Volatility reigns as China woes triggered the worst opening week in history.
The monthly employment report released Friday indicated the US added 292,000 new jobs in December, above the consensus of 215,000. The unemployment rate remained steady at 5%, but the positive labor report did not boost the market.
The benchmark index SPX closed down 21 points yesterday, -1.1% at 1922. The selloff represented a weekly loss of 6%.
We have no open positions on this weekend; it was too risky to enter into the SPX weekly Iron Condor Friday. The SPX 6 month chart is below, which doesn't present a pretty picture. Many analysts say that the first two weeks of January are indicative of the trend for the year, so we will wait to see what next week brings before any conclusions. In the meantime, we will continue to trade the plan according to guidelines.
SPX 6 month chart
I felt it was also worth posting the three year weekly chart of SPX. This week's drop brought SPX down significantly from the highs, and the Average True Range is creeping towards the upper area so we are likely to see continued volatility.
SPX weekly chart
The CBOE's volatility index rose sharply as the market dropped yesterday, the "fear" index closed at 27.01 up 2.02 points or 8%. This is now significantly above the historical average of 20.
VIX 6 monthly chart
Next week brings a fair amount of economic news towards the end of the week; a recap is below:
10:30 am EIA Petroleum Status Report
2:00 pm Beige Book
8:30 am Jobless Claims
8:30 am Import & Export Prices
8:30 am Producer Price Index
8:30 am Empire State Manufacturing Index
9:15 am Industrial Production
9:55 am Consumer Sentiment
10:00 am Business Inventories
Next week is the planned entry for the SPY Iron Condor for the February monthly cycle. Monday will be 39 days to expiration; so we will plan to enter the position sometime next week depending on market conditions and available credit. For those unfamiliar with the trade, guidelines were last posted on August 20, 2015, and the article can be found at this link: Link to Articles
Position updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,