Tuesday, 12 January 2016

The sp'1600s are coming

The sp'500 saw further weakness, but there is high clarity in a short term floor of sp'1901. The market is set to bounce to the 1970/90s. Sustained action >2K looks out of range. More broadly, there can be high confidence the sp'1600s are coming in the months ahead.


China, monthly


re: US equities... short term floor... but clearly headed much lower. The sp'1600s look a rather comfortable target. Based on the bigger monthly MACD cycles... prime downside would be April/May. It could be sooner than that though.

re: China. The big bear flag is playing out, as the Shanghai comp' is set to lose 3K, and then headed for the 2500s. Whether a full retrace to 2K... difficult to say.

Looking ahead

Tuesday has no econ-data of note.

*Fed officials Fischer and Lacker will be speaking, and any talk of 'no rate hike again any time soon' (as Lockhart did today).. would certainly help to inspire a sustained bounce.

Keeping a leveraged ETN on a short leash

I held TVIX-long across the weekend. Seeing the Sunday night futures recover from the equivalent of sp -18pts to pre-market gains of +13pts... yeah, that wasn't great viewing.

I bailed early from $9.29...  net 8% gain (from Thursday closing hour entry).

Naturally, the market then saw another down wave, with TVIX pushing to $10.80s in the 2pm hour.

TVIX, 60min

From the above hourly chart, it should again be clear... the leveraged 2x or 3x ETNs (and ETFs) are wild things. TVIX imploded by almost 20% in the late afternoon, settling at $8.78, which is close to where I bought it last Thursday!

No doubt the $7s are coming, maybe the 6s . Either way, I'll look to pick TVIX up again, when sp' is trading somewhere in the 1970/90 zone.

Goodnight from London