Ford Motor ($F), CBOE Volatility Index ($VIX) ,SPDR 500 Trust ($SPY) Most Dynamic Today!

Stocks opened modestly lower and are trading in a narrow range into midday Tuesday. The S&P 500 is off 4 points to 2162.89 and midway between the day’s 5-point trading range.

Treasury bonds are holding modest gains as equities tick lower and the yield on the benchmark ten-year has eased back to 1.57%.

It’s a quiet day on the commodities front as well. While crude oil is off 20 cents to $45.75, gold has added $2 to $1331.50.

On Wall Street, nearly every market sector is under water. Basic Materials (XLB), Utilities (XLU), and Energy (XLE) are the biggest losers. Industrials (XLI) and Financials (XLF) are flat.

CBOE Volatility Index (VIX) is up .03 to 12.47 and probing the lower end of the 2016 range amid light volumes in the options market. Roughly 2.8 million calls and 2.7 million puts traded across the exchanges. Projected volume for the day is 13 million contracts and 20% less than the one-month daily average.

Ford Motor (F) July 29th Weekly 13.5 calls, VIX Jul 14 puts, and SPDR 500 Trust (SPY) Sep 212 puts are the most actives.

Light options volumes and VIX at the low end of this year’s range reflect a substantial decline in risk perceptions compared to a few weeks ago. Recall that on June 24th and 27th the S&P 500 suffered a dramatic two-day 5.3% rout after the UK referendum to leave the EU. VIX saw a spike to the mid-20s at that time and options volumes surged, with more than 28 million contracts traded on June 24th and 23 million on June 27th.

Brexit fears have obviously receded since that time and, while the S&P 500 has recovered the late June losses and moved to new highs, the focus is shifting from the macro front to earnings. A barrage of reports was released since the closing bell Monday and a flood of reports are slated for the days/weeks ahead.

Meanwhile, across the pond, the outlook has been less stellar as European equities are struggling to keep pace with their US counterparts. The chart below shows the recent action of the Vanguard Europe ETF. Trading under the ticker VGK, this fund holds leading companies from diverse industries across Europe and includes names like Novartis, BP, Roche and Nestle.

See Tradespoon’s Stock Forecast on Vanguard Europe ETF (VGK)

Tradespoon’s Stock Forecast on Vanguard Europe ETF (VGK)

Like in the US, European equities staged a remarkable rally of late June lows and gained nearly 10% since that time. However, unlike the S&P 500, the Vanguard Europe ETF is far from record highs and has also met resistance at the 50 and 200-day moving averages in recent trading days.

Therefore, while investors in the US have perhaps brushed aside the concerns about the UK referendum and turned their attention corporate earnings, European equities are painting a somewhat different picture. In addition, losses in the Europe ETF today come as the European Commission said that the Eurozone could lose half a percent of GDP due to the Brexit vote. At the same time, investors were also digesting disappointing data on German and Eurozone business sentiment Tuesday.

Shares of the Europe Fund could find some support around current levels near $47. Beyond that, watch for a move to $46.50 or $46. Resistance is quiet obvious along the 50 and 200 day moving averages.

Back in the US, look for VIX to hold support around recent lows of 12.5 and the S&P 500 to face challenges at recent all-time highs of 2169. The S&P 500 has short-term support at 2160, 2155, and 2145.