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US stocks gain as volatility index falls to 5-month low

3:09 PM March 13, 2019

Summary:

  • US indices add to recent gains

  • US500 looks set to retest 2824 resistance

  • Volatility index (VOLX) falls to October low


US stock markets have opened this afternoon in an upbeat fashion with all the main benchmarks trading in the green. Tech continues to perform well with the US100 leading the way while the US500 has moved back above the 2800 mark. Recent sessions have seen a strong bid underpin equities across the pond, and the US500 now looks to revisit key resistance in the region around 2824 once more.  

The US500 has failed to break above the 2824 region on several occasions, most noticeably at the start of last week. However, price is close to probing this region once more and a clean move above it would quite remarkably open up the chance for another tilt at record high around 2946. Source: xStation

 

The volatility index trades with an inverse relationship against the US500 and is seen by some as a leading indicator. This could be worthwhile noting now as this market (VOLX on xStation) has broken below recent support and trades at its lowest level since October - when the US500 made its record high. The VOLX is often referred to as a gauge of fear and the large drop indicates that the market is not at all worried at present.

The US500 and VOLX have exhibited a fairly strong inverse relationship and the declines of the latter could be seen to bode well for the former. Source: xStation


In terms of data this afternoon, the core durable goods orders M/M came in a little worse than expected (-0.1% vs 0.1% exp), but this was largely offset by an upwards revision of 20 basis points to the prior month. Durable goods orders M/M topped a forecast -0.5% in coming in at 0.4%, down from 1.3% last time out. At the same time US PPI and core PPI both provided slightly lower than expected reading and this supports the CPI figures yesterday in suggesting the Fed has little to worry about on the inflation front for the time being - something that is positive for the stock market.        

 

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