VIX shoots higher as equities falter

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Equity indexes lost ground yesterday as budget talks hit a roadblock in Washington, sending the CBOE Volatility Index up sharply.

The S&P 500 fell 12.08 points to close at 1698.06. Even with that loss, it held up reasonably well given the rancor on Capitol Hill. The index saw volatile trading in the morning, topping at 1711 before pulling back in the afternoon. It has resistance at 1749 and support at 1630, though that support level will mean little if a deal doesn't get done.

The Nasdaq 100 was down 11.36 points to 3244.66. It hit a new 13-year intraday high just barely shy of 3270 in the morning before declining. It has resistance at that 3270 and support at 3120.

The Russell 2000 dropped 10.69 points to 1079.62. The small-cap index did not see positive territory in the session, one day after posting an all-time closing high. It has resistance at that high of 1090 and support at 1040.

The VIX jumped 2.59 points, or 16.12 percent to 18.66, essentially matching its session high. The volatility index dipped to 16.15 about two hours into the session before bouncing.

The VIX futures were also higher. It was the last trading day for the October futures, which settle this morning and closed at 18.20. They were substantially lower than the spot volatility index, as traders apparently expect something good to happen before the morning settlement. (Ratings agency Fitch put the United States on "negative watch" after the close, but equity futures were surprisingly higher after that news.)

The November VIX futures closed at 17.35. The iPath S&P 500 VIX Short-Term Futures Note (:VXX) were up 5.99 percent to $15.56.


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