S&P 500 PRICE OUTLOOK: STOCKS STILL SOARING BUT SO IS EXPECTED MARKET VOLATILITYS&P 500 value closes at one other all-tim
S&P 500 PRICE OUTLOOK: STOCKS STILL SOARING BUT SO IS EXPECTED MARKET VOLATILITY
- S&P 500 value closes at one other all-time excessive as shares proceed their melt-up
- VIX Index has conspicuously superior alongside the S&P 500 over current periods
- VIX seasonality factors to elevated readings of anticipated volatility throughout Fall months
S&P 500 value motion simply set a brand new file excessive shut but once more now resting on the 3,526-mark. Shares appear like they’re in melt-up mode because the S&P 500 and Nasdaq rise relentlessly. Investor danger urge for food may need been fueled most not too long ago by general stable manufacturing PMI knowledge launched this morning. Although the atypical constructive relationship displayed by the S&P 500 Index and VIX ‘fear-gauge’ over the previous couple of buying and selling periodsstands out as a bit odd.
| Change in | Longs | Shorts | OI |
| Each day | -3% | 3% | 2% |
| Weekly | -2% | 4% | 2% |
S&P 500 PRICE CHART WITH VIX INDEX OVERLAID: 15-MINUTE TIME FRAME (26 AUG TO 01 SEP 2020)
Chart created by @RichDvorakFX with TradingView
Within the midst of shares hitting contemporary all-time highs, nonetheless, one attainable rationalization for the lockstep transfer between S&P 500 value motion and the VIX might be rising investor demand for draw back safety as they hedge in opposition to rising bubble-like circumstances. Additionally, as merchants flip their calendars to September and enterprise out of the summer time doldrums, it’s price mentioning how common VIX seasonality factors to an upcoming interval of elevated market volatility.
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CHART OF VIX SEASONALITY BY MONTH (JAN 1990 TO AUG 2020)
Evaluating common VIX Index readings on a month-by-month foundation, September and October have two of the comparatively highest measurements. This seasonal magnetic pull that has traditionally steered the VIX ‘fear-gauge’ greater and shares decrease throughout this time of yr might probably weigh negatively on market sentiment. Then again, phrase that the Trump administration is transferring to ban evictions via December might assist the bullish pattern underpinning S&P 500 Index value motion
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That mentioned, trying to the DailyFX Financial Calendar highlights the discharge of nonfarm payrolls as a high-impact danger occasion on the instant horizon. Month-to-month NFP knowledge due this coming Friday, September 04 at 13:30 GMT might weigh significantly on urge for food for danger and catalyze volatility if the roles report differs materially from forecast.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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