Volatility fractionally lower

It was a quiet day in volatility land, with the VIX trading in a very tight range. Despite the indexes occasionally going green, VIX held the 14s, closing -0.3% @ 14.28. The gap-zone of 16-18 remains the primary target for this up cycle, which will surely be completed next week.


VIX'60min

VIX'daily

Summary

I suppose the VIX at least held the 14s, but certainly, this battle up from the low 12s is taking its time. At this rate of increase its going to take 6-8 weeks to hit 20, and I don't think 20 is viable anyway.

The MACD (blue bar histogram) cycle is already getting a little high, and VIX closed just under the upper bollinger band. Its going to be VERY difficult to break above, and close in the 16s.

The upper gap zone of 18 is going to be a severely difficult level to hit. Certainly, its possible if the indexes get down to the low 1460s, but those levels are going to be difficult to hit.

As I keep noting, the bears 'lack power'. They have been destroyed since the two hyper-ramp of Dec'31/Jan'2, and the 4 subsequent weeks of algo-bot melt have ground them down.

How we trade Friday will be critical. Bears need a close <sp'1490, with VIX in the 15s.

more later..on the indexes

Closing Brief

A little weakness in the closing hour, and its possible that the bear flag I had suggested has already now been confirmed.  The VIX crossing back to green into the close was a further small positive sign for the bears.


Dow

SP

Trans

Summary

A pretty mess closing few minutes, and it sure looked like 'someone' wanted to pin the sp @ 1500 to close the first month of the year.

Regardless, we didn't close @ 1500, but the daily close is certainly a little disappointing for the bears.

The index cycles go negative cycle tomorrow, so...either we see our first 0.75/1.25% move lower tomorrow...or this down cycle is dead on arrival.

more later...

3pm update - bear flag on the hourly?

If a retracement is indeed underway, then what we're seeing right now are little bear flags develop on the hourly index charts. VIX is holding together - with an appropriate, and contrary bull flag. Metals remain weak, with Gold -$13


sp'60min

vix'60min

Summary

Tis the last trading hour of January. We're almost one month down already on the year!

I do hope the bear flags are indeed just that. If so, they probably count as a minute'2, and thus we should indeed see a major move lower - with the indexes going negative MACD cycle.

The price action to start February..and lead into the weekend will be VERY important.

*Bears need to close the week <sp'1490, with VIX in the 15s.

--
back after the close

2pm update - tough to build downside momentum

Once again we're reminded just how hard it is it for the bears to get any downside momentum. A mere 4-5pts lower on the sp', and now we're back to evens, with the Trans/Rus'2000 showing upside of 0.3 and 0.7% respectively.


sp'daily5

vix'daily3

Trans'daily

Summary

Two hours to go, which is plenty of time to still swing lower, and close at the lows of the day, but...it ain't looking so great is it?

Bears need to a clean break below what is an accelerated channel on ALL indexes, not least the transports. On the sp', that would be <1490

VIX is still holding together..and rising in a slow stair step higher, but is VIX 15/16 going to be all the bears get before another few weeks of dismal slow motion algo-bot ramp?

Stay tuned.

12pm update - trying to break lower

A failed attempt to rally higher, and the bears have a window...they'd better not fail to seize this opportunity. A close <sp'1495 is arguably essential to build at least a little downside momentum for tomorrow..and early next week. The VIX is so far showing no power though...whilst the metals continue to get the hammer.


sp'daily5

vix'daily3

Summary

Nothing particularly dynamic so far.

Best bear case for the close..sp<1490/95..with VIX in the upper 14s.
-

Gold weak..and looking like 158s going to fail to hold..with a wash-out next week to 155/54.

VIX video...from Mr T



time for lunch
 --

UPDATE 1pm  transports still holding within the broad up channel.

Target for the tranny would be 5500/5400 next week.

11am update - battling it out

Its turning into a battle this morning. Despite the arguably 'great' PMI number, the bulls can't ramp this market more than 0.2%. Metals are taking the hammer, with Mr $ seeing yet further weakness. The VIX is red, but its managing to hold the 14s.


sp'daily5

vix'daily3

Summary

Look at the MACD (blue bar histogram) on the sp' daily, we're set to go negative cycle tomorrow. So..those bears seeking some more dynamic action, prime time will be tomorrow.

Frankly, if we dont see a 1% fall tomorrow, with VIX in the 15s, I'm going to be very concerned that the retracement - as highly suggested by the Trans/R2K declines yesterday, is just another tease. We'll soon find out.

I remain on the short side, with a major VIX long position from the low 12s. Seeking 16s.
--

GLD looks set to break the 158 low early next week.

That'll give the gold-bugs a good scare!

10am update - lousy open for the bears

Minor opening declines, but with the Chicago PMI coming in much better than expected, with an absolutely non-recessionary 55.6 reading, the market now has an excuse to challenge the recent 1509 high. Bears...are once again in serious trouble, and it ain't even lunch time.


sp'daily5

vix'daily3

Summary

Any of the serious bear money should probably be running for the hills now.

After all, the micro-cycles all look floored, and we're now set to see another 2-4 hours higher.

A very bad opening 30mins for those short.
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Pre-Market Brief

Good morning. Futures are marginally lower, sp-4pts, we're set to open around Tuesday's low of 1498. It will be important for the bears today to see at least a moderately lower close, anything <1495 would be acceptable, with VIX >14.50.


sp'daily5

vix'daily3

Summary

We have the Chicago PMI @ 9.45am, that will be important. Bears should seek a reading <50, which is recessionary.

LVS is higher on earnings, FB -5%, QCOM +6%

Lets see how we go this morning.  Can we see some morning declines..but just keep going?

Good wishes for Thursday..the last day of January!

Retracement underway

The market reacted with a touch of weakness to the FOMC announcement in the late afternoon. More importantly though, the two indexes which lead the way up - Transports & Rus'2000, both closed with significant declines of 1.5 and 1.2% respectively. The Sp, Dow, and Nasdaq should (in theory) see similar falls within the next few days.


sp'60min4 - fib levels

sp'weekly

sp'monthly3, rainbow

Summary

So, the three main indexes only declined a minor 0.3-0.5%, but it is the move in the Trans and R2K that I think bears can justifiably focus on. The decline in the Tranny was the biggest since the mid November lows, so its kinda important.

The near term retracement - if that's what it is, will likely get stuck somewhere in the sp'1460/50s. The 1440s look out of range after this Friday.

The mid-term trend remains fiercely higher, and as the weekly chart shows, by next week, key rising-channel support will be in the sp'1450s.

If rising support holds - as I'm sure it will, then a further major wave higher to the sp'1520-50 level seems likely in Feb/early March, along with the big dow 14k level..and then quickly surpassing the Oct'2007 high of 14198.


Looking ahead

Thursday will see the usual jobs data, but also Personal income/outlays, the Chicago PMI..and the Natural Gas report. That is plenty for Mr Market to use as an excuse to pick a direction and run with it, all the way into the close.

We could easily open a touch higher tomorrow, but regardless of the open, bears should be seeking a Thursday close <1495..preferably 1490. Anything in the 1480s by the end of this week would be good, and open up those 1460/50s for next week.

Goodnight from London

Daily Index Cycle update

The main indexes appear to be beginning a retracement. The two indexes that lead the way up -Transports and Rus'2000, are appropriately the ones leading the way lower. A multi-day fall of 3-4% would seem very reasonable, with a primary target of sp'1460/50 by end of next week, with VIX'17/18


IWM, daily

SP'daily5

Trans

Summary

Its been two months since we've seen the transports decline by >1.5% - we have to go way back to the post US election November lows. With the Rus'2000 (see IWM chart) similarly falling by 1.2%, I feel confident enough to say that today's close in the two leaders is a good warning that the main indexes will see similar big falls within the next few days.

Transports could fall to 5500 without doing any damage to the primary uptrend, and that equates to sp'1460/50.

So, I think its fair to assume a moderate 3-4% decline in a near term retracement. That is not too bold a call, and as noted, it does nothing to damage in what remain VERY strong up trends - as seen on the weekly/monthly charts.

A little more later

Volatility continuing to climb

With the indexes seeing some weakness in the late afternoon, the VIX closed at the highs of the day, rising 7.6% @ 14.32. We are still a fair distance from the lower gap level of 16. It would seem likely that 15/16 will be hit tomorrow or Friday, with a 'reasonable chance' of 17/18 early next week.


VIX'60min

VIX'daily

Summary

A bit of a choppy day in VIX land, but the climb into the close was a pretty bullish sign for the next few days.

We are seeing a very consistent stair-step higher from the recent low in the 12s.

The gap zone of 16-18 does look like it will be hit soon..and 'filled in'.

More than anything, I don't see the VIX 20s in this up cycle, and indeed, it could be some months until we break that level again.
--
*I remain long VIX, from the 12.34 level.

more later..on the indexes.

Closing Brief

It would appear the market is beginning the much awaited retracement. The action in the Transports and the Rus'2000 are especially supportive of this notion. The higher VIX is also supportive of a little downside across the next few days.


sp'60min

Summary

So, the main indexes closed slightly lower, with the Trans/Rus'2000 significantly lower.

This 'should' be the retracement the bears have been seeking since mid-January..but as noted many times, since we've now broken into the 1500s, the retracement will now only likely be down to the 1460/50 zone.

A move to fill the lower ES/SPY gap @ 1425 looks out of the question, as does the old target of 1440.

*the usual bits and pieces later this evening

3pm update - weakness into the close?

With the FOMC announcement out of the way, things just a little bit simpler. Mr Market certainly hasn't lurched any higher, and we've just recently taken out the earlier morning low of sp'1503. Bears should be seeking a close under the big 1500 level.


sp'daily5

Summary

Even a close of 1495/90 would not break the key uptrend.

Those bears seeking a significant retracement to the 1460/40 zone, have a hell of a task ahead.

VIX remains stuck under the earlier high in the low 14s.

Trans/R2K remain the leaders..and they are leading DOWN.
--

back after the close

2pm update - awaiting the Fed

Mr Market remains in a holding pattern..awaiting the Fed press release at 2.15pm. Lets see if we get a crazy spike..which may include an initial fake-out...up or down!  VIX is holding onto moderate gains of 4.5%


sp'daily5

Summary

...waiting!

Bears sorely need a daily close <1500, with VIX in the mid 14s.

12pm update - minor chop

The moves remain very minor, and that is even more annoying than the rally itself. With the Fed due at 2.15pm, Mr Market will likely remain in a holding pattern. A stupid (brief) spike to the up..or downside is likely..and then we'll see the true direction that the words of the Bernanke have on this twisted and mis-priced casino.


sp'daily5

vix'daily3

Summary

You can see that the VIX is putting in higher highs..and higher lows.. but really, even the 15/16s look kinda difficult to hit.

All those seeking a retracement....

sp'60min, fibs

Yet, with the Fed later today, we could spike upward, and  then all those fib' levels will need to be pushed higher  yet again.

VIX, video..



back at 2pm
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UPDATE 1pm.   another little up cycle on the indexes, with some even going green again.

sp'5min

Bears should look to taking out the sp'1498 low from yesterday, with VIX in the mid 14s.

11am update - VIX breaking higher

We're seeing a little index weakness, but more interesting is the VIX, which has finally broken the 14 threshold. VIX 14 is of course still a bizarrely low level. Metals are strongly higher today, Gold +$18, with the dollar moderately lower.


vix'daily3

sp'daily5

Summary

Well, its still nothing even moderately decisive. Bears need a close <1500, and really in the low 1490s to give any clarity that a retracement is underway.

If the Fed please the market..then we could just as easily close higher..yet again.

*transports and IWM which were flat yesterday are now likely to be the ones leading lower..so...eyes to them!
-

With the Fed later this afternoon, it could get a little wild.

Based on the last 4 trading weeks, this mornings minor declines..will reverse..and we'll close +5-7pts.. urghh.

10am update - its a Fed day

Besides the ADP and GDP data, its important to keep in mind that today is a Fed day. The FOMC will issue a press release @ 2.15pm. No policy change is expected. Meanwhile, the market has opened largely flat. The VIX is a touch higher, but still can't clear the 14 threshold.


sp'daily5

vix'daily3

 Summary

So...GDP was lousy, but ADP is still offering reasonable jobs numbers, assuming you think 150/200k jobs a month is acceptable for the 'new era'

It will be interesting to see how unstable/choppy the market gets at the time of the Fed announcement this afternoon.


Meanwhile...the AMZN, with an early morning black/warning doom candle. Hmmm

That does NOT look a very good stock to be going long..at least until it puts in a daily close ABOVE that double resistance.

I will again note..and realise it sounds like more crazy talk..but AMZN should be a $20 stock. But hey..it is..what is it. Great company, but it can't make a decent profit.  I blame management. How difficult can it be to raise margins 5-7% on sales? All it takes it a few key strokes.

Pre-Market Brief

Good morning..and welcome to the recession train USA ! The US GDP Q4 shocks the mainstream, with a first reading of -0.1%. Officially, it takes two quarters to be a recession, but still..this number is beyond lousy. Market should be down 3%...but its only down a fraction.


sp'daily5

Summary

Perhaps this will be considered a 'green shoot' by the end of today. After all, what little talk of the 'Fed reigning back in' will now vapourise for a few months. In fact, if there is a little concern, the talk will even swing to 'can the Fed increase monthly purchases?'

Regardless of reality, the underlying equity trend remains strongly UP, but this GDP reading will be at least 'gently' rattling the economists for the next month - until the second reading appears.

It says a lot about this market  that we're set to open..flat, despite the first negative growth reading since early 2009.

back at 10am.

On a trip to the moon..and beyond?

The Dow is up 850pts (6.5%) so far this year. The question has to be asked..is this just the start of a rally that will proceed beyond the wildest dreams of the most deluded permabull, or is it yet another tease -before the next fall, as was the tech bubble peak of 2000, and the property bubble plateau of 2007?


Dow'monthly, 20yr, historic

Dow'monthly, 6yr

Dow'weekly, 2yr

Summary

It is understandable that many - not least the maniacs on clown finance TV, are getting rather excited over the Dow. Its a mere 46pts away from the psychological 14000 level. Even more exciting for the market watchers is the historic high - Oct'2007 @ 14198 is now within easy reach.

Considering the underlying momentum, and power of this opening month of the year, the Dow will surely hit the 2007 high...and break through - just as the Transports and the Rus'2000 indexes already have.

Yet..that issue is minor. The real question is what then?


To the Moon (and beyond) or the caves of hell?

I don't know where we are going. No one does. The only thing I think I can safely assume is what the Bernanke would 'like'.  Mr Chairman would no doubt be seeking a market 'to da moon'. Dow 20k..30k..50k....and just keep on going. After all, that is all a central banker knows, to create artificial wealth....to maintain an illusion...to placate the populace with the belief that they are better this year..than last.

We have the Federal Reserve now printing just over 1trn each year, and throwing that money into the system via MBS and T-bonds. A lot of that money is just going to sit on the hard drives of financial institutions. Certainly though, not all of it. The tens..if not hundreds of billions - which could be leveraged 10..20 or even 100 times, will filter its way into the US capital markets..and will doubtless bid up ALL asset classes in the months..and years to come.

After all, QE3 was indeed specifically highlighted as QE without end. ALL talk of QE ending anytime soon is to be dismissed, just as any talk from the Democrats AND Republicans of their claims to 'fiscal responsbility'.

In many ways..I sure don't envy being the Fed Chairman. Contrary to what some often post, I do genuinely believe Bernanke himself truly believes in what he is doing is the right thing.

I can only hope the historians of the mid 21st century will have the 'facts' before them..and can accurately note what happened during these bizarre times.
---


As for Wednesday, we have ADP jobs.and GDP Q4 data. The latter of which I am particularly interested in, but then..its just a number, and largely artificially propped up by the over-spending (via money creation) of the US Federal Govt.

With AMZN earnings coming in poor...but the stock rallying to new highs in after hours...what more needs to be said?

..other than we are in uncharted murky waters...where we go from here...only the gods know.

Goodnight from London

Daily Index Cycle update

The market climbed broadly higher, although the two leaders - Transports and Rus'2000 are looking tired, and closed roughly flat. The cheer leaders on clown finance TV remain ever more excited that the Dow' is now just 46pts shy of the psy level of 14000. Isn't that just great?


IWM, daily

Dow

SP'daily5

Trans

Summary

What to say, other than 'I remain tired of this sick and nasty market'.

But then, the Transports gave the very clear warning in mid-December, and hell, even I bailed on Dec'31st..but have re-shorted from what is now a very long way down. Burnt..again. Urghh.


It remains a fiercely bullish market

More than anything, you can see the accelerated trends on the Dow/SP - which followed the acceleration seen in the Trans/Rus'2000. The Nasdaq (not shown) remains a laggard, but then that is clawing higher.

What is clear, there is NO sign of any turn or levelling phase.

It remains the case the bulls could sustain a wave lower all the way down to the sp'1460/50 area, and it'd do ZERO damage to the current strong upward trend.

Anyone who seriously thinks there is a chance we'll be trading <sp'1400 this quarter, should just set fire to their money..and save themselves some time.

A little more later.

Volatility slips back lower

With the main indexes continuing to melt higher, the VIX is back on the slide again, closing -1.9% @ 13.31. Even the VIX 14 seems a difficult barrier to break. There remains potential for a brief spike to 15/16, but 18s now seem out of range..for some months.


VIX'60min

VIX'daily

Summary

Another day of painful - and utterly mind numbing, algo-bot melt.

It was no surprise to see the VIX slip lower, and its almost a wonder that we're not already trading in the 11s..or even 10s.

The upper bollinger band - see daily chart, is still collapsing, and is now down to 15.98. By the end of this week, it'll probably be around 14.

So..those hopes of VIX in the 16-18 gap fill zone are going to be nigh impossible after this week.

I suppose its possible we could yet hit 14/15..pull back..then battle higher next week..but still..why would next week be any different than this week?

More later..on the indexes