Don’t Fall Asleep!
A slow trade in S&P futures, but don’t fall asleep: implied volatility is ticking up, which could signal a big move ahead.
The 100-day moving average of implied volatility for S&P futures is 24.80. We are currently at 18.71. That means a very complacent market, with smaller ranges and a choppy trade. However, yesterday in a very tight range with a moderate upside, the volatility rose slightly. That means we could be seeing a major move soon.
This morning, S&P futures were trading at 1480, down 4.50. Volume on Globex was less than 1,000 contracts. On the downside, the key number is 1478.50, then 1477.50 and a major area at 1475.50. Yesterday and Monday there was big buying at 1475.50 through 1477.50. Then we have 1472, 1470.50, 1465, and 1458.50.
On the upside, for the market to improve, it has to get above 1491, and not go back below 1485. On the upside, we have 1481, 1487.50 (a key area), 1490 a major area), 1491, 1493.10, and a critical area at 1494.50-1495. Our morning pivot will be between 1484 and 1485.
NASDAQ was trading 40 lower at 3848. It should be a difficult open for the index. A key area of support is going to be found at 3840. If we get through this, it could lead to a quick trade back to the critical support between 3815 and 3790. Yesterday’s low was 3795, and from there we rallied about 3%.
If we break this support, it will target a run to 3650, and quite possibly reassert the down trend of earlier in the spring. On the upside, if we can hold 3840, look for a rally toward the unchanged area of 3888.
Yesterday, a lot of institutional trading occurred around 3895. This area should be crucial again, if we get back up there today. Above 3910, we should shoot for 3930 and eventually 3960.
The Dow continues to be stuck in a wedge. However, any settlement below our support between 10,750 and 10,725 should lead to a move toward 10,450. On the upside, if we can get above 10,840, it should clear the way for a move to 11,000.