WHAT I'M LOOKING AT THIS COMING WEEK: FOMC, FOMC, FOMC
Even though I don't anticipate doing much trading this coming week running into FOMC, old habits die hard, so, as usual, I'm running through underlyings for possible premium selling setups.
With exchange traded funds, I'm looking for a rank >70 and general implied volatility >35; with individual stocks -- rank >70, implied volatility >50%.
Top Implied Volatility Rank/Implied Volatility Exchange Traded Funds
IYR 71/20
TLT 68/15
XLU 67/19
EWZ 66/38
XLF 66/22
GDX 54/47
XRT 48/21
XLI 40/16
Top Implied Volatility Rank/Implied Volatility Individuals
UNG 97/56
GM 93/31 (Earnings in 52)
GLD 58/20
CSX 85/30 (Earnings in 30)
ORCL 84/25 (Earnings in 4)
GS 82/30 (Earnings in 38)
FXE 71/11
As you can see, there isn't much there that meet my general criteria: EWZ and UNG. When I've played UNG, it is usually as a directional seasonality play, and as you can see by the chart, we've already passed the seasonal low, which historically occurs in Oct/Nov. With EWZ, I'm already in a play.
ORCL announces in four days, so that might be playable, assuming implied volatility ramps up dramatically.
All that being said, it's FOMC week, which usually militates in favor of hand sitting. My guess is that the rate hike's already priced in here, so market movement will be, if anything, "all about the talk" of how the Fed views the economy moving forward. Frankly, this can't really be known at this point. For example, some of the recent market movement in various sectors depends on speculation that a good deal of these stimulatory programs the new U.S. President is proposing come to pass. The reality is that many of these proposed programs (e.g., massive infrastructure improvement) will cost and cost big; set against a backdrop of a now majority Republican Congress that has repeatedly bemoaned the size of the US deficit, it remains to be seen whether these proposals will go anywhere, meet substantial Congressional spending concern headwinds, and have the kind of effect the market is anticipating on the time frame that the market is satisfied with.
One thing's for sure: the US government is a bureaucracy and stuff just never has a tendency to happen "overnight." The question is how patient the market will be ... .
With exchange traded funds, I'm looking for a rank >70 and general implied volatility >35; with individual stocks -- rank >70, implied volatility >50%.
Top Implied Volatility Rank/Implied Volatility Exchange Traded Funds
IYR 71/20
TLT 68/15
XLU 67/19
EWZ 66/38
XLF 66/22
GDX 54/47
XRT 48/21
XLI 40/16
Top Implied Volatility Rank/Implied Volatility Individuals
UNG 97/56
GM 93/31 (Earnings in 52)
GLD 58/20
CSX 85/30 (Earnings in 30)
ORCL 84/25 (Earnings in 4)
GS 82/30 (Earnings in 38)
FXE 71/11
As you can see, there isn't much there that meet my general criteria: EWZ and UNG. When I've played UNG, it is usually as a directional seasonality play, and as you can see by the chart, we've already passed the seasonal low, which historically occurs in Oct/Nov. With EWZ, I'm already in a play.
ORCL announces in four days, so that might be playable, assuming implied volatility ramps up dramatically.
All that being said, it's FOMC week, which usually militates in favor of hand sitting. My guess is that the rate hike's already priced in here, so market movement will be, if anything, "all about the talk" of how the Fed views the economy moving forward. Frankly, this can't really be known at this point. For example, some of the recent market movement in various sectors depends on speculation that a good deal of these stimulatory programs the new U.S. President is proposing come to pass. The reality is that many of these proposed programs (e.g., massive infrastructure improvement) will cost and cost big; set against a backdrop of a now majority Republican Congress that has repeatedly bemoaned the size of the US deficit, it remains to be seen whether these proposals will go anywhere, meet substantial Congressional spending concern headwinds, and have the kind of effect the market is anticipating on the time frame that the market is satisfied with.
One thing's for sure: the US government is a bureaucracy and stuff just never has a tendency to happen "overnight." The question is how patient the market will be ... .