Weighing the Week Ahead: Storm Warnings

We have a normal economic calendar. Tuesday’s election will take center stage. Markets have less than expected interest in the election. Partly this reflects confidence in a split outcome, with no major policy changes.

I expect pundits, especially if encouraged by early-week trading, to focus on the signals from volatility and markets declining below technical support. Many will be asking:

How should we react to these storm warnings?

Last Week Recap

In my last edition of WTWA I guessed that the punditry would move away from daily attempts to interpret market moves and look more closely at the upcoming mid-term elections. That was mostly wrong. There was enough daily volatility to maintain media attention. There were some stories on the election, but mostly of the “horse race” variety, not material very useful for investors.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring the futures chart from Investing.com. The image posted here shows a static view. If you go to the site, you can check out the news at various points during the week and adjust the view in many other ways. Since futures trade when the stock market is closed, you can also see those moves.

The market gained 2.7% and the weekly trading range was 5.8%. Both were extremely high. I summarize actual and implied volatility each week in our Indicator Snapshot section below.


Congratulations to Josh Brown on his tenth blogging anniversary! Readers of “A Dash” are familiar with him as a source I frequently cite. Josh has a special role as a blogger committed to the interests of individual investors. I reviewed his first book in January 2013 and noted the strengths of both has blog and his book. His traits are a guide for would-be-bloggers. They would need his honesty, talent, and ideas. Here is a conclusion from my review:

In our office we give Josh our highest accolade: We “unmute” the TV and back up the TIVO to hear what he has to say.

I have also frequently recognized him as a winner of the Silver Bullet award – taking an unpopular position that helps people see through the smog of bogus contentions.

Please read Josh’s eloquent post about what his writing has meant to him – especially the importance of readers and supporters. As one who has shared many of these experiences, I have a special appreciation for his comments. I have the same feelings toward my readers, supporters, and friends. You really cannot make it as a writer without this kind of encouragement.

I wish Josh another ten years and more!

[I have never spoken with Josh in person or on the phone. He is a blogging and email friend, but one who makes readers and correspondents quickly feel a personal connection.]