Trading insights: VIX +9% last 5 days, busy economic calendar today
The VIX volatility index is the global benchmark index for measuring investor expectations for the relative strength of the price changes of the S&P 500 Index.
Basically, the VIX can be used by investors and traders to measure how fast the S&P 500 index price changes as a way to get an understanding of how investors “feel” at a given period of time.
Chart 1 illustrates the five day relative percentage performance of the VIX Volatility Index.
The VIX vs the S&P 500
The Fear factor
- As a general understanding of the VIX, when the VIX price is above 30 it can imply higher volatility on the way (bigger price swings on the S&P), as investors become more uncertain about the stock market.
- As a general understanding of the VIX, when the VIX price is below 20 it can imply that lower volatility is on the way (smaller price swings on the S&P), as investors become more confident about the stock market.
Yes, the VIX is a tradable product that traders can employ to speculate on changes in investor sentiment
- Speculative traders with the view that markets will become more uncertain may seek to buy the VIX as a way to express that view.
- Speculative traders with the view that markets will become more certain may seek to sell the VIX as a way to express that view.
- Hedges might use the VIX to “protect” a portfolio of stocks using hedging techniques
The above is a general commentary about the VIX for speculative product users. Hedging strategies do not imply traders will not avoid market risk.
Today’s economic calendar
Key points to note:
New Zealand kept its interest rate at 5.5%, NZD strengthens against:
- NZDJPY +0.4%
- NZDUSD + 0.5%
- NZDCAD +0.6%
- NZDCHF +0.5%
United Kingdom Core inflation above market forecast
- Core held at 6.9% vs the expected 6.8% year-on-year
United States housing starts in focus, high price action across USD assets expected upon the release
United States FOMC meeting minutes, high price action expected upon the release of the previous US Fed policy meeting minutes
Source: TradingView / J. Knobel August 16 2023 7:14 AM UTC
USD/CAD upside prospects remain
Technical commentary: USD/CAD
Current price 1.3493 remains above its 9 day and 18 day moving averages (bullish), tentative upward price trend line with a near 40 degree angle being observed (see chart) adds speculation that price could continue to appreciate (see chart price trend since August 2023), DMI above its signal line suggest trend strength remains intact. Therefore further upside prospects for an extension move towards the 13 week highs near 1.3650s (see chart) can not be ruled out. Downside risk seen below the 1.3350s (see chart).
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Not investment advice. Past performance does not guarantee or predict future performance.
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