Wednesday, 16 April 2014

Volatility crushed again

With the equity market seeing significant gains - for the third consecutive day, the VIX was crushed, settling -9.2% @ 14.18. Near term outlook is for VIX to melt lower into the 3 day Easter break. With equities looking set for another multi-week up wave, VIX will likely remain <20 until June.




We have a clear break to the upside in the equity market. The multi-week down move from sp'1897 looks concluded.

VIX is therefore likely to remain subdued for a number of weeks.

Any hopes of a break into the 20s are now off the menu until late May (at the earliest), if not midl/late June.

more later..on the indexes

Closing Brief

It was a decisively bullish close for Mr Market, with sp' clearing, and closing above the 50 day MA, settling +19pts @ 1862. The two leaders - Trans/R2K, were higher by 1.7% and 1.1% respectively. With the break of the down trend, near term outlook has turned bullish.



Without question (at least to me)..we have a clear break of the down channel from sp'1897 - 1814..and we're headed back higher.

For once, I've managed to avoided getting smacked, and I will even consider picking up a moderate long-index (probably XLK), next Monday, after the 3 day weekend.

For those still holding short, as ever... I can only add, 'trading stops are useful'.

more later..on the crushed VIX.

3pm update - a close in the 1860s?

US indexes are continuing to build gains, and equity bulls look set to attain an impressive daily close in the sp'1855/65 zone...way above the 50 day MA. VIX is getting crushed, -8% in the 14.20s. Metals are flat.



What to say, other than ...urghhh

At least I'm not getting nailed on this up wave..which now looks set to continue across most of May.

I realise many out there will be outraged at the current gains, but as ever, the market is never wrong..only traders.

3.31pm... Mr Market aiming for a close in the sp'1860s

3.43pm.. grinding higher....bears...into dust.  

For once...I won't be one of them.

2pm update - minor chop continues

US equities continue to see minor chop in the sp'1850s, and indeed, the recent low of 1814 now looks a fair way lower. With the weekly charts flipping back to bullish (in some aspects), market appears to have seen a clear turn...just ahead of the long 3 day Easter weekend.




Even if we pull back to the 1840s late today..or tomorrow, the damage has been done.

I'm resigned to broad upside for the next few weeks, as sickening as that might sound to some of you out there.

For me, any new market shorts are off the agenda for some considerable time. As it is, with a holiday near, I have little interest in getting involved (long side) until early next week.

2.38pm.. minor price chop....every little pull back is being bought.

1pm update - powered up

US equities are a little tired, but still comfortably holding the sp'1850s..well above the 50 day MA of 1848. With the VIX below old rising trend, there is next to zero doubt now that the market is once again on another multi-week up wave. The only quetion is, how high?



*Well, I just spent $65 on a new power unit for my computer, so that is bullish tech sector I guess. At least I've discerned the problem (I think).

Regardless of any minor market noise, the down trend is surely over. Perhaps I might not sound it, but I am very disappointed, but more so. concerned for those still on the short side - especially those hoping to 'ride it out'. That has rarely worked out in my experience, and if the next up wave last a fair few weeks, the upside could be pretty significant.

yours...not currently long XLK.

1.24pm.. minor chop..and we have rather clear underlying upside pressure on every minor down tick.

It would seem we will close the week in the 1860s.

Weekly charts have already flipped to outright bullish.

12pm update - equities building gains

US indexes are building gains, after a brief minor early retrace. It would seem that the down trend from 1897 has recently concluded at sp'1814, and new index highs (at least for some indexes) are likely in May. VIX remains naturally weak, -6% in the mid 14s.



So, we're on our way up again. What else is there to say?

I remain on the sideslines, not least with am unstable computer that I'd like to start kicking around the room.


VIX update from Mr T.


time for a glass of something cold.

..the cold tears of broken bear dreams?   urghh

12.31pm.... bears getting ground down to dust again....a daily close in the 1860s..whether today or tomorrow...seems a given.

11am update - battling to hold the 1850s

The morning gains are little shaky, but the market is so far just able to hold the sp'1850s. VIX is -4% in the 14.90s, and the 13s look viable by the Thursday close. Metals continue to see minor chop, with Gold -$2



*major tech issues, amongst other problems today. Nothing seems to be going right. urghhhh

11.30am... the day continues to get least 'domestically', but my technical issues are perhaps solved.

As for the stupid casino, that little early drop....a last hint of downside, and considering the price action, a daily close in the 1860s is not out of range. full moon mess.

10am update - down trend...busted

US equities open higher, and the primary down trend looks to have decisively broken, not least with a break above the 50 day MA of sp'1848. VIX has already lost the 15s, and looks set for the 14/13s into the 3 day Easter weekend. Metals are seeing minor chop.



To me, it looks more than decisive, the down concluded.

Barring some truly bizarre 'omg, we're in trouble now' comments from Yellen this lunch time, the gains we look set to close in the 1850s, if not even higher.

Daily MACD cycle..ticking higher for a second day. No bullish cross yet...but looks due next Mon/Tuesday.

For those on the short is arguably white flag waving time.

*am having major computer issues again, urghhhhhhhh

If I disappear for an hour or two...that is why. 

Pre-Market Brief

Good morning. Futures are somewhat higher, sp +11pts, we're set to open at 1853 - crucially, back above the 50 day MA. So long as Yellen or Fed official Fisher, don't say anything 'stupid' today, equity bears are not likely to be able to turn this back lower. Metals are set to open..flat.



Frankly, it is not looking good for the bears. If we are indeed trading in the 1850s this morning, and certainly..if we get a daily close >1847 or so, then it would be highly suggestive that a short term floor is in. To me, that is a major disappointment.

Using the R2K as a guide

If you saw the recent two videos from Walker, you'll know about his scenario where the R2K hits/briefly breaks the 200 day MA, only to rebound. If we see a net gain for the R2K today, I'd think it is white flag waving time for the bears. Urghhh!

The following would be a valid bearish scenario - so long as the R2K does NOT break >1210/15 in May/June.

R2K, weekly2, H/S

Make of that..what you will. Right now, that seems the best hope, but clearly, the R2K is now due a 6-8% rally, and we're already higher by 1% in pre-market.

To those currently on the short side, I wlll merely note 'trading stops will be useful'. After all, worse case, is that this nonsense breaks new index highs (at least for the Dow/SP') in May..before the next wave lower.

As for me, I don't intend to get involved until after the Easter break. Further, any daily closes >1850, and that rules out any short side trades in the immediate term (if not much of May).

yours... content to be on the sidelines for 'some time'.

9.18am.. Pre-market gains holding... sp+12pts....that takes us to around 1855. It is pretty decisive now.

Notable gains in Oil, +1.1%

9.37am...It looks decisive. Barring a collapse on 'Yellen talk' - seemingly unlikely, this down wave is done.

First upside target is the 1870/75 price cluster zone.

9.51am.. hmm, a little spiky-fail...but we DID break the 50 day MA..and mood out there looks like bears are exhausted.

Bears need to hold the line

It was a messy day in market land, with some interesting price action between sp'1844/16. Equity bears need to hold under the 50 day MA of sp'1846, but more than that, they really need a weekly close in the mid/low 1830s, to attain a second red candle on the weekly 'rainbow' charts.



With a daily close in the 1840s, the red candle..has turned blue. This is a clear provisional warning of trouble to those still on the short side.

As it is, I'm still guessing we'll hold under 1850..but more importantly, under the 50 day MA...currently 1846 - but rising each day.

The second market leader in real trouble

Most notable aspect of today was unquestionably the R2K, which broke below the 200 day MA, and was briefly trading in the 1000s. Despite the latter day recovery, this was an important break.

The bigger monthly charts are even more of a problem for those seeking continued 'broad upside across the summer/2014'.

R2K, monthly

A monthly close under the 10MA - currently 1114, would be huge technical damage to the broader up trend. Underlying MACD (blue bar histogram) cycle is rolling over, and is set to go negative in May. Right now, best 'bearish case' are the mid/low 900s - which would likely equate to sp'1625/1575 by late summer.

Looking ahead

We have some housing, and industrial prod' data in early morning. However, Mr Market will be far more focused on what Yellen has to say. She is due to appear at the Economic Club of New York around lunch time. Further, Fed official Fisher is also on the loose, whose comments might motivate the market one way..or the other.

At 2pm, the latest Fed beige book is released, and no doubt the algo-bots will be reacting to that.

*next sig' QE-pomo is not until next week.

Video update from Walker


Permabear in tech disarray

This morning was somewhat annoying. I had a straight forward plan. Short from the 1840/45 zone, but computer was having 'issues', and because of that, I decided to abandon picking up a short side block, not knowing if I'd even be able to get online later in the day. Yeah, I don't have a backup PC right now.

Anyway, today was interesting to watch. With two days left of the week, I'm highly suspicious that the market will trade largely sideways, within the 1825/45 zone - critically, STILL under the 50 day MA. If that remains the case, then next Monday, I will seek a major re-short, and would still be seeking downside to the 1770/60s.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately higher, sp +12pts @ 1842. The two leaders - Trans/R2K, settled +0.8% and +0.4% respectively. Near term outlook is for minor chop into the 3 day Easter weekend, holding under the 50 day MA of 1846. Bears look set for renewed downside early next week.





A bit of a messy day, but the daily charts offer more clarity than the smaller hourly/15min cycles.

In my view (when you consider the bigger weekly cycles), we are likely developing bear flags. If that is the case, we'll close this week somewhere in the sp'1825/45 zone - importantly, to remain under the 50 day MA.

The price action in many ways is similar to late January, and if Wed/Thursday is largely minor will form a very clear 5 day bear flag.

Downside next week would be from the 1840/20 zone...down to the 1770/60s.

a little more later...