Below are a few chart updates of the US major indices.
Early last week we pointed out that NASDAQ had reached the first support: 50-day average and the lower part of the trend channel that is in place since April this year. The index continues moving nicely within the trend channel.
Let’s see where we go from here, but the ATH closing level at 7470 is important to watch as short-term “magnet”. The first bigger support is at 7200 where we bounced from.
S&P 500 continues trading within the channel formed in April. Past two days have been rather strong sessions.
2850 is the short term resistance level to watch here and then the ATH (red line).
2800 is the first support level. Despite the FAANG stress recent price action tells us shorts are not comfortable and this will continue to be a frustrating tape for many.
VIX is down to exactly the same level we saw at the low in June, 11.64. Markets are not overly exciting, but optionality is once again getting cheap(er).
Note that the covered call SPX index (BXM index, white) has outperformed the SPX index (orange) over past 6 months. This only shows that index is relatively boring, despite all the noise we read about.
Given the fact volatility is once again trading at relatively low levels, option hedges such as replacement strategies are starting to look attractive.