S&P 500; US Indexes Fundamental Forecast – August 11, 2016

U.S. stock index futures finished lower on Wednesday with investors deciding to book profits in reaction to a steep decline in crude oil prices and as investors digested quarterly numbers from retail firms.

The benchmark S&P 500 Index was dragged down by a 1.4 percent drop in oil stocks. This caused the index to lose about 6 points. The Dow Jones Industrial Average also lost ground on Wednesday, falling about 40 points with ExxonMobil contributing the most to the loss.

The NASDAQ Composite Index was also under pressure, dragged down by Apple stock which lost 0.7 percent and the iShares Nasdaq Biotechnology ETF (IBB) which dropped nearly 2 percent.

The price action by the major indices and average has been sluggish lately after July’s strong rally. Although the markets have been pumped up by the addition of more stimulus from central banks such as the Bank of Japan and the Bank of England, many investors feel that prices are too high given signs of a global economic slowdown.

Some investors also feel that thin market conditions have contributed to the rally and that the markets will be due for a steep correction once the summer vacation season is over and trading volume returns to relatively normal levels.

Stock index traders should be monitoring the CBOE Volatility Index (VIX). It is widely considered to be the best gauge of fear in the market. Currently, it is trading near a one-year low. On Wednesday, the VIX traded 7 percent higher, near 12.5.

In my opinion, the VIX can best be described as a complacency index. At its current low level, it is telling us that investors are not worried about a bearish event. They have become complacent that the stock market will recover from corrections and pull-backs. This is the very line of thought that often leads to the volatile breaks.

Remember that a year ago, bad news from China sent the market sharply lower. This year, the VIX is at nearly its same level as this time last year and China is set to deliver three key reports on Friday.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, August 11, 2016

Government Bond Auctions

Date/Time Country Type

Aug 10 11:00 Germany EUR 5B 0% 2026 Bund

Aug 10 19:00 US 10-yr Note auction

Aug 11 11:30 UK 0.125% I/L 2036

Aug 11 19:00 US 30-yr Bond auction