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S&P 500
After Memorial Day weekend beginning the half way point of the year and start of the slow summer season vacations all the market indexes are trading near levels seen on January 2010. Even the summer movies have a hard time getting off of ground such as the recent Memorial Day weekend movies: Prince of Persia and Sex in the City 2.
2010 has not been a great year as revelations are revealed concerning off shore drilling, European countries debt exceeding their GDPs, and the ‘flash crash’ fallout on May 6th. These uncertainties are adding volatility to the markets and traders and investors are seeking safety within Treasuries, gold, and the dollar. The market will continue to go lower as the volume of trades continues lower as we enter the slow summer months and low risk assets become more appealing.
On Friday the S&P 500 index ended the last trading day in May at 1089. We have mentioned that the 1090 resistance level is a major level to break. It was broken on Thursday due to a short covering rally and fell back.
The S&P 500 index is currently trading below the January 2010 resistance level and ended the day on Friday on the 200 day moving average on the daily chart of 1089.
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. 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.
Summary of Pivot and Technical Levels
1219: S&P 500 52 Week High
1115: 144 Day Fibonacci Moving Average on Daily Chart
1100: Natural Resistance Level
1090: Strong Resistance Level
1085: 200 Day Fibonacci Moving Average on Daily Chart
1076: 200 Day Fibonacci Moving Average on 5 Minute Chart
1075: 144 Day Fibonacci Moving Average on 5 Minute Chart
1175: Natural Support Level
Tuesday Economic Calendar
ISM Mfg Index / 9.00 EST
Construction Spending / 10.00 EST
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