Market News & Analysis
Stocks Continue to be Slammed, VIX Breaks Out
Joe Perry October 3, 2019 12:02 AM
SP500 Futures continued its selloff that began yesterday after today’s worse than expected ADP Nonfarm Employment Change for September. Although the headline number was in line for the most part (135K vs 140K expected), it was the revision from August 195K down to 157K the made this data much worse than expected. This comes after yesterday’s worse than expected US ISM Manufacturing PMI for September. The index is down over 100 handles over the past 2 days near 2891. The daily chart shows SP500 Futures broke key support near 2944, which was strong horizontal resistance on the way up. Currently price is sitting at the 61.8% retracement from the August 26th lows to the September 13th highs. If price breaks lower from here, it looks possible to retrace all the way back down the 2813.
Source: Tradingview, City Index, CME
If we zoom in on a 240-minute chart, resistance doesn’t come into play until way above in the 2440/2450 zone.
Source: Tradingview, City Index, CME
As one would expect, the Volatility SP500 Index, better know as the VIX, has gapped higher today. The 240-minute chart shows the VIX broke out of a descending wedge is late September and came back to test the downward slowing trendline twice, before finally breaking higher today. Horizontal resistance comes in at 21.60. Above that is the August 5th highs at 24.80. First support is back at the gap at 18.60. (note that the RSI is moving into overbought territory, so we may see a pullback shortly, or at least a sideways move so the RSI indicator can move back within the neutral range).
Source: Tradingview, City Index
The next catalyst seems like it can come from anywhere at this point. The political is very contentious within the US, Brexit discussions are ongoing, and on Friday, the US Nonfarm Payrolls data is released. Once again, be on alert for headlines and tweets!
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.