In the first quarter, we saw some massive moves both up and down in many markets. We learned that equity indexes are sensitive to inflation data as well as the threat of taxation on imports and exports. Therefore, make a point to check your calendar for such event risk. There are inflation data in many of the monthly reports. Notably, wages in employment data, CPI, PPI, GDP and ECI.

The tariff issue is a wild card in Q2. Recently, there have been far above average ranges when the tax issue is in the headlines. Meetings with China will likely play a huge part in stock prices in the coming months.

When entering a new quarter and earnings season, it is a good idea to update statistics to judge when a market has reached an overbought or oversold state. The same stats may also help time when a trend is likely to begin. Tracking ATR, or Average True Range, over a series of time frames is always a good idea. The spreadsheet below shows ATR for day, week, month and quarter. And within the spreadsheet there are longer-term stats to compare with the more recent ones. Option traders use implied vs. historic data to recognize opportunity, and so should direction traders. Keep this “cheat sheet” handy to target how far a trend is apt to last or when one is about to end.

The number at the top of each column indicates the number of samples in the ATR. Note the equity markets are running at twice the historic ranges.

John Seguin, Market Taker Mentoring