Tuesday, 28 January 2014

Volatility continues to cool down

Arguably more notable than the equity gains today, was the continued fall in the VIX, which settled -9.3% @ 15.80. Near term outlook is for further declines, to the 15.00/14.50 zone..which might equate to sp'1810/15. From there, VIX looks set to again... surge.




I should note again, there will be VERY strong resistance in the 19/20 zone - where the important 200 weekly MA is lurking.

However, if the market gets stuck around sp'1810/15 in the coming day or two..rolls over, and can then break <1765..we will see the VIX break into the 20s...for the first time since last October.

Without question, the next day or two will be offering a very attractive index re-short /VIX re-long opportunity.

more later...on the indexes

Closing Brief

It was a choppy day for the US indexes, but with underlying upward 'bounce' pressure, sp +10pts @ 1792. The two leaders - Trans/R2K, settled higher by 1.1% and 0.9% respectively. There is near term upside to 1810/15...before the down trend will likely resume.



So..what to make of today?

Is that it for the downside? Considering the price action of Friday, the VIX surge into the upper 18s..and the apparent double micro-top of sp'1850...I have to think there is more downside to come...after the current bounce completes.

It will be important for the bears to appear again..before this week concludes.

Video update from Oscar (yeah..weird time for an update)

Not surprisingly..Oscar is looking for upside. I'd only be concerned if we get a daily close in the sp'1820s.

the usual bits and pieces across the evening...although its only Tuesday, and I'm starting to get tired..urghhh

3pm update - closing at the high of the day?

Considering the smaller, and bigger index cycles, a daily close in the sp'1790s seems likely, and that will keep open the door to an FOMC or Thursday morning (Q4 GDP) spike high...in the 1810/15 zone, along with VIX 15/14.50. From there, the downside (in theory) should resume.




For many..today has been a real mess..but this sure looks like just a standard bounce, after what was a pretty sharp 3 day drop.

Those seeking an index re-short and/or long VIX, should be on standby from the Wednesday open for a potential bounce high..and then a rollover.

As ever...Fed days are somewhat tricky, and the safer strategy would be to wait until at least 2.15/30pm.

I'm not expecting much in the closing hour, other than another 3-5pts higher, although would doubtless really annoy those holding short the market.-

3.15pm.. upper bollinger on the hourly chart..now 1809..so..we will clearly have some stiff resistance around 1810 early tomorrow.

VIX looks weak..-8%..and a close in the upper 15s...would be the target.

Tomorrow could be one hell of a reversal day...

3.39pm...pushing for a new intraday high...... nice to see the market behaving itself.

2pm update - underlying bounce upside

Market is still in the process of a natural bounce/retracement, after the 3 day fall of 72pts. Considering the bigger weekly charts, we'll surely get stuck, and rollover, no later than Thursday morning, somewhere in the sp'1810/20 zone. Metals remain weak ahead of the FOMC, Gold -$4


GLD, daily


*as many recognise, the metals are again sitting the edge. If Fed Taper'2, then metals are probably going to get the hammer, and then talk with shift to 'if the summer 2013 lows will be taken out'

A daily close in the sp'1790s still looks likely..and that will open up the low 1800s tomorrow.

Momo stocks are strong, TWTR, NFLX, FB, gains of 2-4%

1pm update - holding the early low of 1779

Mr Market is comfortably holding the early low of sp'1779, and looks set for a daily close in the 1790s, with VIX 15s. Metals remain weak, Gold -$3, whilst Oil is holding sig' gains of 1.6%. Market is likely to continue slowly clawing higher all the way into FOMC..tomorrow afternoon.



There is little to add on the indexes. We're merely seeing minor chop..but with underlying upside pressure.

The 1810/15 zone sure looks possible by late Wednesday. One issue to keep in mind..GDP Q4 is released Thursday morning. A Thursday morning spike high 1810/15..and then a rollover?

Regardless...this sure doesn't look an attractive re-short level...not least with the VIX still in the 16s

Notable weakness: STX, -11.8%, AAPL, -7.4%

12pm update - continued weak chop

The equity market continues to see weak price chop in the 1780s. Hourly cycles offer upside to 1810/15 within a day or two, which would equate to VIX 15/14.50. Metals remain weak, Gold -$3, whilst Oil is holding notable gains of 1.5%.



*added a fib chart to hourly chart, you can see a lot of key levels 1809/18 zone.
I would imagine a lot of people are getting lost in the minor noise today.  Bigger pressure remains..to the downside..equity bears should be looking to break that late this week..or next.

Notable mover: AAPL, -7% or so, and is even getting featured on Drudgereport.

AAPL looks set to test the 200 day MA...in the 485/475 zone..within a week or so.

time for tea :)

11am update - choppy morning

Some choppy price action, but the short term upside pressure is clearly there. Natural upside to the sp'1810/15 zone remains best case for the bulls within the next few days. Metals have turned lower, Gold -$4, whilst Oil holds sig' gains of 1.6%. VIX is on the slide, -7%




Perhaps most notable...the drop in the VIX...seemingly headed for 15/14.50...a very natural level.

Yeah..the market seems to be acting 'naturally'...after many..many months of nonsense.

*The sig' QE today..is no doubt helping.

AAPL is so far holding the big $500 floor, but looks likely to still close at least -2/3%

11.25am..the chop continues..no doubt some are launching new index shorts  here..but that seems overly early.

Default view is to wait until AFTER the FOMC of Wed' 2pm.  Lets see if Mr Market can battle to 1810/15 at that time.  Between now and then...chop..with underlying upside.

VIX remains weak, -7.5%

Notable weakness: STX -10.5%.  Viable downside of another 10%..which would sync up well with the low sp'1700s by mid February. 

10am update - market wants to claw higher

Whilst the daily and weekly cycles are pushing lower, we're more than due a bounce...into the sp'1800s. Metals are higher, Gold +$3, whilst Oil has jumped a rather significant 1.5%. Equity bears look to have problems until Wednesday afternoon.



With Durable Goods Orders coming in weak, the chatter is about a possibly weaker than expected Q4 GDP - due Thursday.

Then there is the issue of Fed taper'2. All things considered, ironically, it'd probably more upset the market if the fed don't cut QE.

However, another $5bn less of POMO money each money is going to be further lessen the chance of new highs.. >1850.

Notable movers: AAPL, -7%,  STX -9%

STX, daily

I've yet to check the detailed results, but still...it remains under-valued relative to the main market. In terms of price...with a break under the 50 day MA...a natural move would now be to $47/45

10.37am... chop chop....but you can see...the pressure is there..for a bounce...

target remains 1810/15...by Wednesday afternoon.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +7pts, we're set to open at 1788. However, the Nasdaq is -0.4%, held lower by AAPL, -8%. Metals and Oil are both fractionally higher. Equity bulls look set to make a play for the 1800s today.



So, we're set to open a little higher, and with the hourly MACD cycle  about to turn positive, there is potential for the bulls to kick the market back into the 1800s.

However, this is arguably..going to offer the first decent re-short opportunity in over a year.

The bounce...could easily drag out into tomorrow, and maybe we'll see a brief FOMC spike to 1810/15..before a reversal.

Early movers: AAPL -8%..will be interesting to see whether it can recover across the day.
STX, -5.7%...also on market reaction to earnings.

Ford (F), +2.0%

We've a fair few things today...some econ-data...QE-pomo, and King O' later this evening...

Of course, the FOMC starts today, with the announcement tomorrow at 2pm.

The fun never ends..right?

Update on Japan

Brazil, Spain, Italy..France...indeed, most of the world indexes are now looking problematic to end January. Baring a reversal in the next few days, First downside for the bears should be 12k, which is 20% lower.

Video update from Mr Permabull

Oscar has struggled in the past week, with a series of bad calls. However, he does point out correctly, natural support in the 1780/70s..and indeed, its possible we just bounce here for some days.

As many also recognise though..a break <1765 - the 100 day MA..and taking out the 1767 FOMC taper'1 low, would be a major bearish achievement.

*Durable Goods Orders:  -1.6%

Pretty lousy numbers, and the sp' drops 5pts on the news... to +2pts @ 1783.

Weekly cycles are conclusively broken

Despite the latter day recovery (part of a very natural bounce), after new daily cycle lows earlier in the day, the bigger weekly cycles are now clearly broken. Most indexes are suggestive of further downside to the low sp'1700s, no later than mid/late February.

R2K, weekly


All of the US equity indexes now generally look like the above R2K chart. With the R2K conclusively breaking the trend from Nov'2012...things look clearer, at least for a few weeks.

Best case for the bears

The following few charts should clarify what I am now seeking in the coming weeks and months. If sp'1850 was an intermediate top - completing the wave from Oct'2011, then we should eventually battle lower to the mid 1500s.



Daily1b is one outlook that might frustrate many bears..but it'd still result in downside to the mid/low 1700s by mid/late February.

What would be VERY much more exciting is if we break <1765/55 this week..or next - see weekly7b, that would likely result in a fast hit of the 200 day MA..along with the lower weekly bollinger in the low 1700s. If 1850 was a key intermediate high, then the primary target are the mid 1500s..just a few months away.

Looking ahead

A busy Tuesday is ahead. We have Durable Goods Orders, Consumer confidence. There is the start of the FOMC meeting, and we have King O' addressing the senate/congress at 9pm EST.

*there is sig' QE-pomo of $2-3bn, bears..beware!

We have a VERY busy week now underway..and I'd better stop there!

Goodnight from London

Daily Index Cycle update

The sp' broke lower in late morning to 1772, but then found a floor, and saw a latter day recovery, settling -8pts @ 1781. The two leaders - Trans/R2K, settled lower by -0.8% and -1.4% respectively. Near term upside is 1810/15, with viable downside to the low 1700s.





A rather important third day to the downside for most of the big indexes. We saw a lower low..and a lower high..there is nothing bullish here.

With the weekly charts clearly broken, equity bears are starting to show some consistency - something that has been lacking in over a year.

It increasingly looks, that one way or another..we're going to test the 200 day MA on the sp'...right now, that is 1702 - and still slowly rising.

*As at 7.30pm EST, AAPL, -$44, (-8%) @ $506.  Maybe if AAPL started losing money like AMZN or TWTR, it too could have a PE of 100...or 1000 ? Crazy times...crazy valuations.

a little more later...

Closing update from Mr topstep