Off the Charts

ES & CL 5 Minute Charts

Wild volatility is currently at levels that are way outside the norm. Between late summer seasonal lull in liquidity, world-dominated market news and computers being the general market itself, price moves spike and slam so fast that it’s tough to follow them on the DOM by eye.

Several times today I had orders filled while the automated stop got blown thru before it could rest on the data feed. Numerous times I had fills completely missed or key levels chopped repeatedly before price took off 100-ticks or so in favor… after my stops were long dead and gone.

Wider stops are not the solution when sideways swings get extreme. Nothing, actually, is the overall solution. With weekly inventory tomorrow, non-farm payroll Friday and the three-day weekend looming, you should expect these same levels of volatility to persist. return to somewhat quieter normalcy should emerge next week and onward. Obviously we all know that these ranges here cannot sustain themselves very long at all.

As for me, I’ll try to be picky about where I get in and when. It’s one thing to look at those price ranges in hindsight and dream about what-if they were captured… another thing entirely to see – enter – hold stop – exit in consistent fashion. A little bit of volatility is a good thing, while a lot is not.

For more daily updates from Austin, visit his blog at Coiled Markets.