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30.04.2021

The American Market Is Actively Testing the S&P 500 Strength

On Wednesday, April 14, the all-time high for the S&P 500 stood at 4151 points, matched with an equally noticeable change in the VIX indicator. It showed 13-month lows. Meanwhile, no cardinal discrepancy between the indicators was observed. 

Already on April 15, the new market high was 4173 p. Could this serve as a reliable signal for a reversal? It seems not – investors feel calm and relaxed. 

Still, the news from the US authorities on the continuation of a coordinated monetary and fiscal policy significantly increased the sensitivity threshold for investors. Most of them began to react more sharply to even the slightest drivers emerging in the securities market. 

Sharp inflationary surges and unpredictable bond yields, incessant internal political strife, surprising geopolitical confrontation, reduced dividend stock yields, and a high return on investment – have so far in no way influenced the emergence of a protracted correction in the US stock market. 

It seems that investors stay in their usual mode and keep buying out everything they can. 

On the other hand, technical indicators signal a colossal market overbought. What’s more, the volatility indicator systematically demonstrates an increasingly noticeable decrease. 

Given the high correlation, most of the world’s stock exchanges and the American stock market are still significantly influenced by the S&P 500 volatility. 

It is not so important what will be the prerequisite for the correction in the US stock market, while it shows an extremely high overbought. If the divergence between the VIX and S&P 500 indicators becomes more tangible, the mid-term expectations may change. 

All this can lead to the fact that the bears will receive an even more solid argument for forming a new price agenda. Now, the only correct solution is to follow the trend and compare positions. The conclusion offers itself – hold your breath and check the VIX. 

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