Resistance Prevailed |

Last Week’s Highlights at IVolLive:

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Not Too Hot, Not Too Cold

March 27, 2023

Last Wednesday, the Federal Reserve (Fed) raised interest rates by 25 basis points. The market's reaction? At first... mildly happy. By the last hour of trading, not so happy.

Source: IVolLive

You can see this action at work in this one-month chart of the S&P 500 from IVolLive. As the markets fell going into the last hour of trading on Wednesday, volatility spiked. This is the inverse relationship we'd expect.

However, once traders had time to digest the news, they realized all was not lost. The Fed indicated plans to potentially slow down the pace of interest rate increases. This is good news as Mr. Market has not been a fan of rapid increases.

Removing this uncertainty could prove to be a major tailwind for the market moving forward. Remember, the market hates one thing above all else: uncertainty. Any time a major item of uncertainty is removed, we look to buy.

Speaking of which, the FDIC has found a buyer for a large chunk of Silicon Valley Bank's assets. First Citizens Bank will buy $72 billion of the failed banks assets, at a $16.5 billion discount.

The orderly handling of the Silicon Valley Bank carcass will help soothe investor concerns in turn, lowering volatility. Speaking of which...

The CBOE Volatility Index (VIX) remains volatile but overall trending lower over the past week as fears of a full-on bank run have receded.

Source: IVolLive

The jagged mountain peaks formations tell us that volatility spikes are still a thing of the present, however. On spikes, we're looking for opportunities to sell options (since premiums are inflated); whereas on drops, we are looking to buy options (since option premiums are depressed).

Gold Continues to Outperform

Gold has been a safe haven for capital throughout the banking chaos:

Source: IVolLive

Using this one-month chart from IVolLive, we can see that golds price (the blue line) continues to march higher. Implied volatility (green line) and historical volatility (orange line) remain elevated as well, making gold and select major gold mines like Barrick (GOLD) and Newmont (NEM) interesting potential targets.

Summing Up

The banking crisis, while stressful, might have solved a major problem for the Fed. It eliminated billions in market "froth" that could weigh down inflationary pressures.

In turn, this could accomplish what the Fed set out to do by raising interest rates.

Time will tell, but under current market conditions, tech, FinTech, and gold look interesting as potential trade targets.

Previous issues are located under the News tab on our website.

Disclaimer - This information is provided for general information and marketing purposes only. The content of the presentation does not constitute investment advice or a recommendation. and its partners do not guarantee that this information is error free. The data shown in this presentation are not necessarily real time data. and its partners will not be liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use or reliance on the information. When trading, you should consider whether you can afford to take the high risk of losing your money. You should not make decisions that are only based on the information provided in this video. Please be aware that information and research based on historical data or performance do not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.
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