VIX Down 3%, Erasing Yesterday’s Gains

The CBOE VIX (VIX) futures are down nearly 3% today; the declines from yesterday’s session, which exceeded 3% for the S&P 500 and Nasdaq 100 futures, have eased, with the US500 and US100 gaining around 0.8% to 1% before the U.S. market opens.

• After the U.S. session today, Tesla will report earnings, and on Thursday, Alphabet (GOOGL.US) will also release results. This will likely keep volatility in the tech sector—and consequently in the S&P 500—elevated for a while. Verizon’s earnings report today caused the company’s stock to drop nearly 5%, but GE Aerospace and Lockheed Martin shares are gaining 1% to 2% following their reports.
• Aside from Tesla’s earnings, Alphabet’s results on Thursday will be particularly watched, as they will shed more light on the real state and forecasts for the tech sector. This is likely to bring increased volatility in Big Tech stocks, particularly for cloud-related businesses (Amazon, Microsoft) and the advertising sector (Meta Platforms). The drop in the VIX accelerated after the benchmark approached the ‘fear’ threshold around 30.

VIX (H1 interval)

An improvement in sentiment on U.S. stock markets is likely to lead to the realization of a ‘bearish flag’ formation on the VIX. This, in the case of VIX, suggests a further decrease in expected volatility and a potential rebound in U.S. indices. The current key level is around 27. A drop below this level could indicate control shifting to the ‘sellers’ in VIX, triggering another downward impulse.

Source: xStation5

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