After an eventful summer, U.S. stocks appear to have hit a pocket of calm. Over the past few sessions, trading volume has dwindled, while major indexes have mostly drifted sideways. Investors should enjoy the quiet while it lasts.
Because the options market is apparently bracing for an outbreak of volatility beginning later this month. In commentary shared with MarketWatch on Monday, Matt Amberson, founder of ORATS, called this period “the calm before the storm.” According to a Dow Jones Market Data analysis of options pricing data, expected daily swings in the S&P 500 are expected to increase by roughly 50%, on average, beginning on Oct. 28, as the Federal Reserve announces its next decision on interest rates. What follows is a series of potentially market-moving catalysts.
The main event will be the Nov. 3 midterm election. The busy period will conclude with the Nov. 6 jobs report for October. Chip stocks have been on a wild ride.
What comes next?Play video: Chip stocks have been on a wild ride. But options traders are bracing for more action beginning later this month, as investors run a gauntlet of catalysts including Fed Day, a number of key earnings reports, the midterm elections and the October jobs report,” Amberson told MarketWatch via email. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it.
I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. The Cboe Volatility Index , known as Wall Street’s “fear gauge,” has been trending lower for months, even as individual names within the S&P 500 have tallied some big swings, as stocks in different sectors have increasingly moved in different directions.
This intense dispersion beneath the surface has helped to keep a lid on volatility at the index level. When stocks linked to the booming artificial-intelligence trade have struggled, so-called “non-AI” stocks have ridden to the rescue, and vice versa. Whether this string of potentially market-moving catalysts might be enough to drive volatility at the index level remains to be seen.
Extract — continue reading at the source.
