Thursday, 11 July 2013

Volatility breaks into the 13s

With the main equity indexes seeing very significant gains of around 1.5%, the VIX was naturally weak for the entire day. After breaking into the 13s, the VIX closed -1.4%  @ 14.01. VIX is now so low the daily moves are largely to be considered as 'mere noise'.




It would seem that even though the market is continuing to ramp, the VIX is no longer going to keep dropping like a rock.

Today's decline was very minor, and it appears the VIX is now content to just trade within an exceptionally narrow range in the 14/12s.

Even if sp'1740/60 in August, it would now appear somewhat unlikely that we'll see VIX 11/10.

more later..on those bullish indexes

Closing Brief - bears burnt to a crisp

The main indexes all closed with very strong gains. The sp' closed +22pts @ 1675, and is now a mere 0.7% from breaking new historic highs. The R2K closed at a record 1033, with the Trans +1.2%  @ 6471. Bernanke....has a 'great deal' to answer for.



Day'13 of an up cycle that has seen the market ramp 115 pts from sp' incredible move, on any basis.

There is absolutely no reason why the market is going to see any significant falls for some 'weeks'..perhaps...months.

For the bears still holding short, the outlook does not look good. The one thing in favour for the bears, no sig' QE until next Friday.

*having exited another annoying short-index position, I am now long Oil (via USO).

more later on the smashed down VIX...

3pm update - strength into the close

Mr Market is in hyper-bullish mode, no sellers, 'some' buyers, with the cheer leaders on clown finance TV...feeling like its been Christmas day for the past 13 trading days. After all, everything is fine again, now that Uncle Ben has assured the markets that he will print..until the end of time.



As expected, the small 5/15min cycles are fully reset..and hence we broke to new highs. There is little reason why the bulls can't smite the bears into the close, even into the low 1680s.

That sets up new historic highs for the Friday open..or early next week.

Those 1700s are a given...right?

I suppose the one upside of today.. Queen cheer leader Maria will not be saying 'we're off the lows'.

2pm update - sunny afternoon..for the bulls

The market is flat lining @ sp'1670, whilst the smaller 15/60min cycles continue to burn off a little of the excess overbought situation. There is little reason why we won't close in the mid 1670s, and that will bring the 1700s within easy reach next week.

sp'60min3' - broad outlook


I'm still running with the '5 little waves' higher in early August.

If we're going to hit the 1740/60s, we'll likely need to break 1700 in the current sub'3 wave.

So...bulls just need to keep pushing into the weekend..and beyond.

The weekly charts look as  bullish as they ever have...especially for the next 2-3 weeks.

Early August will probably be a short term peak, but hell, why would it stop then?

2.14pm.. 15min cycle looks floored, and ready to jump. Upside all the way into the close, 1675 looks relatively easy.

2.27pm...and there we up cycle..underway.

No doubt..the bears still short will be disgusted, and I do understand, but there is NO point holding short now. Bernanke has made sure of that.

1pm update - no sellers

The market is holding flat, whilst the smaller 5/15min cycles are resetting. A further wave higher into the close to sp'1673/75....appears easily viable. There are simply no sellers out there, and why would there be ? The Bernanke is out there..every day...'inspiring' things.



Look at the MACD (blue bar histogram) cycle, its around 60/70% reset already, and looks set to rally higher into the close.

Bears are absolutely obliterated again, and those sp'1700s don't look far away now.

Indeed, its now easily viable next week.

*I am now long USO, seeking the 38s

Primary weekly trend is up..and the 40s look viable by early August.

Ironically, I've been 7/8 'good' on USO trades recently, why wasn't I going long a few weeks ago, not least with all the bullish oil charts I was posting? Urghhh !

As for the metals, both are sharply higher,

...but they are still probably just building yet another bear flag. Weekly/monthly charts look..dire

12pm update - holding gains

The market is comfortably holding strong gains, and even a retrace into the 1650s now looks unlikely in the near term. Indeed, with the Bernanke telling the market there is no need to worry about QE ending any time soon, the market looks set to rally much higher from here.



So, day'13 of the rally, and we're a clear 110pts above the key low of sp'1560.

Best case for the bulls, somewhere in the sp'1740/60s in August, with VIX 12/11s.

*I exited index-shorts earlier, there looks to be only marginal downside from here. It was an overly risky..and stupid trade. I could blame the Bernanke, but no.

VIX update, from Mr T

time for lunch

11am update - relentless upside

Whatever you want to call this latest Bernanke inspired rally, one thing is clear, the Fed is entirely in control..of just about everything. A mere Q & A session with the press is enough to swing the global markets by huge multi-trillion amounts. Incredible.



Daily charts remain extremely strong, hourly charts are strong, but the smaller 15min cycle is now due a small wave lower. At best, bears will be lucky to see 1660 this afternoon.

*as things are, doesn't seem any point holding short, after the next 15min cycle is done by 2/3pm.

The laughable thing is that there isn't any significant QE until next Friday, and yet, bulls don't need it, so long as the Bernanke says the right thing.

11.20am.. exiting index-short position. Am utterly tired of this. No point holding short, we ain't going back into the 1650s any time soon, are we?

mid 1700s look viable within a few weeks.

Anyone doubt sp'2000 by spring 2014? I mean, seriously, how can anyone doubt that? Thats only 20% or so higher, easily viable.

10am update - utter failure

Well, the bears are utterly powerless, and the rally continues, now 110pts across 13 trading days. VIX is back in the 13s -although trying to put in an opening reversal candle, and Mr Market is again fully assured that QE forever..really is forever.




Another lousy day for the bears, but hey, hasn't it been that way for 97% of the last 900 or so trading days?

I suppose it could be seen as kinda funny, but really...its shamefully embarrassing how gods damn stupid and naively 'hopeful' the remaining bears are.

..and that most certainly includes yours truly.

On any basis, I'll be looking to exit for another loss, on the next micro-down cycle.

After all, there is absolutely no point holding into the 1725/50s.

Pre-Market Brief

Good morning, and welcome to another day at the worlds most rigged casino. Futures are significantly higher, sp+17pts, we're set to open at 1669, a mere 1% from the May'22 high. USD is sharply lower after comments from the Bernanke, Oil is not joining the party...yet




So..the Bernanke has once again managed to kick the US equity market up, this time by around 1% for most indexes.

With the sp' set to open on the border of the 1670s, bears are still in dire trouble.

VIX will almost certainly open in the mid/low 13s, a weekly close in the 12s?

If todays gains largely hold, that will make for around 110pts (7%) across just 13 trading days.

WTIC Oil, breaking out

Whilst equities continue to broadly climb higher since the sp'1560 low, the more dynamic mover is Oil. WTIC has now clearly broken higher on the hugely important monthly charts. There is soft resistance in the 106/07 area, but is it the $110 level that will be far more decisive.

WTIC Oil, monthly, 20yr

WTIC Oil, monthly2, rainbow


Just a few short notes on Oil, which as many are starting to realise, is seeing some very significant..and consistent daily gains.

As ever, what will be particularly important, is how we close the month. Any close in the $110s, would bode for 120s in August, and that is going to put some serious (at least short-term) pressure on the US economy.

The 2008 high of $147s look extremely unlikely this year, global demand just isn't that strong right now. What is clear though, higher Oil prices are going to spook the equity market at 'some point'. Already, the airline stocks are starting to decline (see UAL post), and they are a typical leading sector that can warn of trouble.

Looking ahead

There is the usual weekly jobless claims, import/export prices, and also Treasury monthly data on the deficit. There is no significant QE for the bears to be concerned about, and indeed, there are no major QEs until next Friday (opex, July'19)

For Thursday, bears should be seeking at least a moderately lower Thursday close, somewhere <1646, preferably something in the 1630s. The 50 day MA will be around 1630 late Friday, and would be a very understandable level where the market can find support.

**Late evening update

As of writing (10pm EST), futures are sp +15pts, so, we're set to open @ 1667. Perhaps the most disturbing realisation, is that is a mere 20pts from the May'22 high.

If we open up 15pts, that will make for a 107pt rally in just 13 trading days....sickeningly incredible.

sp'60min'2 - bollinger/Keltner bands

A gap straight to the upper 1660s is going to put the market into very overbought territory again. Indeed, regardless of any gap higher, primary downside target will be the 50 day MA, but that is rising each..and every day.

*I am short the indexes from sp'1654, seeking an exit in the low 1630s by the Friday close, although with the likely Thursday gap higher, the 1630s now look a long way down.

Goodnight from London

Daily Index Cycle update

The main indexes closed broadly flat, after trading in a rather narrow range. The 'old leader' transports though, did see some moderate weakness, closing -0.7% @ 6394. Daily charts are looking pretty toppy, and a minor retracement of around 2% look very viable by late Friday.





For those bears seeking a major downside reaction after the FOMC minutes, today was indeed something of a disappointment, but hey, neither did the market see a hyper-ramp into the 1660/70s.

Instead, the main indexes closed flat, and today's little spike higher at the FOMC release, may be a short term cycle least for a few days.

Bears should be seeking at least a moderately red Thursday close, at least <sp'1646, preferably somewhere in the 1630s.

It remains important to keep in mind, a gap zone around sp'1630, which is also where the (steadily rising) 50 day MA is lurking.

*I am holding short (indexes) overnight, from sp'1654.

a little more later...