S&P 500 PRICE OUTLOOK: STOCKS PRESSING ALL-TIME HIGHS, VIX INDEX FALLSS&P 500 Index closed above its pre-pandemic report
S&P 500 PRICE OUTLOOK: STOCKS PRESSING ALL-TIME HIGHS, VIX INDEX FALLS
- S&P 500 Index closed above its pre-pandemic report excessive worth of three,386.15
- VIX ‘fear-gauge’ has edged notably decrease however continues to be comparatively elevated
- Upbeat dealer sentiment would possibly maintain the inventory market rally – for now
The S&P 500 Index simply set a brand new report with its newest shut on the 3,389.78-price mark. This modestly eclipses its prior all-time excessive of three,386.15 set on February 19 previous to the sharp selloff that ensued on the again of the coronavirus pandemic. Shares have been capable of stage a exceptional restoration largely because of coordinated motion from international governments and central financial institution.
| Change in | Longs | Shorts | OI |
| Day by day | -5% | -1% | -1% |
| Weekly | -10% | 8% | 3% |
In flip, this largely flooded the market with liquidity, which has not solely helped restore urge for food for threat, however has seemingly enabled it as nicely. In the meantime, this has exerted appreciable strain on the S&P 500 VIX Index, or fear-gauge, as investor demand for draw back safety evaporates amid the sustained enchancment in dealer sentiment.
S&P 500 PRICE CHART WITH VIX INDEX OVERLAID: DAILY TIME FRAME (DEC 2019 – AUG 2020)
Chart created by @RichDvorakFX with TradingView
This was not too long ago identified in a market positioning report detailing choices merchants positioned for an all-time excessive. Volatility suppression may proceed within the occasion that probably bearish catalysts fail to materialize, which might seemingly correspond with sustained investor optimism and affirmation of latest report highs for the S&P 500.
Trying to the DailyFX Financial Calendar brings to focus the upcoming launch of FOMC minutes due Wednesday, August 19 at 18:00 GMT. Although particulars from the newest Federal Reserve assembly should not anticipated to unveil any giant surprises, however language discovered throughout the FOMC minutes can present perception on the discussions held by Fed officers. One other scheduled threat occasion contains the discharge of month-to-month PMI knowledge from IHS Markit on Friday, August 21. Proof of a stalling financial restoration may give traders the jitters and immediate an inflow of threat aversion.
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That stated, the VIX Index has apparently hovered above the 20.00-handle and trades at a stage notably increased than the place it was earlier than the onset of coronavirus-induced market turmoil. Maybe comparatively elevated VIX readings at present may very well be defined by comparatively excessive VIX Index measurements that gauge anticipated inventory market volatility past the following 30-days. For instance, the present VIX Index futures contract is at present buying and selling across the 21.50-mark, however the October VIX Index futures contract is buying and selling above the 28.00-level.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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