Summary:
- US500 hits new all-time high
- Price now within 10 points of 2600 level
- Volatility at extremely low levels
The US stock market has begun the new week in a bullish mood with the US500 rising to post a new all-time high. The market ended on Friday at a record weekly closing level and today has seen another move to the upside.
Recent months have seen a nice and clean uptrend with the 8 and 21 period EMAs remaining in a positive orientation (8 above 21) since the bullish cross at the end of August. On a couple of occasions price has pulled back to test the 21 EMA (yellow line) but each time this has provided a dip to buy and price has then resumed its march higher.
The US500 has enjoyed a clean uptrend in recent months as shown by the 8 and 21 period EMAs. Source: xStation
September and October have been remarkably sanguine months for stocks with very little seen by the way of a pullback as a slow and steady grind higher has defined the price action. There has been a notable increase in traders attempting to call a top and short this market with the client sentiment on the XTB website revealing that 81% of clients with open positions in the US500 are short, looking for price to drop.
There is a strong majority of traders short the US500 according to the client sentiment. Source: XTB.com
The low levels of volatility seen during the latest move higher can be further highlighted by looking at the volatility index (VOLX on xStation). A monthly candlestick chart reveals that VOLX is currently trading close to its lowest level of the decade with 5 of the past 6 months seeing lower prices trade than at any point since 2009. These current levels are extremely low by historical standards and should we get a negative shock to the US500 then a sharp move higher may well occur.
The volatility index is currently at extremely low levels compared to the rest of this decade. Source: xStation