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S&P 500
The European markets are plaguing the markets as their debts will hurt the global financial sectors. On the
The S&P 500 index finished as it did yesterday around the natural support level of 1175. Investors and traders maybe covering their shorts the ‘Volcker Rule’ is slowly becoming a reality which limits high-risk trading near July 4th.
The index met resistance due to Monday’s previous high as well as the convergence of the 144 and 200 day moving averages on the 5 minute chart. The S&P 500 index should be trading below the 1190 Monday’s resistance. An upward breakout could possible push the towards the 1110 area.
Looking at the daily chart of the S&P 500, the index is currently trading below the January 2010 resistance level as well as the 144 and 200 day moving averages. Yesterday we mentioned that the S&P 500 will be range bound between 1175 and 1110 as we head towards the slow summer months. The index traded below this range however rallied and finished near the natural resistance level of 1175.
The Chicago Board Options Exchange (CBOE) Market Volatility index (VIX) measures options activity within the market and is widely used tracking the S&P 500. Increasing volatility implies pessimism within the market and stocks sell off as traders seek protection for their assets.
A common trading strategy for traders and investors includes a VIX level of 30 or above means an immediate switch from equities to cash. Traders and investors are retreating from the markets and finding safety and protection within the dollar. As long as we stay above this level expect pessimism as we approach the slow summer months. Currently the VIX is above the 144 and 200 day moving averages on the daily chart. The index is also slightly above 30 so unless it is below this level do not expect a confirmed rally or upside within the equities market.
As long as we are below the 1075 level on the S&P 500 and the market volatility is above 30 expect choppy trading with no confirmed rallies. We still expect the market to be range bound between 1075 and 1100.
Summary of Pivot and Technical Levels
1219: S&P 500 52 Week High
1116: 144 Day Fibonacci Moving Average on Daily Chart
1110: Natural Resistance Level
1190: Monday’s Previous High
1086: 144 Day Fibonacci Moving Average on 5 Minute Chart
1085: 200 Day Fibonacci Moving Average on Daily Chart
1175: Natural Support Level
1069: 200 Day Fibonacci Moving Average on 5 Minute Chart
Wednesday Economic Calendar
Mortgage Applications / 7.00 EST
Durable Goods Orders / 8.30 EST
New Home Sales / 10.00 EST
Petroleum Report / 10.30 est
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