holiday sale bannerholiday sale banner

Markets consolidate, big levels ahead

August 8, 2022

Last week would be best described as a consolidation week for headline indices. In the daily SPX chart displayed below, we can see the two immediate levels that matter most for the market with first, on the upside the zone up to 4200 that marks the first major hurdle for bulls and on the downside, the rapidly ascending support line displayed in red that was actually the upper-end of the trendline established from the bottom made in mid-June.

ivolatility spot price chart

Source: Tradingview.com

Both levels were tested and respected over the past week and they will most likely continue to attract attention over the coming days.

Zooming in on the hourly chart helps us locate some support levels on the downside starting with 4100-4105 which is the area where bulls step into action to defend the SPX when prices were under pressure from bears following the strong jobs report on Friday.

The following levels are seen around 4080 - 4000 - 3923

Ivolatility spot price chart

Source: Tradingview.com

Looking at the NDX, a fairly similar picture emerges. The blue trendline caps the rallies for 2022 so the current level of 13300 plays a significant role for NQ traders. On the downside, the same red channel marking the uptrend from mid-June was broken and now serves as support.

Ivolatility spot price chart

Source: Tradingview.com

Given the configuration of both the SPX and the NDX, it seems that the convergence of the levels identified will force either a break higher or a break lower by the middle of August.

Looking at sectors, the big loser last week was the XLE which dropped more than 7%. The performance was in line with that of the USO which lost around 8.5% over the week.

Ivolatility spot price chart

Implied volatility for the XLE remained fairly subdued although it moved higher by around 3 points over the week, it looks low historically.

Ivolatility spot price chart

The rest of the sectors performed fairly close to each other with performances between -2% and +2%. The best performing segment of the market was the Technology space gaining 2% over the week.

Ivolatility spot price chart

At the single stock level, looking at the DJIA components, CVX and CAT both lost more than 6%, pretty much removing all of their excess performance of the prior week.

Ivolatility spot price chart

On the upside, BA continued to advance, gaining almost 4% for the week. PG also showed a good performance up slightly more than 4%.

Ivolatility spot price chart

From a volatility perspective, CAT’s implied volatility dropped meaningfully over the week following the company reporting earnings.

Ivolatility spot price chart

The 30d IVX is now back below 30% for CAT. For BA, the implied volatility also dropped significantly over the week and market makers have now taken a lot of premium out of the implied volatility of BA following its steep rally.

Ivolatility spot price chart

DIS implied volatility was the best performing over the week for DJIA components, gaining around 2 points despite the stock being largely unchanged over the period. As earnings are expected on the 10th Aug’22, market makers moved implied volatility higher although the magnitude looks fairly small on the chart below.

Ivolatility spot price chart
Disclaimer - This information is provided for general information and marketing purposes only. The content of the presentation does not constitute investment advice or a recommendation. IVolatility.com and its partners do not guarantee that this information is error free. The data shown in this presentation are not necessarily real time data. IVolatility.com and its partners will not be liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use or reliance on the information. When trading, you should consider whether you can afford to take the high risk of losing your money. You should not make decisions that are only based on the information provided in this video. Please be aware that information and research based on historical data or performance do not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.
Back to All News articles