v-trader

One of the early year themes we have been discussing on our subscriber site has been our expectation for an increase in market volatility. 

Probably about three weeks back we wrote, “Unlike the consensus and big Street houses which have been predicting/expecting falling volatility in 2010 after an already accomplished death defying drop in volatility during 2009, we’re not so sure shorting volatility is such a wonderful investment idea right here. 

Although we could be dead wrong, we believe 2010 will present us with a great opportunity to buy volatility.  We could be very close right now.”  We’re not reprinting this to proverbially pat ourselves on the back as the year is still very young. 

The major U.S. index futures are pointing to a lower opening on Wednesday, with traders likely to use some disappointing economic reports as reason to take profits after yesterday’s scintillating advance.

A report released earlier in the day showed a bigger than expected drop in housing starts, while the Labor Department said producer prices rose much more expected. However, core producer prices remained benign, showing no growth in December.

Additionally, moves by China to restrict lending may cool off Chinese growth, which many analysts believe would would upset the Chinese-led global growth.

U.S. stock futures point to a lackluster opening Wednesday morning as traders await further direction amid mixed signals related to the global economy and corporate earnings. Stocks ended weaker in the previous session on disappointing results from Alcoa (AA).

Traders might focus on the Beige book and Treasury Budget. Tightening of monetary policy by China, weak trading across global markets, lower oil prices and cautious outlook on corporate earnings after Alcoa's disappointment might weigh on traders' outlook for the day.