Summary:
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All US indices in the green
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US500 not far from prior resistance around 2844
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VOLX pulls back from 5-week high
It looks like it’s going to be a green open for US stock markets, with all 3 major indices in the green at the time of writing. The markets are looking to regain their footing after a wobble yesterday which saw the US500 drop by almost 40 points from its highest level of the day to make a low of 2803 before recovering into the close. Once price breached prior support around 2820 not long after the cash open, the market rain hard to the downside but buyers stepped in and defended the 2800 level and price recovered back near to 2820 by the time of the closing bell. Overnight, there was a strong push higher on reports that China may be taking steps to ease their trade tensions with the US and we now find ourselves back near the upper reaches of the recent range.
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The US500 made an attempt to break lower and was sharply lower at one point yesterday, before recovering into the close. Price is now back near recent highs and the possible resistance around 2844 may be set for a retest. Source: xStation
The situation in Turkey is yet to be resolved to a satisfactory manner, but the concerns to seem to have eased a little as the Lira recovers. USDTRY is on course for a 3rd day of declines and the pair has now moved firmly back below the 6.00 handle. It remains premature to suggest that this is the end of the matter, but while the Lira remains well supported the risk-off flows seen elsewhere at the back end of last week and the start of this will dissipate and as such, US stocks may have a chance to make another attempt at their record highs - the US500 is currently trading only around 2% from its record peak.
As well as keeping an eye on the Lira, indices traders may also have an eye on the volatility index (VOLX on xStation) as this can often be seen to represent fear in the market. The VOLX hit its highest level in a month yesterday around 16.30 which represents a gain of almost ⅓ from last week’s low. However, the D1 candle reveals some strong selling with a large wick above the body and in the absence of any further bad news then this could quite quickly fall back towards where it was last week. Should this occur then stocks will likely enjoy gains and could once more move up to retest their record highs.
VOLX hit a 5-week high yesterday, but a wick above the D1 candle represents some strong selling pressure. Indices traders could keep an eye on this for signs as to how fearful traders are. Source: xStation
