All major developed market equity indices have been bouncing for the past sessions. Below are a few snapshot charts of the big charts and levels worth reviewing.
S&P 500 futures continue trading higher today. The move from 2700 has been a real schoolbook bounce. The index found support on the 50 day average as well as the short term trading trend line. We are now seeing the first resistance levels. The big one to watch is the 2800 level. Shaving off the bounce extra longs looks prudent to me.
NASDAQ futures are also continuing the move higher today.
This has been another perfect bounce on the 50 day average but note we are approaching recent highs that will provide resistance. Chasing short term trading longs here is a late trade.
Euro Stoxx 50 continues trading in the short term trading channel since April.
We have now seen the index bounce nicely from channel lows to channel highs. The index is close to the 3500 level which is a huge resistance level. The short term trading long has played out the potential as we now enter resistance levels.
The Euro Stoxx 50 term structure has seen a big shift down in general volatility levels, but even more extreme has been the shift lower in short term maturities. Green is the volatility term structure one week ago and the orange represents the current picture.
Short term maturities are starting to look relatively cheap. Trades for upcoming earnings or hedges for the overall portfolio look attractive via shorter term options.
All in all, shaving off bounce longs or hedging with short term maturities are trades worth considering given the above.
Source: charts by Bloomberg
