Thursday, 26 September 2013

Volatility remains low

With the main indexes closing slightly higher, the VIX remained weak, and settled +0.3% @ 14.06 - having earlier fallen to 13.58. If the main market begins a new rally into October, the VIX looks set to slip further, into the 12s, perhaps even the 11s, if sp'1750/75.




Another day where the VIX slipped into the 13s, even though the market was generally weak.

It remains a fearless market, and that is pretty surprising considering the recent 5 day equity down wave (the first since Dec'2012).

Best guess, equities look set for a new wave higher, with a target of sp'1750/75 by late Oct/early Nov, and that should be enough to kick the VIX into the 12s, if not even the 11s.

This is simply not bear weather.
more later..on the indexes

Closing Brief

The main indexes closed a touch higher, with the sp +5pts @ 1698. The two market leaders - Trans/R2K, both closed up around 0.4%. It would appear the five day down cycle has concluded, and the market is now primed for another multi-week ramp into the mid sp'1700s.



*little mini wave higher into the expected.

So, the multi-day down wave has been terminated.

Certainly, today was pretty dull, with a lot of chop, but it does set up a rather big up wave across October.


As for tomorrow, I'd be looking for a weekly close in the sp'1700s, but more on that later.

3pm update - battling for a positive close

Another micro cycle to the downside, with the sp @ 1693, and a complacent VIX, +2% in the 14.30s. A daily close in the 1700s looks overly difficult, although all six main US indexes look set to close moderately higher.



The smaller 5/15min cycles are offering another spike-floor.

Obviously, we'll see a snap lower, if the key 1691 low is taken out, and if that's the case, we'll likely fall to the 1680/75 zone. I'm guessing 1691 will hold though.

Again, it has to be said...despite the weakness out there, bears still look generally powerless.

RE: VIX, no doubt some will be calling an Inverse H/S, seen on the hourly chart...

If that was the case, target upside would be about 16/17s, which would probably equate to sp'1660/50s. Further, if we hit those levels,m the weekly charts would rollover...something I still find hard to envision.

3.25pm.. market looks primed for a really stupid spike higher into the close. first target 1697

Watch out bears!

3.44pm ..sp'1696s...hmm, all the cycles are currently bullish...could be a fierce gap higher tomorrow if Mr Market wants to nail the bears after a 5 day run.

2pm update - minor chop

The market seems to have given up on picking a clear direction, and looks set to close somewhere in the sp'1690s. VIX reflects a market with little concern, +1% in the 14.10s. Precious metals are on the slide, Gold -$10, whilst Oil is holding moderate gains of 0.5%



Arguably, both bulls and bears can be disappointed in today, which is turning out to be a somewhat muted afternoon.

I see a few people are still expecting a break lower into the 1670/60s, but the issue with that is, if that occurs, then the bigger weekly charts will be rolling over.

Notable movers, STX, -2%, NFLX/FB, both +2%. 

1pm update - fed speak helping the market

The main indexes are trying to resume earlier gains, with the bulls battling for a daily close in the sp'1700s. If that is achieved, it opens up new index highs within the next 3-6 trading days. VIX is showing no concern, and looks set to close red in the 13s.



I'm calling a floor at sp'1691.

If we close today in the sp'1700s, that should be enough to confirm that the 5 day down wave is complete.

Since last Thursday the bears have shown virtually no downside power, and the VIX has reflected this.

Upside target of October is somewhere in the 1750/75 zone, although yes, the 1770s look a long way up right now.

FB, is naturally still climbing.

We're now in the $50s...and the $60s look an easy target by end year, not that I'd ever buy one of those hysteria-surrounded social media stocks.

12pm update - Mr Market just teased the bears

The main indexes are bouncing back, after a minor snap lower to test the recent 1693/91 floor. So far..the bears still look almost entirely powerless. Underlying pressure on the hourly index charts looks set to be increasingly positive into the afternoon.




Yes, we could close lower again..certainly, the trend has been lower in the previous 5 days, but really, bears have shown next to ZERO downside power.

It is the lack of downside power that should really concern those who are looking for much lower levels. How we going to take out the important 1627 low, if the best the bears can do is 5-10pts a day?

VIX update from Mr T.

time for..tea.

12.35pm.. A Fed person was speaking, and Mr Market is making another play for the 1700s again.

Actually, 2 more fed people to speak later today. If they want to kick the market higher..they have the opportunity.

11am update - failed break?

The main indexes are still slightly higher, and this could be merely be a back test of old resistance, but still..any break <1691..and the low 1680s will again be viable. Hourly momentum remains primed to break conclusively higher. For the day traders out there, this is kinda interesting!



A pretty clear failure this hour, no doubt those chasing the higher open, with 1700 long-stops all just got the kick.

Considering the bigger picture though, I'm guessing its merely a back test of the 5 day resistance/down trend.

We'll know soon enough.  Worse case for the bulls, another failure..with renewed weakness to the low 1680s.

11.31am.. Mr Market confusing both sides. Now offering a spike-floor in the 1693s...

15min cycle...

Baring a break <1691...the bears are still being teased.

10am update - bulls terminate the down trend

The market is seeing moderate gains, and they are more than enough to break the 5 day down trend from sp'1729. The sp' is back above 1700, with the VIX already -2.8% in the 13s. Any daily close in the 1700s should be enough to clarify a major new up wave is beginning.




We could see chop all the way into the weekend in this 1695/1705 zone, however, with weekly charts still outright bullish, a weekly close >1710 is now viable.

That would be extremely bullish for next week...the start of October/Q4.

There are 3 fed people speaking today, so..Mr Market could get a kick from either of the latest fed-speak.


Pre-Market Brief

Good morning. Futures are moderately higher, sp +5pts, we're set to open around 1697. Precious metals are a touch lower, whilst Oil is +0.3%. Equity bulls need a daily close in the sp'1700s, which would be enough to break the downward trend.



*econ-data just came in 'reasonable',  GDP Q2 2.5%, with weekly jobless of 305k,

So, we're set to open a little higher, and the hourly charts are offering some distinct underlying upward divergence.

Six days lower, or...the start of a up trend?  I'm guessing it will be the latter.

early notable mover: FB, in the $50s.

Video update from Mr Permabull...

Interesting day ahead...hopefully.

9.38am.. down being broken.  Bulls terminating the down trend. 

CNBC - the power of TV on stock prices

Whilst the main market closed moderately lower, the usual nonsense was occurring on CNBC earlier today. Clown finance TV (my preferred name for it) remains the US equity market's primary cheer leader. A simple guest-spot on the lunch time show resulted in three stocks snapping into hyper-ramp mode.

*Now, let me get one thing quite clear, the guest - Ms Beth Lilly, seems nice enough, but lets have a look at how those three stocks responded - within seconds, of her appearance.

All charts 1min, covering the past 2 trading days).

Surmodics (SRDX)

Sunopta (STKL)

Bio Script (BIOS)


First, here is the video...

Special can even see the stock price reaction on the CNBC live charts. Perhaps most interesting though, the hosts and guest (perhaps embarrassingly) both utterly refrain from acknowledging the fact the stocks they were discussing went into hyper ramp mode.

Maybe others are more used to it, but for me, seeing those stocks snap higher today on a mere guest appearing on a TV show, it just makes me sigh. To think of all the little guys (and girls) whom the SEC have chased across the years, whether its for stock newsletters, or even web postings.

Yet, here we are, with an absolute clear case of a person appearing on a live TV show, where the specific stocks they are there to highlight (or should that be pump?) snap violently higher.

Now, I'm not saying Ms. Lilly - or anyone associated with her, were buying either of those three stocks ahead of her few minutes on TV, but I'd sure be 'curious' to see their trading account records for the past few days.
Here is a thought. How can I get the lunch time guest-list for CNBC, along with details of what stocks they are going to..what are they calling it again...oh yes.. its called 'highlighting'. Gods forbid I suggest they are 'pumping' their freshly structured portfolios.

Looking ahead

Thursday has the usual jobs data. There is also another reading on Q2 GDP, market is expecting a slight revision upward to 2.7%. At 10am, there are pending homes data.

*next sig' QE-pomo, is the very large $5bn on Friday

As for the main market, there isn't much to add to what I've already noted in earlier posts this evening. Broader trend remains to the upside, and baring a few daily closes in the sp'1670s, I'm pretty confident of a move into the sp'1750/75 zone this October.

Goodnight from London

Daily Index Cycle update

US equities saw further weakness with the sp -4pts at 1692, the fifth consecutive daily decline. The two leaders - Trans/R2K, saw declines of 0.7% and 0.1% respectively. Near term trend remains weak, but the bears aren't showing any real downside power, as reflected in a VIX back in the 13s.





So, the sp'500 fell for a fifth day, and certainly, some bears are getting a little overly confident of 'big declines' this autumn.

I can only refer anyone with that view to go stare at a longer term daily or weekly chart. Whether you look at just this year..or all the way back to late 2011, the same pattern is there. Sporadic minor pull backs of a few percent..before renewed gains.

I would think most can agree that the VIX sure isn't indicating any underlying market concern. Indeed, VIX 13s are pretty astounding to reflect upon.

Just consider the last two times we saw the market lower for a fifth consecutive day..the VIX (Dec 2012 was 23), and in July 2012 (VIX 21).

a little more later, looking at the effect of CNBC on stocks.