LIVE MARKETS-S&P 500: Pressure in the pipe

* U.S. equity index futures suggest modest opening losses

* Euro STOXX 600 index up ~0.2%

* Dollar up; gold, crude decline

* U.S. 10-Year Treasury yield ~1.19%

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S&P 500: PRESSURE IN THE PIPE (0900 EST/1400 GMT)

The S&P 500 index has seen little change over the past 3 trading days. In fact, the index is essentially flat with a gain of just 0.02% over this period.

With this narrow action shorter-term, historical volatility measures, on an hourly basis, have compressed to especially low levels:

On Tuesday, hourly Bollinger Band width collapsed to 0.00565, which was its lowest reading since December 31 of last year. On January 4, the first trading day of 2021, the SPX promptly slid 2.5%.

Bollinger Bands $(BB)$ are envelopes, or trading bands, plotted at a level of standard deviation above and below a simple moving average of price. Given that the bands are based on standard deviation, they adjust to swings in volatility.

Besides readings on December 30 and 31, over the past year or so, hourly BB width was only lower than Tuesday's level on February 14 and 18 of last year. February 18 was just 1 trading day before the SPX put in a major top.

The January 4 tumble proved to be a one-day wonder, although the aftermath of the February 2020 top was, of course, a severe month-long affair.

On the upside, low hourly BB width readings in mid-August of last year, preceded a more than 6%-thrust into the early September high.

Indeed, crushed historical volatility in itself does not predict direction, but it can indicate the market is poised for much more spirited action.

Thus, by this measure, it would appear the SPX is especially ripe to let off some steam, one way or the other.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)