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S&P 500
A weak July consumer confidence fell to a 5-month low offset the latest round of strong corporate earnings. On Wednesday June durable goods orders as well as the weekly mortgage applications and petroleum reports. The Beige Book is expected today which report economic conditions used for the FOMC meetings in 2 weeks. Expect the market to move after the 2pm Eastern Standard Time announcement.
On the S&P 500 on the 60-day chart shows we have been rallying since the beginning of July especially after options expiration last Friday. Expect the market to hit the January 2010 resistance level as we approach the slowest month of the year – August. The volume will not be enough in August to break through the January resistance levels. The FOMC announcement is in two weeks so expect the markets to remain calm and volume stale for the rest of the summer.
On the daily chart of the S&P 500 we were trading between the cushion area of 144 and 200 day moving averages as traders and investors are cautious looking ahead especially with the upcoming mid-term elections, uncertainty with European debt, and the current Gulf Oil Spill. Now we have slowly broke out of this area after the European banks passed the stress tests. However expect the markets to remain trading below the January 2010 resistance levels.
The Market Volatility Index (VIX) has been active due to the seasonal selling trend of the ‘Sell in May’ philosophy however seems to stabilizing after the Fourth of July weekend and the anticipation of second quarter 2010 earnings season. Currently the VIX trading below the 144 and 200 day moving averages indicating more riskier approach towards investments and assets.
The Chicago Board Options Exchange (CBOE) Market Volatility Index 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 Treasuries, gold, and the dollar when the index is trading above 30.
Summary of Major S&P Pivot Levels
1219: S&P 500 52 Week High
Technical Levels Natural Support and Resistance
1125: January 2010 Resistance Level
1100: Natural Support Level
Technical Levels 5 Minute Chart
1111: 144 Day Fibonacci Moving Average on 5 Minute Chart
1108: 200 Day Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1101: 144 Day Fibonacci Moving Average on Daily Chart
1088: 200 Day Moving Average on Daily Chart
Daily Economic Calendar
Mortgage Applications / 7.00AM EST
Durable Goods Orders / 8.30AM EST
Petroleum Report / 10.30 AM EST
Beige Book / 2.00 PM EST
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