Thus, despite all problems of American economy, last week “bullish” trend for S&P500 index future was renewed. Having fought the moving average, which lasted for 200 days, the market gave a strong impulse up, having broken serious resistance; namely, 1300 warrant barrier and the moving average, which lasted for 50 days. By the end of the week it closed around the week’s maximum level, which additionally proves the strength of “bullish” climate. Nevertheless, investors may have certain fears due to the fact that growing index is not accompanied by growing volumes. If the growth continues, the main resistance on the way up will be represented by 1350 and 1400 warrant barriers as well as the yearly maximum of 1373.5. If after such powerful rally the market needs correction, the levels of support will be the following: averages lasting for 50 and 200 days, 1300 and 1250 warrant barriers, and 1241.25 local minimum.
Due to a strong one-way movement, the weekly range of S&P500 index future this week has considerably exceeded its average value and amounted to 79.5 future points. Friday became the most volatile day of the week with a daily range of 24 future points, whereas Wednesday became the least volatile with a daily range of 14 future points. This week the expected volatility was lowering, as it usually happens with S&P500 index when the market grows. The value of VIX expected volatility index was changing from the week’s maximum of 21.82 on Monday to the week’s minimum of 15.12 on Friday. As a result, volatility index has lowered almost to the level of its minimal yearly value (the yearly minimum amounts to 14.27 points). Such low value of expected volatility makes higher the chances of profitable work of warrant traders, who trade by volatility purchase oriented strategies.
The calendar of issuing macroeconomic statistics for the following trade week:
Monday, July 04, is a day-off in the USA. From the point of view of possible influence on volatility, Thursday and Friday, when the data on employment and unemployment is issued, will be of major interest to us. Volatility purchase tactics remains the same – preliminary entrance in expectation of important news and fixing income either at expected volatility growth shortly before the expected event data is issued or at real volatility growth as soon as the data is published.
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