Last week the futures of S&P500 rallied. However, it is too early to consider the continuation of the mid-term uptrend – first the index needs to come out of the 1300-1350 range. Nevertheless, it should be noted that the growing volume during the days of upswings testifies to the high probability of another uptrend. The possible levels of resistance are 1350 (an option barrier), 1373.5 (the high of the year), 1400 (a psychological level). The possible levels of support are 1315 (July’s max volume cluster), the 50-day and 200-day MAs and 1300 (an option barrier).
The actual volatility of S&P500 was above the average during the week (it usually happens during the periods of quarterly reports). The weekly range of the futures was 56.5pts. Thursday was the day of the highest volatility - 28.5pts. The lowest level of volatility was seen on Wednesday – only 10.5pts.As for the expected volatility of S&P500, it was declining throughout the week as investors grew more confident about the debt ceiling issue and the market rally. The VIX index got back to the “green zone” below 20pts, thus making volatility purchases appropriate once again.
This week’s news calendar:
When looking for an opportunity to buy the volatility of S&P500, pay attention to the following reports:
· New Home sales, Consumer Confidence
· Unemployment Claims
· Advance GDP
Provided by the Department of Options,
