S&P 500 Faces Risks from Oil Prices and Stronger Yen
The S&P 500 has been experiencing some calm days in the market. The index fell by around 60 basis points, which is hardly an exciting move. According to Mike from Mott Capital Management, there's not much to say unless it breaks below 7,600. For now, it could remain range-bound or potentially retest the highs.
The volatility in the market was relatively low today, but as Mike noted, it remains very low, especially when looking at implied correlations. A macro shock or a few days of selling pressure on the index could trigger a sharp increase in volatility.
Mike is also keeping an eye on oil prices and their potential impact on the VIX. WTI crude has broken through resistance at $93 and may be heading towards $101. This could lead to higher oil prices, which would likely push the 2-year Treasury yield higher as well.
The USD/JPY exchange rate has also broken below support at 155 and is now threatening to fall towards its next support region around 152. A stronger yen could pose a problem for markets, especially if it starts weighing on Japanese equity prices.