By Samir Al Khoury,
The VIX Fear and Volatility Index, which expresses investors’ expectations regarding price movement in the stock market, dropped yesterday from 21.36 points to approximately 12.38 points. This is its lowest level since January 11, 2024, indicating stability and investor satisfaction in the US stock markets, as US stock indices closed with strong gains. The main Standard & Poor’s 500, Dow Jones, Nasdaq 100, and Russell 2000 reported significant increases.
This noticeable decline in the VIX index is due to several factors, the most prominent of which are:
• The headline consumer price index declined on an annual basis in the United States of America yesterday, recording 3.4%, which is a lower percentage than the previous reading (3.5%). The core consumer price index (which excludes food and energy) recorded on an annual basis 3.6%, lower than the previous reading (3.8%).
• Retail sales declined on a monthly basis in the United States of America yesterday, recording 0%, which is lower than expectations (0.4%) and the previous reading (0.6%).
• Long-term and short-term US Treasury bond yields declined yesterday, with the two-year bond yield recording 4.70%, and the ten-year bond yield recording 4.31%, its lowest level since April 5, 2024.
• The US Dollar Index, which measures the performance of the dollar against a basket of six major currencies, declined, recording 104.08 points today, its lowest level since April 10, 2024.
It is worth noting that the markets have increased their optimism regarding interest rate cuts in the United States of America, currently pricing in the possibility of an interest rate cut in September 2024.
From a technical standpoint, it seems that the downward trend for the VIX index is prevailing in the next stage, with the next challenge for the VIX index being reaching the support level of 11.81 points. The Relative Strength Index (RSI) also indicates negative momentum for the VIX index, recording approximately 38 points.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.
Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.
Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.
Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.
Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.
*All trading involves risk.
