The short term technical picture improved this past week as stocks erased the post Fed meeting drop as forecasted. The Nasdaq and the S&P 500 have since both surged to fresh new all-time highs. They are now all above their 50-day moving averages and the benchmarks are still well clear of their rising 200-day moving averages. The Volatility Index (VIX) confirmed the rally, plunging to a new recovery low below the key 15 level, before closing the week at 15.5.
As volatility in treasuries, precious metals, and stocks dropped last week the economy and the COVID Delta variant developments could come into focus this week. There will be plenty of key economic reports coming out shortly as well. Tuesday’s CB consumer confidence number, Wednesday’s Chicago PMI and ADP payrolls number, and Thursday’s ISM manufacturing PMI will all be monitored. On Friday, the government jobs report has the potential to trigger wild moves across all asset classes.
A major volatility event is currently forecast for stocks this summer. Key positions will be entered in the coming days to harvest profits from the expected volatility about to unfold.