S&P 500 and the VIX both at crucial levels

<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.

FTSE 100 (bottom) vs. S&P 500 (top) Joshua Raymond Blog

VIX Chart  Joshua Raymond Blog

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.