We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/X15k6b4ZyB
  • The month of May saw equities rise across the board. The #Dow Jones and #DAX 30 will look to hold above nearby support while the #Nasdaq 100 may look to attack all-time highs. Get your #equities market update from @PeterHanksFX here: https://t.co/dQxkG68R0I https://t.co/cgfcOs14qG
  • There is a dramatic departure between yield curve pricing for a recession and other measures of near-term growth; the Q2’20 Atlanta Fed GDPNow is extremely alarming.Get your market update from @CVecchioFX here: https://t.co/eMd3T8EwDO https://t.co/56oUP6we9U
  • The #DAX has now closed the gap from the beginning of March with the index breaking above 61.8% fib at 11592. Get your DAX market update from @JMcQueenFX here: https://t.co/wr67nkxc8z https://t.co/CkxPZn1v3t
  • Emerging market currencies haven’t been treated equally by the effects of global contagion, even if most have suffered to some degree. However withdrawal of investment flows could hit them all. Get your market update from @DavidCottleFX here:https://t.co/QzNoNYgMgP https://t.co/9CV6iZt40j
  • My weekend trading video: 'S&P 500 Rises on Trump China Presser, #NFPs and Rate Decisions Ahead' https://www.dailyfx.com/forex/video/daily_news_report/2020/05/30/SP-500-Rises-on-Trump-China-Presser-NFPs-and-Rate-Decisions-Ahead.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/ZvoGoibzj1
  • Hopes are high for deeper European economic integration as the continent battles back from the coronavirus slowdowns – but will it hold? What impact can this have on #Euro? Find out from @JStanleyFX here: https://t.co/b9ZWRd4cTr https://t.co/gngm5tKqjz
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/iL7xlHLBiF
  • #Gold has a short-term bullish set-up that may play nicely with USD weakening. The longer and shorter-term path of least resistance remains higher. Get your $XAUUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/B4MVrg8f6i
  • The AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/Fo1wlWyz8r
S&P 500 Price Sinks as Unemployment Spikes; VIX Index Drops?

S&P 500 Price Sinks as Unemployment Spikes; VIX Index Drops?

2020-04-04 04:00:00
Rich Dvorak, Analyst
Share:

S&P 500 PRICE OUTLOOK – STOCK MARKET RECOVERY STYMIED BY DISMAL JOBS REPORT, VIX INDEX DOWN BUT EXTREME FEAR LINGERS

  • S&P 500 dropped by 2% this past week on the back of accelerating jobless claims and rising unemployment
  • Investors overlooked recent FOMC liquidity and fiscal stimulus efforts as deepening coronavirus recession risk steered the stock market lower
  • The VIX Index edged lower four out of the last five trading sessions alongside a broad-based pullback in cross-asset volatility benchmarks

The S&P 500 whipsawed last week to end about 2% lower on net following the 4% rise by Tuesday that quickly flipped to a 4% decline by Thursday’s low point. Perhaps month-end and quarter-end rebalancing partly contributed to S&P 500 price action.

US 500 MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -10% 0% -3%
Weekly -2% -7% -6%
Learn how to use sentiment in your trading strategy
Get My Guide

Investor optimism that continued from the prior week’s massive 11% rebound – primarily a reaction to trillions of dollars in stimulus from the Fed and US congress – helped the stock market extend higher initially. After another alarming jobless claims report was echoed by dismal NFP data, however, the S&P 500 resumed its broader bearish trend.

S&P 500 PRESSURED BY SURGING UNEMPLOYMENT, PLUNGING NONFARM PAYROLLS

S&P 500 Price Sinks as Unemployment Spikes; VIX Index Drops?

That said, while economic chaos caused by the coronavirus accumulates, the S&P 500 Index and broader stock market might face more downside ahead. This is considering a recession is likely unavoidable with nonfarm payrolls falling off a cliff, and the unemployment rate spiking higher, as the coronavirus lockdown endures.

VIX INDEX SLIDES DESPITE STOCK MARKET DECLINES AS S&P 500 PRICE VOLATILITY SIMMERS

S&P 500 Price Sinks as Unemployment Spikes; VIX Index Drops?

Chart created by @RichDvorakFX with TradingView

Despite the slide in stocks last week, the VIX Index, sometimes referred to as an investor fear-gauge, shed nearly 20 percentage points. Correspondingly, the VIX to S&P 500 correlation has turned less negative as the typically strong inverse relationship wanes. The drop in the VIX Index over the last few trading sessions might be explained by a decrease in magnitude of price swings in the S&P 500.

CROSS-ASSET VOLATILITY GRAVITATES LOWER, LED BY VIX INDEX & OIL PRICE RECOVERY

S&P 500 Price Sinks as Unemployment Spikes; VIX Index Drops?

Chart created by @RichDvorakFX with TradingView

Moreover, cross-asset volatility benchmarks, such as currency volatility (FXVIX), oil volatility (OVX) and high yield corporate debt volatility (VXHYG), have gravitated lower alongside expected S&P 500 volatility gauged by the VIX Index. This could be broadly due to the gusher of FOMC liquidity and fiscal stimulus that has calmed market angst.

Top Trading Opportunities in 2020
Top Trading Opportunities in 2020
Recommended by Rich Dvorak
Discover our latest top trading opportunities
Get My Guide

In addition to cross-asset volatility benchmarks edging lower, rebounding oil price action is probably a positive development for risk appetite, but the moves may prove short-lived. Volatility measures nevertheless remain at extreme highs last seen during the global financial crisis.

On that note, perhaps the dominant theme of investor demand for safe-haven currencies is lingering with the US Dollar ripping back toward multi-year highs. This could correspond with another rise in FX volatility as the S&P 500 Index, Dow Jones and Nasdaq bleed.

Read More: S&P 500 Index Trading Strategies, Tips & More

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.