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The SPDR S&P 500 (NYSE:SPY) was rising over 0.5% higher Wednesday after the Bureau of Economic Analysis downwardly revised U.S. GDP to 2.1% in the second quarter, reflecting softer economic growth.
The revision indicates the Federal Reserve’s monetary tightening policy is working, which brought investors hope the central bank may hold interest rates steady when it meets next month.
The SPY’s move higher caused the market ETF to break up from a rising channel pattern, which often happens in bull cycles. The SPY hasn’t formed a higher low since Aug. 25, however, which indicates a retracement is likely on the horizon.
When the SPY retraces to form at least another higher low, volatility in the stock market is likely to tick higher.
Traders wishing to trade the potential volatility have multiple options, including the ConvexityShares Daily 1.5x SPIKES Futures ETF (NYSE:SPKY).
SPKY is a 1.5x leveraged fund, which tracks the SPIKES Futures Short-Term Index and measures volatility in broad-based equities in a similar way to ProShares Ultra VIX Short Term Futures ETF (NYSE:UVXY), which tracks the movement of the S&P 500 VIX Short-Term Futures Index.
For every 1% daily movement in the SPIKES Futures Short-Term Index, the SPKY fund seeks to move 1.5%, meaning that it’s for short-term trades and should not be held for a long period of time.
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The SPY Chart: The SPY formed a bullish Marubozu candlestick on Tuesday, which indicates higher prices were likely to come on Wednesday. On Wednesday, the SPY was attempting to form a second bullish Marubozu candlestick, which suggests higher prices could come again on Thursday.
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