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Volatility emerges before the reporting season

There was very little to influence traders in global markets last night, other than price action itself.  Selling pressure led to an uplift in volatility that traders will now be watching closely.

US stock indices staged a reversal, finishing well below their high. This price action created the largest daily trading range seen in the Dow Jones Index since 1st December.  

This increase in volatility suggests traders are becoming nervous that the market may already have anticipated the widely expected strong profits this quarter. If further selling does emerge over the next session or two, it will signal that a correction is under way.

Selling on US markets centred around cyclical sectors indicating profit taking on the “co-ordinated global growth theme” that has driven markets higher in recent weeks. Further evidence of this was on display in weak session for industrial metals

Downward pressure on the ASX 200 index this morning will be amplified by profit taking in mining stocks after a stellar run over recent weeks. This will see the index fall below recent peaks in a sign that the strong upward trending character on display since late September has come to an end, at least for now.  

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