While the 42nd week of the year (which are moving into) has averaged a retreat from the typical peak (which connects to this last week) we don’t have to abide that granular average. From the latter perspective, the expectations around seasons could not put us in a worse situation. In the former column, we have: the threat of recession, purposefully-restrictive monetary policy and an abundance of pressure points to trigger systemic threats. Shifting our assessment of the market’s broader influences, there are two general forces for which we need to follow: contemporary factors and seasonal influences. That said, there are few, high profile listings in the week ahead that would be expected to waylay the natural evolution of risk trends.Ĭhart of S&P 500 with 20-Day SMA, 1-Day Range of Change, 2 to 10-Day ATR Ratio (Daily)
To demonstrate the influence of that expectation factor, the 2 to 10 day ATR (average true range) offers meaningful context. The ‘anchor’ that this represents was represented well in the transition from an exceptionally quiet stretch pre-CPI and an enormous charge in volatility after the release. That said, lifting the veil of anticipation allowed for volatility to unfold. While the headline figure’s push to four decade highs was impressive in economic terms, it wasn’t exactly a dramatic shift in the course of systemic fundamentals. Through the first half of the week, the anticipation for the Thursday US CPI seemed to cast a restricting fog over the global markets. The flippancy that can generate was on full display this past week. At present, the market’s sensitivity to risk trends and propensity for volatility is a top concern. I am a firm believer that ‘market conditions’ is an overriding influence of the financial system with notable distortion on whether technical levels or event risk will render a definitive impact or target assets or not. There are those that consider themselves acolytes of fundamentals and technicals, but those are not the only market influences for which traders need to keep track. Market Volatility is the Principal Concern
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