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S&P 500 Price Outlook: Traders on Edge as VIX Pops Ahead of Jackson Hole

S&P 500 Price Outlook: Traders on Edge as VIX Pops Ahead of Jackson Hole

2019-08-22 21:00:00
Peter Hanks, Junior Analyst
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S&P 500 Price Outlook:

S&P 500 Price Outlook: Traders on Edge as VIX Pops

The S&P 500, Dow Jones and Nasdaq 100 were faced with widespread uncertainty on Thursday as traders jostled for position ahead of incoming Fed speak that possesses great market-moving potential. Although the three indices pared major losses and the Dow Jones was dragged higher by Boeing (BA), the VIX Index remained elevated into the close which speaks to the fear amongst investors – which is understandable given the stakes.

S&P 500 Price Chart: 4 - Hour Time Frame (June – August) (Chart 1)

S&P 500 price chart

Chart created withTradingView

As it stands, markets are expecting a 25-basis point cut at the September FOMC meeting – while others have called for a 50-basis point cut at minimum. Some analysts, myself included, argue the prospect of further easing has already been priced in which has allowed the S&P 500 to maintain its robust valuation despite an expanded trade war and inverted yield curve.

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Therefore, if the assumption is correct, anything less than complete capitulation from Fed Chairman Jerome Powell and his peers could seriously disappoint stock traders and result in price declines which could potentially see the Index retest the trendline from June.

VIX Price Chart: 4 – Hour Time Frame (June – August) (Chart 2)

VIX chart

Chart created withTradingView

On the other hand, IG Client Sentiment Data suggests the S&P 500 may be destined for greater heights as traders remain net-short. For more technical analysis and fundamental updates on the major equity markets, follow @PeterHanksFX on Twitter.

S&P 500 Price Outlook: Traders on Edge as VIX Pops Ahead of Jackson Hole

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

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