Volatility Index Has Cleared Key Technical Levels as October Kicks Off
Michele Schneider | Oct 02, 2024 02:35AM ET
After the nice timely call on Occidental Petroleum (NYSE:OXY) from yesterday's article, let’s move on to volatility as we start October or Rocktober.
And things are certainly rocking, making me feel all late 1970s all over again.
Eerily the port strike last happened in 1977.
- Today is President Carter's 100th birthday.
- The Middle East is unstable and WTI oil is back over $70.
- The Fed has started adding liquidity.
- Recent weather patterns along with geopolitics impacting sugar.
- We appear to be between 1977 and 1978 in terms of the trough in CPI about to turn.
Good time to look at the turnaround in volatility.
The Daily chart shows that the price is trying to clear above 50 daily moving average.
The momentum is above the 50-DMA and increasing.
And the leadership has flipped in favor of Volatility over SPY.
Will that sustain?
Zooming out to the weekly charts:
The weekly chart shows some resistance against the 200-week moving average (green line).
Is that comforting?
Only if the price remains below that key resistance.
If the volatility picks up from here, we are looking at another even scarier potential.
The monthly chart, which shows the price back into a 2-year expansion, is threatening to clear the 80-month moving average or a longer business cycle expansion.
That would mean more volatility like what we saw in 2022, only for very different reasons.
Keep your eyes on 20.25 as this month continues is the biggest overhead resistance bulls do not want to see clear.
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
- S&P 500 (SPY) 565 pivotal support
- Russell 2000 (IWM) Range 215-225
- Dow (DIA) Another potential topping pattern?
- Nasdaq (QQQ) 485 pivotal
- Regional banks (KRE) 52-55 support zone
- Semiconductors (SMH) 240 pivotal
- Transportation (IYT) 67.00 support 69 resistance
- Biotechnology (IBB) 140-142 support zone
- Retail (XRT) 77 pivotal
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 support to hold for risk on
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