While earnings seasons just started and uncertainty remains high, investors might look for second level risk measures such as the implied volatility and quantitative data.

In terms of implied volatility, a good measure and reference is definitively the VIX. The CBOE describe the VIX Index as a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500® Index call and put options. On a global basis, it is one of the most recognized measures of volatility -- widely reported by financial media and closely followed by a variety of market participants as a daily market indicator.

From a chartist point of view, the VIX is currently challenging June bottom and is approaching the pre-Covid-19 area. Also, the index is capped by a key declining trend line and confirmed its bearish trend after breaking below its 200-day moving average for the first time since mid-February.

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In addition, the percentage of the S&P 500 stocks member trading above their 20-day moving average is currently at 88%; a high level but not overbought yet. Indeed, this measure is pointing for a top when staying above the 90% region for few days and only after it’s exist this 90% area, can a market consolidation happen. To say it in another way, this measure is not yet providing a bearish signal.

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As a consequence, further advance can be expected on the S&P 500 and traders may consider long position above 3110 to target 2020 top at 3390 and even the Fibonacci projection at 3620. Alternatively, below 3110, look for a correction towards 2965.

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Rémy Gaussens is the Head of Global Research at Multi-Stock Trading LLC in Paris.