Investing: The market is preparing for a further decline

Source: Investing

Authors: Michael Kramer

Article: Original article

Publication date: Thursday, November 10, 2022

Yesterday, stocks fell sharply, dropping the S&P 500 Index by about 2%. The market sell-off accelerated after the 10-year U.S. bond auction. The market sell-off accelerated after the 10-year U.S. bond auction. The auction didn't go well with a price of 4.14% compared to the yield at the time of the issue of 4.106%.

Today we are waiting for the release of the Consumer Price Index, which will play an important role in the S&P index dynamics. As a result of the increasing volatility of the VIX, the VVIX has risen slightly over the last couple of days. The rise in the VVIX can sometimes be an indicator of a rise in the VIX and a fall in the S&P. I believe the market should be preparing for a higher-than-expected Consumer Price Index report, and traders should look for hedging funds after the Consumer Price Index is released.

VIX Daily Chart

Meanwhile, the S&P has fallen out of a diamond-shaped reversal pattern. The first support level should be 3,640 points on the index.

Hourly chart of S&P futures

Forecast:

An exit from the technical diamond pattern coupled with potentially weak inflation data could contribute to further declines in the S&P index. Therefore, there is an opportunity for opening short positions on the index, the first target of this movement is 3640 points.