Friday’s Black Friday introduced significant valuations also on the markets and we met with large anomalies also from the perspective of the Option flow, which we automatically analyze with our software. While we observe a strong directional movement already during the Globex session, it is not worth fighting the trend and it is much safer to try to join it wisely. Anyway, the Gamma Intraday strategy assumes that in the event of breaking the extreme level, we do not fight the trend but try to join the movement. Gamma -1 was broken in the markets during the Overnight / Globex session.
From a medium-term perspective, it’s worth going back to the Virgin VPOC levels to assess the potential for moves. The market will try to retest them, the only question is when it will happen. Let’s look at the situation on the main instruments:
- DAX – a clear downward trend that was deepened during Friday’s session. The price is close to the 14946 level, so it should be retested sooner rather than later. The remaining Virgin VPOC levels are above the current price, showing upside potential on the German index – starting at 15,909 with a potential to 16,158.
- S&P500 – Friday’s panic on the American stock market may only be the beginning of the sell-off. It has been known for a long time that the FED has been pumping sky-high amounts of money for a long time, which causes continuous increases in the S & P500. From the Virgin VPOCs perspective, there is a lot of potential for declines through 4471.50, 4310.25 and ending at 4234.25. This does not negate long-term gains, but it is definitely worth keeping an eye on the downside opportunities.
- Gold – despite declines in the main stock exchange indices, we would expect gold to increase significantly in line with the inverse correlation. However, we saw a moderate drop in price on Friday’s session and only the end showed the demand entry. Relatively close is the 1763 level, one of the Virgin VPOCs below the current gold price (at the time of writing). The growth potential of Gold looks much more interesting due to Virgin VPOC points at 1817.2 through 1863, 1875.7 with potential at 1885.2
- Crude Oil – a clear discount on “black gold” on Black Friday, which will surely please drivers at gas stations;) From the perspective of potential, there is a lot of room for growth, with the price reaching 81.37 and 84.22.