Monday, 28 July 2014

Volatility fails to hold the morning gains

With US equities seeing a latter day recovery, the VIX failed to hold the moderate gains (intra high 13.64), settling -1.0% @ 12.56. Near term outlook is for the VIX to melt back into the 10s.. and eventually single digit VIX this summer.


VIX'60min


VIX'daily3


Summary

*the daily VIX candle is particularly bearish, a red close with a spike, and a failure at the 200 dma, which itself continues to tick slowly lower.
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So, some morning gains in the VIX, but it merely makes for a lower spike high. The 10s look due by end of this week.

VIX 20s look unlikely for some considerable time, and I have ZERO interest in being long the VIX.
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more later... on the indexes

Closing Brief

US equities started the day weak, but ended the day with fractional gains, sp +0.5pts @ 1978. The two leaders - Trans/R2K, settled lower by -1.1% and 0.4% respectively. Near term outlook is for minor churn... before a rather important Wednesday.


sp'60min


Summary

*VIX closed fractionally red, and certainly shouldn't inspire the equity bears.
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So..a broadly flat close for the sp'500, not exactly surprising.

The one concern for the bulls should be the R2K, but even that lagging index is 5% above critical support. R2K 1080 would probably equate to sp'1900.. and I sure don't expect either of those to be hit in the near term.
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more later.. on the VIX

3pm update - a close in the 1980s?

US equities have seen some moderate swings today, the only issue is whether a close fractionally above..or below sp'1980. Regardless of which side of 1980, Mr Market looks set to settle into minor churn until 'big action' Wednesday.


sp'15min


Summary

*second baby bull flag of the day... with the hourly cycles as they are, I wouldn't bet against another wave higher into the close.
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Certainly, there is no real downside power... even in the R2K/Trans, which were both -1% earlier this morning.
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Personally, I'd rather skip tomorrow.. and just jump straight ahead to Wednesday.

2pm update - flag confirmed

US equities confirm a small.. but clear baby bull flag.. with a break into the sp'1980s. Whether the bulls can attain a daily close in the 1980s...is another matter. Mr Market looks set to move into nano churn mode.. ahead of 'big Wednesday'.


sp'15min


R2K, 60min


Summary

*price action confirmed, with a VIX that has turned fractionally red.
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Suffice to say... equity bears had a bonus opportunity to exit this morning, and we're now barely 0.5% from breaking a new historic high.

All the bulls need is to see the R2K break >1965, which would really nail anyone who has been short since last week.