S&P 500: Growing Broader Market Strength Could Help Bulls Clear Key Resistance
2025.01.22 02:56
Yesterday, continued to move lower, and the was noticeably weaker. Treasury yields declined across the board—not just in the U.S. but globally, with rates in the UK, Europe, and Japan remaining flat.
It seems like rates are taking a breather after significant moves over the last few weeks. This pause feels normal and hasn’t changed my long-term view on where rates are headed, especially if we are near the end of the ’s rate-cutting cycle. Of course, this depends heavily on where , growth, and employment trends go.
Regarding equities, the market appears to be catching its breath, allowing for some rebound. For instance, the RSP (the ) outperformed yesterday, rising about 1.16%, while the itself was up roughly 90 basis points. Resistance for the cash index is around 6,085.
Volatility is another area worth noting. Realized volatility over 10, 20, and 30 days hovers in the 15–17 range. yesterday, the closed at 15, while realized volatility stood at 16.7 for 10 days, 15 for 20 days, and 15.8 for 30 days.
With daily moves averaging 80 basis points, it’s unlikely we’ll see realized volatility drop much further. Meanwhile, the VIX’s nine-day implied volatility gauge rose slightly by 0.18 to 14.31, indicating potential risks ahead with next week’s Fed meeting on Wednesday and the meeting later this week.
Also noteworthy is the one-month implied correlation index, which fell over two points yesterday, settling at 9. Historically, this is at the lower end of the range, and past dips to similar levels—like in August, November, and December—have typically marked a bottom before implied correlations rose again. This suggests limited downside potential for implied correlation from here unless the VIX drops significantly, which seems unlikely given the current market volatility.
Finally, regarding equity funding: total return futures for March, adjusted for BTIC interest rates, traded down to 61.5 yesterday, slightly below Friday’s close of 63. This indicates limited demand for leverage and margin redeployment, unlike the year-end period when equity financing costs spiked.
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