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S&P 500
Deflation risk is influencing the markets as lower money supply and credit are affecting both the producer prices and manufacturing sectors. Lower food prices affected the producer price index which is a leading indicator affecting consumer prices. Overall this translates into low interest rates and could be good for profits if money supply and credit is available for growth.
However lower numbers in the manufacturing sector translated into a slowdown in growth. This has been indicated by the lower Empire State
The S&P 500 opened up lower breaking Wednesday’s previous low before rallying at the end of the day. Looking at the 5 minute chart we are in a trading range making three attempts flirting with the 1100 level on the S&P 500.
On the daily chart of the S&P 500 we are 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.
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 is at the 144 and 200 day moving averages indicating a steady cautiousness between traders and investors.
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.
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
1075: Natural Support Level
Technical Levels 5 Minute Chart
1089: 144 Day Fibonacci Moving Average on 5 Minute Chart
1188: 200 Day Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1102: 144 Day Fibonacci Moving Average on Daily Chart
1087: 200 Day Moving Average on Daily Chart
Daily Economic Calendar
Consumer Price Index / 8.30 AM EST
Consumer Sentiment / 9.55 AM EST
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