Investors take a "pause for the cause" after markets reached new record highs.
After reaching new record levels this past week, the broad markets closed pretty much flat Friday. The market has been churning sideways since the middle of last month, following the rally sparked by the outcome of the U.S. Presidential election.
Analysts said investors have retreated to a wait-and-see mode as they look for more details on the Trump administration and what changes may be ahead.
The benchmark index SPX closed Friday at 2294.69, down -1.99 points or .09%. The index posted a weekly gain of 1% after reaching a new high of 2300.99 on Thursday.
We do not have any open positions on this weekend. Thursday we entered the SPX Weekly Iron Condor for the February 3 cycle to test entering an early entry, and we were given the gift of being able to exit for target gain on Friday It's always a special treat when that happens; not having to take the risk over the weekend.
Below is the SPX 6 month chart:
SPX 6 month chart
The CBOE Market Volatility Index (VIX), a measure of fear in the market, is trading at an extremely subdued level that is more symptomatic of a carefree market. But the mood on Wall Street is anything but, suggesting that the VIX volatility index being below 20 for such an extended period of time may be a sign of turmoil ahead. The VIX closed yesterday at 10.58, down -.05 and just off the lows of the day of 10.3. It is increasingly difficult for option sellers to find decent premium at these levels, so caution is in order.
VIX 12 month chart
Next week we will not be entering the weekly trade a day early. As next week's news outlines, the monthly Employment Situation Report is being released Friday morning, and it is too risky to have just entered the weekly Iron Condor with the potential volatility the payroll report sometimes brings. We will hope there is at least some volatility increase over the next week to be able to enter a weekly position next Friday for the February 10 cycle.
Next week's economic news is highlighted below:
8:30 am Personal Income & Outlays
10:00 am Pending Home Sales Index
FOMC Meeting Begins
9:00 am S & P Case Shiller HPI
9:45 am Chicago PMI
10:00 am Consumer Confidence
8:15 am ADP Employment Report
10:00 am ISM Manufacturing Index
10:00 am Construction Spending
10:30 am EIA Petroleum Status Report
2:00 pm FOMC Meeting Announcement
8:30 am Jobless Claims
8:30 am Monthly Employment Situation Report
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,