Thursday, 10 March 2016

VIX unable to hold gains

With US equities seeing a day of rather significant swings, the VIX opened lower to 17.06, but then rebounded to an intra high of 19.59, but settling -1.6% @ 18.05. Near term outlook threatens another brief equity wave lower, but then resuming higher into next week's FOMC.




Aside from the very significant reversal in the USD today, the second most notable aspect was the VIX.

Despite what was a very powerful reversal from sp'2005 to 1969, the VIX never showed any sig' upside power, and the fact it closed moderately negative is testament to the fact the equity bulls are still in control.

For the moment, sustained action above the key 20 threshold looks unlikely this side of the FOMC.

more later.... on the indexes

Closing Brief

US equity indexes closed moderately mixed, sp +0.3pts @ 1989 (intra range 2005/1969). The two leaders - Trans/R2K, settled lower by -0.1% and -0.8% respectively. Near term threatens Friday weakness, but still, the market looks set for another push higher into next Wednesday's FOMC. From there... another key lower high should be solidified.



*closing hour action: a new afternoon high of 1992... some 23pts above the earlier low!

Well.... that is the ECB out of the way.

All that is left now is the FOMC next Wednesday afternoon.

I admit its entirely possible that even on a spike higher next Wednesday, we might not break either of the two recent highs of 2009/2005. Today's latter day recovery was another example of the underlying upward pressure.

For the super cautious bears... another 3.5 trading days to wait on the sidelines.

Anyway.............. have a good evening :)

more later... on the VIX

3pm update - it certainly isn't dull

US equities are making a play to turn positive, sp -2pts @ 1986, having clawed from a low of 1969. USD remains notably weak, -1.1% in the DXY 96.00s. Metals are holding sig' gains, Gold +$18, with Silver +1.9%. Oil remains broadly weak, -1.3% in the $37s.




For the wave counters out there, it could be argued this afternoon's bounce from 1969 is a sub'2/B bounce.. with renewed downside into the close and early Friday.

Broadly, I still expect another push higher into the FOMC, but we now have two very notable highs of sp'2009 and 2005.

A failure to break and hold above the 200dma next week would surely seal the bulls fate for the spring and into the summer.

notable weakness... TWTR, daily

Ugly ugly ugly      ... and from how I've experienced Twitter, 90/95% of new users are SPAM-bots. Twitter is turning into one giant spam machine that is increasingly annoying what few real people actually use it.


3.21pm... update from Riley


sp -2pts... hmmm

3.30pm.. +2pts... with the VIX turning negative.  

VIX just never showed any sig' upside power today.. which really was unusual, considering the size of the reversal.

2pm update - hey everyone

US equities remain moderately weak, with the sp -13pts @ 1975. VIX remains relatively subdued, +5% in the 19.20s. The most notable aspect remains the USD, -1.2% in the DXY 96.00s, having earlier been +1.3% in the 98.40s. Metals are really being helped by the dollar reversal, Gold +$21, with Silver +2.1%.




It continues to be a pretty dynamic day.

There remains high threat that the price cluster zone of 1960/45 will be hit, before renewed upside.

Even if we're in the 1950s early tomorrow, that still offers a good 20 trading hours to claw back to the 1990/2020 zone by FOMC afternoon.

*It is notable that next Wed', the 200dma will be around 2017/16.


In far more important news though........ we've a new trailer for Civil War

Hyper bullish Capt'... and by default... Disney (DIS)     :)

1pm update - next support zone

US equities continue to slip, with the sp -16pts @ 1972. Next support is the price cluster zone of 1960/45. Despite this morning's strong reversal, it still seems unlikely that the equity bears can manage sustained downside this side of the FOMC. USD continues to weaken, -1.2% in the DXY 96.00s.




*VIX remains subdued, relative to the size of this today's equity reversal

Suffice to add...   a really interesting day

For the moment though, I am not in the least bit considering chasing this lower.


Wolfe Research is touting CVX as a buy, with a target of $105

CVX monthly

If you consider Oil has likely not floored, and believe that the sp'1700/1600s are due in the months ahead... I'd have a target of the $65/55 zone... a long way below Sankey's target of $105.

1.03pm... Ohh lookie... its CNBC favourite...

Bullish clown entertainment.

Again, I gotta wonder, what kinda screams will these maniacs be emitting if sp'1700/1600s? How much will they blame Yellen for daring to raise rates last December?

12pm update - moderately weak

The sp'500 has reversed from an early morning high of 2005 to the mid 1970s...   There is price cluster support in the 1960/45 zone, and it still seems highly unlikely the equity bears can manage sustained downside this side of the FOMC.




**German DAX settled -2.3% @ 9498.. having swung from 9995.

Considering the power of the equity reversal this morning, the VIX is still really weak. Even the 20 threshold looks a challenge in the near term.

Best guess... threat of downside to 1960... worse case.. 1945.. then whipsaw higher into next Wednesday afternoon.

I would acknowledge.. that next Wed'.. even on a spike higher.. we might still fail to break the most recent two highs of 2009/2005.

In any case.. the more cautious bears should be able to just sit back for another 4 trading days.

notable strength, miners, GDX, daily2

Despite a second day higher, GDX is still trading under recent highs.. same for Gold/Silver.

time for lunch :)... and to see if the cheerleaders on clown finance TV are proclaiming 'Draghi messed up'.

11am update - bearish engulfing hourly candle

US equities see a morning high of sp'2005, but have reversed to 1987, primarily as a result of a very powerful swing lower in the USD, from +1.3% in the DXY 98.40s to -0.7% in the 96.40s. Metals are holding sig' gains, Gold +$14, with Silver +1.9%. Oil is -1.5% in the $37s.


UUP, daily


So.. the cash market came pretty close to reaching the pre-market gain of sp +21pts @ 2010... but the reversal is pretty significant.

The hourly candle is of the bearish engulfing type, and normally that would have me seriously bearish.

Yet... we have the FOMC next week, and for now, I still see little reason for the bears to get involved.

*VIX is showing little sign of concern, currently 1.6% at 18.05

Here in London city....

Not exactly inspiring, that is as close to sunshine as there is today.

time to cook

11.10am... re: German market.. DAX.. interesting it reversed from 9995. The 10K threshold is indeed powerful resistance.   Currently -0.6% in the 9600s.

11.24am Germany -1.4% in the 9500s..

sp -9pts @ 1979...  if 1977 fails... next level is price cluster zone of 1960/50

11.29am.. well, there goes 1977... so.. a move to 1960/50 zone looks due.

11.35am....bulls getting spooked... refined zone... 1960/45... which would equate to VIX 20.50/21s.

... and Oil is not helping, -2.4% in the $37s. A test of $39/40 still looks viable next Wednesday.

10am update - very messy open

Pre-market gains of sp +21pts to 2010 largely vapourised as Draghi suggested no more rate cuts (at least in the short term). Price action is a real mess, but cyclically, the pressure remains leaning to the upside, with a daily close above the sp'2K threshold still viable. USD has notably swung from +1.2% to -0.1% in the DXY 97.10s.




It was all going very well for the equity market.. as amongst a number of measures, ECB paper printing was spooled up to €80bn a month.

.. Yet Draghi has really spooked the FOREX market, as 'no more rate cuts' send the Euro rebounding... and that has naturally pressured equities.

Today is one of those days when underlying (equity) price pressure is what will likely be key... and for the moment.. that is still leaning to the upside.

As things stand... I'm still looking for further upside into the next FOMC.... to the sp'2020/40 zone.

re: Gold, GLD, daily2

Gold was -$11 in pre-market.. but with the Euro rebounding.. and USD cooling, we're seeing a rather powerful spike floor.  For the moment, I still don't see a new cycle high this side of the FOMC.

time to shop... back soon

Pre-Market Brief

Good morning. US equity futures are broadly higher, sp +16pts, we're set to open at 2005. USD is +0.8% in the DXY 97.90s. Metals are a little lower, Gold -$3, with Silver -0.2%.  Oil is +0.1% in the $38s.


WTIC oil, weekly


*ECB: headline deposit rate cut 10bps to -0.4%

QE increased to €80bn (from 60) a month, now including 'investment grade' non-bank corp' bonds.

Refinancing rate cut from 0.05% to... 0.0%

re: Oil. Descending trend offers clear resistance around the $40 threshold. Upper bollinger is $46s... will be 44s next week.

On any fair basis, sustained action >$40 does not look viable... never mind the fact that the issue of over supply remains completely unresolved.

As for equities, the market is initially pleased with the various moves by the ECB.

A daily close above 2K looks probable... and that opens up the 2020/40 zone by next Wednesday afternoon.

Overnight action

Japan: +1.3% in the 16800s
China: unraveling into the close, -2.0% @ 2804
Germany: currently +1.3%....

Have a good Thursday

7.57am... sp +21pts... that gives 2010.. a new cycle high.... bears set to get washed out.. the 200dma is now likely today.

Metals starting to notably cool, Gold -$6, with miners -1.0%

8.00am.. Gold -$11, miners -2.0%.....     things look pretty much on track into the FOMC.

8.11am .. sp +18pts... 2007.... for now, the gains look pretty solid, and by this afternoon, we could be damn close to the 200dma around sp'2020.

notable weakness... TVIX -7% in the $6.60s

8.26am... Gold swings from -11 to +3....  hmm. Still looks in process of falling into the FOMC.

sp +18pts.. 2007.

.... here comes Draghi press conf'..............................

8.38am.. DB +4.6% in the $19s.. which is pure comedy, as NIRP worsens bank profitability.

sp +21pts... 2010.....

9.07am.. sp +14pts... 2003...  a little cooling, but still... the broader market response remains positive... and that will surely carry across into the FOMC.

9.31am.. major failure.. as Draghi spooks the FOREX market... Euro powerfully rebounds... and equities naturally cool.

Gold +$9... from -11 earlier.  Miners are naturally following...... GDX +1.7%

9.34am.. Draghi struggling to talk about 'helicopter money'. lol 

9.39am.. A serious mess right now... could go either way.... cyclically, STILL inclined to the upside, but Draghi has messed things up with the Euro back to 1.10.

Another day closer

It was a pretty subdued day in the US equity market, with the sp'500 settling +10pts @ 1989. With the ECB on Thursday and the FOMC next Wednesday, equity bulls still look to have the edge for another 5 trading days. On any fair basis though, the market looks highly vulnerable after mid March.




We continue to have a second consecutive green candle on the weekly 'rainbow' chart. Current trend is clearly outright bullish.

However, the giant monthly cycles are still broadly bearish, and we remain on track for a fourth consecutive monthly close under the 10MA.

Looking ahead

Thursday will see the usual weekly jobs, and US Treasury Budget data.

However, the market will really only care about the latest ECB meeting. There will be a press release @ 7.45am EST, with a Draghi press conf' at 8.30am EST.

Market is expecting NIRP to be intensified from -0.2% to -0.3%.. with the ongoing QE program extended and/or increased in size.

Goodnight from London

Daily Index Cycle update

US equity indexes closed moderately higher, sp +10pts @ 1989 (intra high 1992). The two leaders - Trans/R2K, settled higher by 0.7% and 0.5% respectively. Near term outlook offers a 'Draghi inspired' break above last Friday's high of sp'2009.. with a test of the 200dma (currently 2021) early next week.




More than anything, it is notable that after broad Tuesday declines, there was simply no downside follow through today.

Best guess: further upside to the 200dma for most indexes. The market has a high probability of maxing out next week.

a little more later....