Understanding trading elements 101

Market signals

• SPX/ EEM implied correlation

o Option implied correlation of volatility and average single stock in the index
o SPX / EEM > Emerging market index (EEM is the MSCI emerging market ETF)
o The index tells you the index level options is more expensive/ cheaper relative to
underlying components’ option
o Correlation tend to increase when index is falling

o
o Monitor > COR3M
• Cross asset Rank
o cross-asset rank fell to 5%
• Factor returns
• Capitulation analysis
o Capitulation happens when investors cut loss of losing positions
o Usually high trading volume with sharp decline in stock price could be single of
capitulation
o Technical analysts use candlestick charts to identify capitulation patterns. One such
pattern is the hammer candle, which marks a trading session in which the price drops
well below its opening level but reverses to regain much of the loss by the close.
• Intraday recovery score
o The UBS 4 month intraday recovery score which measures investor confidence or
positioning bias through investor intraday behaviors on meaningful move days