Chart Snapshot: S&P 500, Gold, Crude, VIX

Risk appetite firmed over the week with equities benefiting from better than expected corporate earnings data, improving investor confidence, technical buying on resistance levels and an International Monetary Fund upgrade to global growth forecasts for 2010. Gold, like equities, also rallied whilst volatility, measured by the VIX index dipped again after temporarily spiking on poor jobless data from the 2nd which sparked last week’s decline.

Oil also stabilised near $60 after a brief sell off but remains rangebound with improving global sentiment offsetting growing US inventories.

Risky asset prices are not yet stretched (RSI) following the week’s progress and with most key corporations surpassing earning predictions further gains can not be ruled out in the short term.

S&P 500 Daily Chart

SPY Daily to 17th July 2009

Gold Weekly Chart

Gold Weekly Chart to 17th July 2009

Crude Oil Weekly Chart

Crude Oil Weekly to 17th July 2009

VIX Weekly Chart

VIX Weekly Chart to 17th July 2009

The Volatility Index Returns to Life

As forecasted here 10 days ago, the VIX index broke it’s downward trend, following worse than expected economic news. The spike in volatility was prompted by depressing US jobless data on the 2nd July. Investors are increasingly looking anxiously at the hard-won profits made during the March-May rally and are torn between hoping for a sustained economic recovery and the possibility of a “double-dip” recession in which growth stutters into the economy only to fade as government stimulus drains from the system.

The Volatility Index (VIX) to 11th July 2009

VIX Volatility Index at Recent lows

The infamous VIX volatility index, which peaked at an all-time high a few months ago in the midst of the banking sector chaos, has steadily fallen to 8-month low. The index may stay at relatively subdued levels during the summer lull but will experience a spike on the next inevitable bad news as investors over-react after weeks of relative calm.

VIX Weekly to 1st July 2009