News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • (NZD Special) New Zealand Dollar Technical Forecast: NZD/USD, NZD/JPY, NZD/CAD, NZD/CHF #NZD $NZDUSD $NZDJPY $NZDCAD $NZDCHF https://www.dailyfx.com/forex/technical/article/special_report/2021/03/02/New-Zealand-Dollar-Technical-Forecast-NZDUSD-NZDJPY-NZDCAD-NZDCHF.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/EDrqHPK5g6
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.20%, while traders in GBP/JPY are at opposite extremes with 69.96%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/OQu3NemWeA
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: -0.08% 🇨🇭CHF: -0.09% 🇦🇺AUD: -0.21% 🇳🇿NZD: -0.28% 🇨🇦CAD: -0.29% 🇬🇧GBP: -0.34% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/An810rm9x6
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.24% France 40: -0.29% Wall Street: -0.35% US 500: -0.39% Germany 30: -0.42% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/yplqPaVCJ8
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/Ugv151eibY
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/H2xUrnaSKU
  • RT @FxWestwater: Australian Dollar Forecast: $AUDUSD Uptrend in Focus as #RBA Holds Policy Steady Link: https://www.dailyfx.com/forex/market_alert/2021/03/02/Australian-Dollar-Forecast-AUDUSD-Uptrend-in-Focus-as-RBA-Holds-Policy-Steady.html?ref-author=Westwater https://t.…
  • Overall quiet reaction from $AUDUSD to the #RBA rate decision Most notable update likely has to do with them letting the markets know that they could do more adjustments to bond purchases given rising yields But that may have already been priced in... https://t.co/rol1p1WcAw
  • RBA: Bond purchases brought forward this week to assist market -BBG #RBA
  • RBA: Lending conditions remain sound, important to remain so. Committed to 3-year target, will continue buys as needed -BBG
S&P 500 Price Outlook: VIX Index Sends Bad Omen for Stocks

S&P 500 Price Outlook: VIX Index Sends Bad Omen for Stocks

Rich Dvorak, Analyst

S&P 500 PRICE OUTLOOK: VIX INDEX, CROSS-ASSET VOLATILITY SUGGEST INVESTOR UNCERTAINTY STILL A LINGERING THREAT TO STOCKS

  • S&P 500 Index fluctuates around the 3,000 price level after the US equity benchmark climbed nearly 10% from its May 14 low
  • VIX Index price action hints at a possible base formed as cross-asset volatility measures drift sideways amid lingering investor uncertainty
  • Stocks look vulnerable in light of still-elevated VIX readings and escalating China tension

Stocks looks set on closing the month of May on an unencouraging note. S&P 500 Index price action has drifted lower by about 2% from the prior trading session’s intraday high. Despite the latest stretch of weakness, the S&P 500 gained 6% on balance since its April 30 close, which extended the recovery in equities largely fueled by sustained coronavirus optimism.

US 500 MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -13% 23% 4%
Weekly 5% -5% -1%
What does it mean for price action?
Get My Guide

Unwavering investor risk appetite over recent weeks looks accompanied by a huge volatility squeeze that pressured the popular VIX Index ‘fear-gauge’ materially lower. Following the most recent volatility cycle normalization, however, the VIX and other cross-asset volatility benchmarks allude to a potential bottoming attempt as investor uncertainty lingers. This likely corresponds with China tension rising and mounting risk of another trade war, which presents a major threat to global GDP growth, market sentiment, and stocks.

VIX INDEX PRICE CHART: DAILY TIME FRAME (26 DEC 2019 TO 29 MAY 2020)

VIX Index Price Chart S&P 500 Outlook

The VIX Index appears to have formed a double bottom pattern around the 25.5 level. This area of technical support is underpinned by a confluence of its 200-day exponential moving average, March 03 swing low, and 78.6% Fibonacci retracement of the year-to-date trading range. Bullish divergence indicated by the MACD also suggests upward momentum is building.

Top Trading Opportunities in 2021
Top Trading Opportunities in 2021
Recommended by Rich Dvorak
Get Your Free Top Trading Opportunities Forecast
Get My Guide

Considering relatively sticky volatility and still-elevated investor uncertainty, in addition to the fundamental driver of escalating US-China tension, it seems that S&P 500 Index price outlook could quickly sour. Nevertheless, as unfazed trader sentiment broadly crushes volatility, the VIX Index might struggle to overcome its series of higher lows recorded since April.

VIX INDEX, FX VOLATILITY, GOLD VOLATILITY, EMERGING MARKETS EQUITY VOLATILITY IN FOCUS

VIX Price Chart S&P 500 Index Outlook Cross Asset Volatility Trump China Tension

That said, key cross-asset volatility benchmarks are relatively unchanged this month as S&P 500 volatility (VIX), gold volatility (GVZ), currency volatility (FXVIX), and emerging markets equity volatility (VXEEM) gyrate sideways. Keeping close tabs on cross-asset volatility might provide traders with a possible bellwether to market sentiment and perceived uncertainty, which could foretell where the S&P 500 Index heads next.

Keep Reading: US Dollar Eyes Rising China Tension as Jobless Claims Mount

-- 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