. They are calculated by a customized standard deviation tool.

Originally Posted on March 4, 2021 – Market Outlook: Mar. 4, 2021

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