Thursday, 30 June 2016

Awaiting the monthly close

US equities closed significantly higher for a second consecutive day, sp +34pts @ 2070 (intra high 2073). The two leaders - Trans/R2K, both settled higher by 2.2%. VIX settled lower by -11.2% @ 16.64. Near term outlook offers renewed cooling into end month to the 2050/40s.. with <2K next week.


sp'daily5



VIX'daily3



Summary

So, a second day for the equity bull maniacs, many of whom are now touting new historic highs - much as they were last Thursday afternoon.

A bounce was expected, although even I was surprised to see the 2060s this morning.. and the 2070s this afternoon. It was pretty incredible to see the VIX 16s... a full 10pts lower than Monday.

Is everything fine now? Was the BREXIT vote just overblown out of proportion?

No. Hell no.

Other EU states are going to vote to leave. The EU is going to fragment. Perhaps there will remain a core in 4-5 years, but there is no doubt Spain and many others are going to want to leave.


--
June set to conclude

sp'monthly1b


As things are, we look set for a net monthly decline (<2096), but it does look likely that the bull maniacs will manage a fourth consecutive close above the key 10MA.

A June close in the 2050/40s won't give any clarity to either bulls or bears. Even if there is renewed downside in the first half of July to sp'1980/20s, then it will again be a case of whether the July close is under 2K.

Goodnight from London

Wednesday, 29 June 2016

Its just a bounce

US equity indexes closed significantly higher, sp +35pts @ 2036. The two leaders - Trans/R2K, settled higher by 2.2% and 1.6% respectively. VIX settled lower by a rather severe -21.4% @ 18.75. Near term outlook offers the sp'2040/50 zone - with VIX 17s, before another strong reversal lower.


sp'daily5



VIX'daily3



Summary

So... yesterday saw a double floor of sp'1991, confirmed with today's net gains. Considering the decline from 2113-1991 took only two days, the bounce should (in theory) be no more than that.

Yesterday's VIX decline remains notable, relative to the very significant equity declines. It would seem, even if renewed downside to the sp'1950s.. VIX will max out no higher than 28/32.


The monthly close

With just two trading days left of June, my attention is increasingly on how equities, and many other asset classes will settle the month...

sp'monthly1b


As ever, I think the equity bears should be seeking a close under the key 10MA - which currently sits as 2025. Clearly, that is well within range. A Thursday/June settlement under the giant psy' level of 2K would be a real bonus, considering we closed last Thursday at 2113.

As for tomorrow, the bounce should have exhausted itself, and we should close at least marginally lower. It will be interesting to see how many of the bull maniacs decide to sell into month end, and ahead of the July 4th holiday break.

Goodnight from London

Tuesday, 28 June 2016

Bearish start to the week

US equities closed very significantly lower, sp -36pts @ 2000 (intra low 1991). The two leaders - Trans/R2K, settled lower by -3.1% and -3.3% respectively. VIX settled lower by a notably 'odd' -7.4% @ 23.85. Near term outlook threatens the sp'2030/40s - with VIX 21/19, before 1950/25... with VIX 28/32.


sp'daily5



VIX'daily3



Summary

Last week's set of weekly candles were absolutely clear.... bearish engulfing... spiky tops.... offering downside of 3-4% this week.

This morning's declines took out an array of key supports, 2025, the 200dma, and the giant psy' level of 2K. Further downside to the 1950/25 zone remains valid by the weekend.

Most notable today, despite sp'1991, the VIX never reflected the equity weakness... opening a touch lower... and only hitting 26.39. It would seem if sp'1950/25... VIX 28/32.  The 40s look well out of range in the near term.


--
Update on the bigger cycles...

sp'weekly1b


Note the lower bollinger band @ 1950, and that is a very valid target for this week.

sp'monthly3c


Note the red 'elder impulse' candle', the first red one we've had since February. The lower bollinger is offering the 1920s in the near term. From a grander multi-decade perspective, the deflationary doomer bears need a monthly close <1500 to have any justification for calling for sp'400 or Dow 5K - as I'm seeing touted again.

First things first. Lets see how the central banks react to sp'1700/1600s within the next 1-3 months.

Goodnight from London