Why are we seeing some volatility with no real catalyst?

Markets are living creatures that need feeding and looking after, like a pet. If they don't have something to concentrate on then they get bored and restless. Right now we approaching year end and have all but a few big events left to trade

For trading central bank action we're more or less done. The Fed is the biggie but the market is sure of a hike so it's not concentrating on that. Here's the list;

  • Fed - Hike priced in, trading wise more or less done
  • ECB - All done
  • BOE - No expectations for Thursday, all done
  • BOJ - Done
  • RBA - Done
  • RBNZ - Cut expected - still a bit to trade

Commodities are taking quite a bit of the limelight and look to be behind a lot of the moves and risk off sentiment. Chinese growth worries are lingering, particularly with last nights trade data, and there's some further data out this week that might increase those fears

Stocks are looking to give up the gains made last week in another sign that we're pretty directionless at the moment

It all feels like there's nothing for markets to really get their teeth into and that can lead to dangerous trading conditions

What I'm seeing in markets now is similar to what I saw in July, which prompted my warning on seeing a blow out. We know what happened a month later. This is on a much smaller scale and more of general malaise and boredom rather than a big build up of negativity that's going to lead to anything really explosive. But, there's scope to see volatility increase further

If anything it could lead to some markets pushing the edges of some ranges but I suspect that we won't stray too far with the FOMC on the horizon

The greater risk is for after the FOMC, and once the market has dissected all the details. It's going to be a dangerous time because if we do see a big close up of positions into the holiday period, that might go against the FOMC trade and what that trade is for the longer term, and thus give a false signal into year end

For now just stick to your levels and try not to chase anything too far, if at all. The way markets are trading now you have plenty of opportunity to let the trades come to you. Push to hard and you could end up in a hole