Even the futures trader needs to understand when a particular market is susceptible to violent knee jerk reactions that can quickly get them upside down on a trade.
One aspect of the VIX that we want to bring to light is the backwardation that we are seeing in the VIX futures, and this is what it means to the markets.
While I still believe that a taper is in the works, I also believe that the bickering on Capitol Hill has delayed the timeframe until early 2014 at the absolute earliest.
As it pertains to the broader market, and more specifically to the E-mini S&P 500 futures, we are using the following three areas of interest to guide our posturing ahead of next week's trade.
For futures traders, as well as options on futures traders, if positioned correctly and in tune with the pulse of the market, such swings can present a very stimulating trading environment.
I tend to believe that the equity index markets will begin to lose the patience that they are displaying at the current moment if the shutdown begins to meld into debt ceiling talks, which would put the US at more economic risk than we have seen in a long time.
The broader market still has plenty of room to run to the upside and these are the levels to watch in the S&P 500.
I continue to watch this 1670 level in the S&P as "my line in the sand", as a break below this level could have us quickly trading back to that 1650 level seen earlier in the month.
My guess is that we will see a fairly active trade in the morning, as the numbers are released, but most business and portfolio positioning will be complete by the noon hour on the east coast.
I consider the moves that the market has had over the past five days as the calm before the storm.