We Have Got Movement

With the summer vacation season more or less behind us we are starting to see directional movement in several major verticals. Equity futures finally managed to burn through overhead resistance, and notwithstanding non-stop bearish reporting in the financial MSM, are heading toward a retest of their all time highs. So if you were trading the per news last week you are going to feel it in the groin region come the opening bell.

With a historical Sharpe ratio of 0.53 week # 37 certainly puts the wind into our backs for this week. But let’s not get complacent for we have three more weeks of seasonal drag ahead of us.

With all the BREXIT drama and the ECB interest rate decision a good amount of volatility is pretty much baked in.

Last week we actually exceeded the expected move by about 10 handles and I wouldn’t be surprised if we would do the same this week. So I suggest err on the cautious side with your respective projections and when it comes to setting your stops.

ES 2950 is where the short term bearish case died. Great spot to be long as well as the upper range was nicely defined. There is a small possibility of a retest and if it happens I plan to grab a long position.

BTW, if you bought long calls last week you will see your premiums drop due to a crush in volatility. If in doubt simply play a call spread which mostly  inoculates you against vega and theta risk.

More market analysis and setups below the fold for my intrepid subs:

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