Stocks finished the day higher, with the S&P 500 gaining 18 bps. Not much was accomplished between Friday and Monday, so from my standpoint, that leaves a lot of the technical views I have shared relatively unchanged and not worth diving into. Given the Fed meeting on Wednesday, it seems likely we will grind sideways until then.
VIX
The VIX did rise slightly yesterday to 16.4, and it was trending higher the past few trading sessions. It isn’t normal to see the VIX and the S&P 500 both trending higher simultaneously.
VXN
The CBOE NASDAQ 100 Volatility index was also moving higher as well, and again this is highly unusual activity. Typically, when I have seen this rise in volatility and an increase in the market, it leads to a pullback; think about September 2020. It doesn’t have to lead to a drop; I guess it could even lead to a push higher if the volatility melts.
It would make sense to see the VIX and VXN rise heading into the Fed meeting. But still worrisome.
High Yield ETF
There was a massive divergence forming between the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) and the S&P 500. These two tend to trade together, so a deviation of this size seems notable. It doesn’t tell us which asset class was correct, but couple that with rising volatility, and one should be paying close attention.
Starbucks
Starbucks (NASDAQ:SBUX) rebounded sharply Monday after falling on Friday. Friday’s gap was still open and will likely get filled at $113.50 before the stock resumes its move lower.
PayPal
The chart for PayPal Holdings (NASDAQ:PYPL) doesn’t look encouraging heading into results later this week. I have seen some options activity in the name, but I need to go through and analyze it better; I just haven’t had the chance. But the stock was sitting right on support at $230, and it won’t take much of a push at this point to get the shares trading down to $213.
China
Iron ore and shipping prices keep dropping, and the manufacturing slowdown in China for two months seems to be going ultimately unnoticed by the market. At some point, everyone will see it, but so far, no luck. I wonder how much longer the market will continue to rise in front of a global slowdown as the Fed reduces its asset purchases. ¯_(ツ)_/¯
