Monday, 27 January 2014

Volatility pulling back

It was a mixed day for the VIX. It wasn't until the sp' -10pts this morning that the VIX finally turned positive, getting stuck at 18.99. With equities rebounding, the VIX closed -4.0% @ 17.42. There is near term downside to 15/14.50 before the next surge into the 20s.




One of the most notable aspects of today was the action in the VIX. Despite the market lower in the morning, it wasn't until the sp' slipped 10pts that the VIX finally turned positive. Even then..with sp'17/ 1772..the VIX didn't quite manage the 19s.

The daily chart is pretty clear...we have resistance in the 19/20 zone, and it will likely take a drop below sp'1765 to finally break into the 20s.

Considering the break on the weekly index charts, the VIX 20s do seem viable, but as has been the case for some years...the VIX never stays high for very long.

Best guess..a near term pull back to 15/14.50..before a move into the low/mid 20s - along with sp <1765..possibly down to the 1720/00.

more later...on the indexes

Closing Brief

It was somewhat of a mini roller coaster for US equities, with a morning low of sp'1772, but seeing a latter day recovery to settle -8pts @ 1781. The two leaders - Trans/R2K, settled lower by -0.85% and -1.45% respectively. Near term bounce to 1810/15, then 1760/50..if not lower.



*awaiting AAPL earnings...due 4.30pm

So...we broke to the low 1770s..and have already seen a 20pt swing higher. Yes, the closing hour was weak, but still...we closed almost 10pts above the morning low.

On any basis, a 'natural' bounce zone would be the old broken support in the sp'1810/15 zone. It is hard to guess whether that will be reached tomorrow..or not until Wednesday.

Regardless. the bigger weekly cycles are BROKEN. Bulls...beware!
the usual bits and pieces to wrap up the day...across the evening.  :)


STX, Seagate missed... -7% in AH, to the $54s

AAPL in-line...  stock selling lower, -5% @ $520.   Overall though, its still raking in $14 EPS..each quarter, a very impressive profit margin.

more later...on the VIX.

3pm update - a bounce to the sp'1810s

We have a pretty clear least in the short term. There is natural bounce upside to the sp'1810/15 zone..which will likely equate to VIX 15/14.50. That will make for a rather interesting re-short opportunity. Metals remain weak, Gold -$14




*AAPL earnings at the close.

We have breaks of short-term trend on the VIX..and sp' hourly charts.

As is more important to keep in mind the bigger weekly/monthly cycles - the former of which have now seen conclusive downside breaks.

...updates into the close...and after (AAPL earnings will be kinda interesting to see)

3.17pm... the following is the semi-bearish'd still offer a hit of the lower weekly bol', but not for a few weeks.


What is key...ultimate short-side stops will now be 1850, with target downside to the low 1700s.

*VIX back in the 16s....on track for 15/14.50.

3.30pm.. a little chop around sp'1790...but underlying hourly MACD cycle is due to turn positive at the Tuesday we could easily gap open in the 1800s.

The fact there is sig QE-pomo tomorrow should concern anyone still holding short.

3.44pm... looks like we'll be bouncing into FOMC afternoon..and getting stuck around 1810/15.

For the equity bears seeking major downside, a weekly close in the 1780s...or lower will be pretty important. Just need one major down day...Thursday..or Friday.

notable strength: AAPL +1.1%, RIG +2.2%  - the latter remains a broken stock though.

3.51pm.. VIX looks set to close -5% in the low 17s...not exactly the big jump some were looking for. The big 20s sure won't be easy..even with another big drop like last Friday.   

*AAPL earnings will be released at 4.30pm.

back at the close.

2pm update - due a dumb bounce

Having slipped from sp'1846 to 1772 across just 3 trading days, we're more than due a bounce, with sp'1810/15 being a natural zone for the market to get stuck and rollover again. VIX looks maxed in the upper 18s. Metals remain weak, Gold -$8


Summary be clear...

high probability of a short term bounce..all the way to the 1810/15 zone.

However..even more important..we have confirmed breaks on the bigger weekly cycles.

A re-short in the 1810/15 zone by late Wednesday would make for a particularly easy trade, considering the breaks in the weekly charts.

Notable strength: AAPL +$4 @ 550...with earnings at the close of today.

VIX pullback zone (if bounce to sp'1810/15)..would be 15/14.50. 

2.16pm..a break >hourly 10MA..1790..will break the 3 day down trend...but it sure won't do anything to negate the bigger down turn on the weekly charts.

Metals are slipping away - as the market bounces... Gold -$13

1pm update - weekly up trend is confirmed broken

The third day of significant weakness for US equities. Arguably, most illustrative of the weakness are the weekly charts where we have clear breaks on all the indexes. The huge ramp from Nov' over. Metals and Oil remain weak..whilst the VIX is making a play for the 19/20 zone.

Nasdaq, weekly



*AAPL earnings at the close of really is going to be a busy week.....!

The Nasdaq weekly tells the story..the huge ramp from Nov'2012 is broken...there is NO doubt now. The break opens up a hit of the lower weekly bollinger..equivalent to the low sp'1700s.

There is clearly risk of an FOMC bounce..but there is now VERY high risk things will unravel this week..all the way to the low sp'1700s.

notable weakness: FB, TWTR, UAL

1.22pm..another attempt to 1782... who is buying here?

Broader trend remains weak..baring a break >hourly 10MA..but that is a further 10pts higher.

Arguably..short-side day trading bears should have made a run for it in the past hour.

A fair question right now..who fears the Yellen across Tue/Wednesday?

12pm update - battling it out

Mr Market is fighting hard to find a short term floor - in the 1780/70s, in order to begin some degree of significant bounce..back into the low sp'1800s. Metals remain weak, Gold -$7, whilst Oil reflects the broader market, -1.0%. Despite weak equities, VIX is fractionally lower.




*weekly7b' is the most bearish outlook I can come up with right now, and as I will be noting...if 1850 is a key intermediate top, then in theory (based on previous big cycles) we should hit the lower weekly bol..currently 1682..but rising 10/15pts a week.

It is notable that despite the lower indexes...VIX is moderately red.

Best case downside for the bears right early Tuesday...sp'1770s...with VIX 19/20..before the 'stupid bounce'.

Notable weakness: TWTR, -7%
Strength: CAT +4.4%, RIG +1.3%

time for tea :)

12.01pm  It takes the sp' get the VIX to turn positive.

Bears are getting a chance to tighten stops here...considering King O' is talking tomorrow..with sig' QE-pomo, and then Yellen on Wednesday....

Be careful out there!

12.19pm.. the bull maniacs really must hold 1770/65 in the current wave..or..there is risk of a straight down move to the 200 day MA @ 1700...and that'd result in a likely hit of the lower weekly bol' by next week.

Look to the VIX...if it gets stuck in the 19s.....with sp' levelling 1770/65..that is a probable short term floor. this is important...

R2K,...breaks the ramp from Nov'2012...its over....

Target IS the lower weekly bol..which would indeed equate to sp'1720/00 within no more than a few weeks.

11am update - momo stocks really struggling

Whilst the main indexes are on the slide again - after failed opening gains,  there is particular weakness in the momo stocks, with FB and TWTR both seeing very significant declines of -7% and -3.5% respectively. Metals are weak, Gold -$8, with Oil -0.8%

FB, daily

TWTR, daily


Clearly, there are still a lot of momo bulls who need to get rattled out of their positions.

As for the main support is the 1780/70 zone. If we do level out offers a H/S long as we don't bounce much above 1815/25.

VIX is trying to turn positive..but as many recognise..there is strong resistance at the 200 MA on the weekly cycle - in the 19s.

11.18am..first sign of a turn...bears highly vulnerable to a sig' high as 1810/15..but that would no doubt take at least 2-3 days to achieve.

10am update - weak opening

The indexes open moderately higher, and considering the Friday drop, this is a particularly weak open. There is still a very viable drop to the 1780/70 zone, before a significant bounce. Precious metals are weak, Gold -$10. VIX is on the slide...-5%..back in the 17s.



A new week..and there is already a lot to cover...bear with me!

The second red 'rainbow' candle on the weekly chart...and we've not seen that since Nov'2012. Unquestionably...the style of trend we saw across all of 2013 is...over.

The real 'prize' would be a hit of the lower weekly bollinger...which has jumped at the Monday open to 1682. It will be a very viable target mid/late the 1740/20 zone.

Notable weakness: TWTR, -4.5%... wanna buy that loss making nonsense in the upper $50s?  ;)

10.23am...weak weak weak...and we're moderately lower.

Bears really need to be cautious here..and despite what some were touting over the weekend, this is no 'crashy Monday'.

Frankly..its a place to drop shorts..and wait for a 'stupid bounce'. Whether it takes until late tomorrow..or after the doesn't really matter..does it ?

TWTR..-6.5%.....what a crying shame to see that.

Pre-Market Brief

Good morning. Futures are moderately higher, sp + 5pts, we're set to open around 1795. Precious metals are lower, Gold -$7. Equity bulls (for once) face real problems on any bounce early this week, where there will be strong resistance in the 1810/15 zone.



So...we're set to open a little higher, but really, 5pts is a micro move.

I suppose any minor bounce this morning of 5/10pts could be labelled a micro'4 - in relation to last Fridays rather clear 3' (of whatever degree).

Obviously, bears face risk of a sizable bounce between now and the FOMC announcement this Wednesday (2pm).

All things considered though, any bounce is to be re-shorted, ideally, from the 1810/15 zone.

One primary scenario

The following is something that a fair few have also noted this past weekend..

sp'daily1b, HS

It'd suggest no lower than 1780/70 this week, and then a  bounce, back to the 1810/20s...before eventual downside (mid/late Feb) to 1740/20.

Anyone holding short whilst the market is in the 1780/70s is going to need to be real careful, mindful of a bounce that might be 40/50pts..with a VIX that could slip from 19/20...down to the low teens.

Video update from Oscar

'Don't fall in love with the downside'. Hmm. Oscar has a point, but as I noted at the weekend, the weekly charts sure don't look good right now. The power, and style in which we closed Friday was very bearish, and bodes for at least 1780 this week.

Notable early movers: CAT, +6.7%, BTU +2.0%, but the latter really looks ugly on a daily chart.

Have a good day!

9.16am.. market sure looks weak in pre-market..with the opening gains of just 2-3pts now.

If Mr Market wants to annoy most...a move to 1780/70..then whipsaw higher across Tue/Wednesday..before renewed weakness Thur/Friday.

Weekly VIX cycle is clear...strong resistance in the 19/20 zone.