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S&P 500
One week ago we suggested that the market will sell off on Friday due to traders and investors not holding their positions over the weekend. We are currently holding this belief going into this Friday – either the market sells off or trades flat. The rally of the markets today due to strong earnings pushed the dollar lower against the euro as traders took more risk.
During a testimony between Ben Bernanke and the House Financial Services Committee, the Fed Reserve Chairman spoke about further stimulus actions.
Looking at the Asia markets China is expected to slowdown and Japan
We only rallied to about the same level as one week ago on the 10 minute chart of the S&P 500 as traders relieved their positions last Friday and bought up their shorts this week. With no economic news on Friday except for earnings expect it to be a quiet day in the markets with a possibility of short sellers coming by the afternoon.
The S&P 500 shows that we are nearing the 144 day moving average on the daily chart. The 1100 area is a tough resistance level to break when the volume is not there during the slow summer trading months.
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. The Market Volatility Index (VIX) has been active due to the seasonal selling trend of the ‘Sell in May’ philosophy. A common trading strategy for traders and investors includes a VIX level of 30 or above means an immediate switch from equities to cash.
If the index is above 30 then traders and investors are switching from riskier assets to cash. Traders and investors are retreating from the markets and finding safety and protection within the Treasuries, gold, and the dollar.
Lower than 30 especially breaking through the two major moving averages of 144 and 200 means that people are buying riskier assets and financial instruments. The Market Volatility Index seems to stabilizing after the Fourth of July weekend and along with the release of second quarter 2010 earnings season.
Currently the VIX is trading below 30 however it is resting and wrapping around the 144 and 200 day moving averages. This suggests that the volume and activity is not there to indicate a directional trend of either bullish or bearish. Direction would mostly come after the mid-term elections in November once fiscal and monetary policies are defined for the next two years.
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 Resistance Level
1075: Natural Support Level
Technical Levels 5 Minute Chart
1083: 144 Day Fibonacci Moving Average on 5 Minute Chart
1181: 200 Day Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1100: 144 Day Fibonacci Moving Average on Daily Chart
1087: 200 Day Moving Average on Daily Chart
Daily Economic Calendar
No Economic Numbers
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