S&P 500 and the VIX both at crucial levels
City Index August 17, 2012 8:26 PM
<p>In a relatively quiet week for stock markets as the traditional August lull in trading volumes took hold, we did see global indices trade at […]</p>
In a relatively quiet week for stock markets as the traditional August lull in trading volumes took hold, we did see global indices trade at interesting and important levels.
The S&P 500 hit a new high not reached since April of this year and is now trading at resistance levels of 1415. The last time the S&P was trading at this level, the Index fell 10% in the space of one month and so now with this recent test it will be interesting to see if equities can find a second wind to help lift the S&P above the 1422 level.
Crucially, the VIX or Volatility Index, a key barometer of market fear or pessimism, also hit its lowest levels since March last week of 13.67. It was from this level that the VIX found support and rallied close to 60% within a month also. So with both the VIX and S&P now at key levels, the following weeks could prove pivotal in whether we are to see a correction or not. See the charts detailed below.
A correction of course is nothing to fear having seen such a strong rally recently which has seen the S&P 500 and FTSE 100 both rally over 11% since early June. A correction of 5% to 10% could well be good for the long term health of equities in helping to entice investors back into the markets for a year end Santa Claus rally.
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