LIVE MARKETS-S&P 500 index chop about to stop?

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S&P 500 INDEX CHOP ABOUT TO STOP?

For more than two months now, the S&P 500 index .SPX has been struggling to make progress. Indeed, it's been a lot of chop, and little sustained trend. However, given especially compressed historical volatility, the benchmark index once again appears especially ripe for much more spirited action.

The S&P 500, which finished Friday at 6,114.63, has risen just 0.4% since its December 6 then-record closing high of 6,090.27

In any event, at 6,114,63, the benchmark index ended down just 0.07% from its 6,118.71 January 23 record closing high, and down only 0.22% from its 6,128.18 January 24 record intraday high:

With this, historical volatility has collapsed. Daily Bollinger Band width is at its lowest level since August 20, 2021, while on a weekly basis, it's now at its most compressed level since the week ending November 9, 2019.

Of note, in terms of the next major moves from these prior band width readings, from August 20, 2021, the SPX popped as much 2.4% over the next nine trading days (tds), before then sliding about 6% over the next 21 tds.

From the week ending November 9, 2019, the SPX surged more than 34% over the next 60 trading weeks into its early 2022 peak.

Meanwhile, the SPX now faces a significant hurdle in the form of a long-term resistance line from its 1929 high. This line, which resides around 6,150 this month, or only about 0.6% above Friday's close, capped strength in December and again in January.

In the event of further chop, on a weekly basis, initial support is at the 10-week moving average (WMA), which ended Friday at 6,000.

The 20-WMA should ascend to around 5,965 this week, while the support line from the October 2023 low should be around 5,955. The early February low was at 5,923.93.

(Terence Gabriel)

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