September has managed to live up to its reputation so far, with both a spike in the VIX and a drop in the SPX. And futures are not indicating a big rally to take out prior highs this week.
When looking at pricing behavior last week, markets got yanked around. Monday was a big down-day, crossing below the 100-day moving average before rallying back to find support and close just above the 50-day moving average.
Much of the decline seemed to be driven by the problems stemming from China’s Evergrand real estate tital and the possible failure of about $300 billion in debt. While that story continues to evolve, the Fed stepped in to reassure the markets the cheap-money punch bowl was not going to get taken way too quickly. Whatever the catalyst, the markets charged higher again to end the week in the black.
For this week, it looks like the range to watch is 4407-to-4778 for the SPX. With the quarter coming to a close there it’s unlikely there will be too much of a push higher in price. Instead, look for the VIX to come back down some as markets begin to reposition for Q4.
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