Wednesday, 26 November 2014

Closing Brief

US equities (naturally) saw a day of micro price chop, with the sp'500 settling +5pts @ 2072. The two leaders - Trans/R2K, settled -0.1% and +0.4% respectively. Near term outlook is for continued gains... into the low sp'2100s.



*an important daily close in the 1190s for the R2K

Suffice to say... for those few who were around today.. YOU are the diehard market traders.

If you're also around this Friday morning... you deserve a prize.

To all my American readers.. (and that is 70/80% of you).... have a great Thanksgiving holiday.

*I'll post a daily wrap at 8pm EST

3pm update - micro chop into Thanksgiving

US equity indexes look set for continued micro chop into the Wednesday close, with the Sp'500 around 2070, Dow 17800, and R2K making a viable attempt to get a daily close in the 1190s. VIX is naturally subdued in the low 12s.



Price action is entirely to be expected....  looks like we'll settle around sp'2070.

*Friday is also an early close at 1pm EST... so.. in many ways its almost the weekend!

Notable weakness: (along with the drillers), CHK -2.6%. The fact that Nat' gas is -1.6% is not helping!

2pm update - R2K clawing higher

Whilst the broader market is seeing micro chop, there is a touch of notable strength in the second market leader - the R2K, +3pts @ 1189. A few daily closes in the 1190s will confirm that an attempt to break the double top of 1212/13 is due in December.

R2K, daily


Here is the bigger issue though...

If can accept Trans 10k... and then R2K >1212... then what does that imply for the broader market next year?

I've already posted a provisional target zone for end 2015....but really.. what do YOU think?

Notable weakness: RIG -8%, SDRL -21%.   

1pm update - VIX in holiday melt mode

With very light holiday trading, the VIX is merely melting lower... now in the upper 11s... the lowest level since the Alibaba top of Sept'19. Single digit VIX looks probable at some point next year... as Mr Market continues to remain almost entirely fearless.



*It has to be assumed, if broad equity strength across 2015.. then VIX in the single digits looks probable.. at least from time to time.

Notable severe collapse in the oil/gas drillers.

SDRL -22%
RIG -7%

...both look set for much lower levels.. not least if Oil continues to slip to the low $60s next spring.

12pm update - no thanks for the drillers

US equities remain in micro chop mode.. with the VIX naturally melting.. having lost the 12s. There remains absolute carnage in the oil/gas service sector, after SDRL suspended the dividend. With oil prices set to continue falling in early 2015... outlook is dire.

SDRL, daily


Little to add... on what is naturally, a generally very quiet day.

VIX update from Mr T. (due)

..seemingly not to be posted today... I can't blame him.

time for tea....

11am update - Oil set for much lower levels

Whilst the broader equity market is merely in micro chop mode ahead of the holiday, the real action is in the energy sector. Oil prices remain under severe downward pressure (not least via the strong USD).. and this is causing havoc in the oil/gas service sector.

USO, daily

SDRL, weekly


*if Oil $60 or so, USO will be somewhere in the 24/20 zone by next spring.

As for Sea Drill, not only did they miss estimates by 50%.. but they suspended the dividend. This is pretty serious, and it would seem that Q4 and Q1 earnings will be much worse. There is little hope of a dividend again until Q4 of next year.

Meanwhile... it is a beautiful sunset in the land of Fire and Ice..

Enjoy the view.
back 12pm

10am update - oil service sector in flames

Whilst the broader market is generally flat, there is an outright meltdown in the Oil/gas service stocks. With Sea Drill (SDRL) suspending the dividend after missing earnings by 50%, SDRL is collapsing, -17% in the $17s. RIG.. DO... they are all following.

SDRL, daily

RIG, monthly


*I could drone on all day about the oil/gas drillers, a fair few of which I traded in the early summer....

Suffice to say... with Oil prices set for $65/60 (at least) by spring 2015, the energy sector is in real trouble.

Broader downside targets...

RIG 20/17
SDRL 12/10.

On any basis though... both stocks will be fine across the longer term, and I will be looking for 'bargain buys' in the spring.

Since the main market will be quiet today, I'll instead mostly be covering individual stocks, sectors.. or commodites.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +1pt, we're set to open at 2068. Metals are a little weak, Gold -$2. Nat' gas remains weak, -1%, although Oil is flat.. ahead of the Thursday OPEC meeting.



Well, tis the day before the holiday. Trading will no doubt be very muted, and probably dry up almost completely by early afternoon - once all the econ-data is out of the way.

For those around today, I will look at some individual stocks.. since the main indexes will likely be flat.


*notable SEVERE early weakness.. SDRL, -10% in the mid $18s. Most bearish target remains $12/10 by spring 2015... but that will need Oil 65/60.

After a little digging, it would seem SDRL has suspended the dividend after lousy Q3 earnings (or lack of).   31 cents profit.. vs exp' of 68 cents.....

So.. SDRL still made almost $150 million, but considering future Oil prices... Q4 and Q1 will likely be far worse.

Spring 2015... it might make for a tempting long term buy.

Have a good Wednesday

Daily Wrap

Yet another quiet day for the US equity market, sp -2pts @ 2067 (new historic high of 2074). The broader hyper-ramp from mid October continues, and there looks to be high probability of the low sp'2100s, before the next minor retrace... at best 'sp'2000'.


VIX' daily3


*VIX remains in melt mode, settling -2.9% at 12.25... headed for the 11s.

The sixth consecutive green candle on the weekly 'rainbow' chart, and there is little reason why the market won't be able to break into the low 2100s before year end.

On any basis... this ongoing hyper-ramp from mid October is incredible... but then, what will people say when we're close to sp'3000 within the next 9-15 months?

WTIC Oil - the $60s are still on track

As I mentioned in early October, with the break of $90 support, the door opened wide for the next key level of the $60s. We're well on the way...

WTIC, monthly'2

The 65/60 zone looks a relatively easy target for spring 2015. The only issue then will be... does supply start to be reduced.. and/or demand start to increase?

There is increasing talk of the $40s.. the first to suggest (that I know of) was Oscar Carboni. Just this morning, the Cramer was touting 40s for next year. Regardless, lower oil prices are bullish for the broader US and world economy... even most doomer bears should be able to accept that.

Closing update from Riley


Looking ahead

Wed' will see a veritable truck load of data... Durable goods orders, weekly jobs, pers' income/outlay, consumer sent', new/pending home sales.

*The EIA Oil and Nat' gas reports are reportedly also due, but I would not be surprised if they don't appear until Friday.

With the Thanksgiving holiday this Thursday, trading will be even lighter tomorrow. No doubt.. a fair few traders are just taking the entire week off anyway.

Goodnight from London