The Market Jumps Early, Only To Give Back All Of The Day’s Gains
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Well, it looks like yesterday’s implied volatility ramp higher came back to bite the market today. The early IV crush in the VIX 1D went from 21 to 11, sending the S&P 500 surging by almost 1% to start the day. But by day’s end, it was all gone, with the index closing the day flat, at 0%.
The Nasdaq 100 finished the day down 13 basis points and dropped about 1.5% from its highs of the day in the final hours of trading.
They tried for a second day to get over resistance at 19,475 and failed again. All the Nasdaq needs to do tomorrow is to fill the gap lower, below support at 19,250, and probably on its way to filling the gap from August 24 at 19,000.
In addition, despite all the hype at the start of the week about the billions a day that Systematic funds were supposed to buy, the price action hasn’t been awe-inspiring yet. Looking at the MACD, with a 20 and 120 value, it almost seems as if they might have to start selling again if the S&P 500 begins to move lower.
I don’t think today’s afternoon sell-off had to do with tomorrow’s PCE. The VIX1D closed the day under 13, down from yesterday’s close of around 21. So, today’s decline had more to do with the morning’s IV crush fading away as normal trading took over, and Nvidia sank to the lows of the day.
The selling in Nvidia (NVDA) was on autopilot for almost the entire day, a slow mechanical move lower. Then, around 2:30, the sellers decided to stop messing around and took Nvidia down.
Nvidia managed to close on technical support around $118. However, breaking that level could lead to a further drop to around $110. It is also back below its 50-day moving average and below its 10-day exponential moving average.
Meanwhile, the 10-year rate seems to be waiting for either the PCE report or the job report next week, but this level at 3.8% remains incredibly important. A break of support could likely trigger a much steeper drop and, more importantly, another move lower in USD/JPY.
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and ...
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