Hello!
After a week and a half hovering around the 4550/455 level, SPX/SPY made a move higher late in the week. The index has been doing a bit of a stairstep higher the past 3 weeks, first pinning near 450 after a strong move higher then doing the same at 455. Now near 460, it’s entirely possible the same thing happens at this level, but there are some things to keep an eye out for that could signal a pickup in vol. The first would be any sign of two-way moves. The SPX/SPY is currently in the midst of a historic run that has only seen 1 day the red of more than 0.5% in the past month. So clearly any move lower more than that, particularly one that sees an acceleration over a few days of larger moves lower would probably be a signal of a little bit of volatility returning. The other would be to the upside. It’s worth keeping an eye on Russell 2000 / IWM as that has been showing some signs the past week of playing catchup to the move in QQQ. On Friday IWM was up nearly 3%. And IWM vol, as measured by the RVX was up 2%. That sort of rising stocks, with rising IV condition, is noteworthy if it turns from more of a rotation from mega-cap to small cap into FOMO buying and froth, with the potential that investors start reaching for out-of-the-money calls. That’s another way vol goes higher and it can mean some powerful moves higher in a lot of stocks, sometimes defying logic.
The big economic news of the week comes Friday with the NFP payrolls/jobs number. The earnings calendar is highlighted by Broadcom AVGO on Thursday. Vol remains extremely low with the VIX near 12.50 on Friday and 0DTE expected moves about 0.5% each day:
Expected Move This Week:
- SPY/SPX: 1.1%
- QQQ: 1.5%
- IWM: 2.2%
0DTE Moves:
- SPY/SPX: 0.5%
- QQQ: 0.6%
Economic Calendar
- Tuesday – ISM Services PMI, JOLTS job opening
- Wednesday – ADP Employment
- Thursday – Initial Jobless Claims
- Friday – NFP Jobs Number, UoM Consumer Sentiment
Monday
- GTLB GitLab Inc. 12.3%
Tuesday
- AZO AutoZone, Inc. 4.0%
- MDB MongoDB, Inc. 11.2%
- NIO NIO Inc. 9.1%
- BOX Box, Inc. 7.1%
Wednesday
- CPB Campbell Soup Company 4.4%
- CHWY Chewy, Inc. 13.8%
- THO Thor Industries, Inc. 6.9%
- GME GameStop Corp. 19.0%
- OLLI Ollie’s Bargain Outlet Holdings, Inc. 8.2%
- AI C3.ai, Inc. 12.0%
Thursday
- AVGO Broadcom Inc. 4.1**%**
- LULU Lululemon Athletica Inc. 5.6%
- DOCU DocuSign, Inc. 9.9%
- MTN Vail Resorts, Inc. 4.9%
- GWRE Guidewire Software, Inc. 6.2%
- CIEN Ciena Corporation 8.0%
Friday
- MOMO Hello Group Inc. 10.1%
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