March 29, 2022 6:34:28

The last week of March kicked off with another whippy but positive day in US stock markets. The three main sectors that are in the green for the year all underperformed. Energy, materials and financials were the laggards as volatility measures eased once again. Instead, investors appear to be adding more equity exposure with the worst hit areas making a bigger comeback.

A sharp climb in Tesla gave a big boost to stock markets. The electric-car maker said it will seek investor approval to increase its number of shares to enable a stock split in the form of a dividend. If approved, it would be the latest after a five-for-one split in August 2020 that made the stock cheaper for its employees and investors.

All this coincides with Wall Street’s “fear gauge” returning to its long-term average. The Vix is down four out of the last five sessions and trading just below 20. This level was last seen in mid-January. We note that the European equivalent volatility index remains elevated and has room to improve.

S&P500 moves above 100-day SMA

US futures are modestly positive today building on the recent gains seen in the benchmark US stock index. Yesterday saw prices move above the 100-day SMA at 4546 which becomes initial support. A Fib level (61.8%) of the year-to-date high/low sits at 4551.

Below this is the widely watched 200-day SMA at 4478. This is a key marker, and the gravitational point should risk-off come into the market again. Rapidly rising US interest rates remain a key risk. Worsening headlines out of Ukraine will also impact on the current positive mood.

Upside targets include a resistance zone around the February highs at 4595/4590. The next Fib level (78.6%) of the year-to-date high/low move comes in at 4670.