Volatility battling higher

With the main indexes closing lower, the VIX managed a moderately significant gain, closing +7.4%  @ 16.60 (opening spike high of 17.49) - the highest close in four weeks. Despite the trend, and the uncertainty about a US Govt' shutdown, VIX 20s look unlikely in the immediate term.


VIX'60min

VIX'daily3

Summary

The VIX was arguably the most interesting aspect of the market to watch today.

The opening hourly candle was a classic black-fail one, and indeed, that was a clear early warning that equities would eventually battle back higher into the afternoon.

Despite renewed equity weakness in the closing hour, the daily closing VIX candle was itself also a black-fail candle, and frankly, that should really concern those equity bears hoping for much lower levels across this week.

Considering the style of price action across the past few weeks..and months, I simply can't envision the VIX above the key 20 threshold in the near term.

On the flip side, equity bulls can not be confident until we see a few daily closes in the sp'1710/20s.

As ever....we'll know soon enough.
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more later..on the indexes

Closing Brief

The main indexes closed somewhat lower, with the sp -10pts @ 1681. The two leaders - Trans/R2K, remain stronger, and declined by just -0.2% and -0.1% respectively. Near term trend remains weak, but once the shutdown has come and gone..the bigger upward trend will likely resume.


sp'60min

Summary

Well, congrats to those on the short side from last Friday...with two good opportunities today.. either an exit at the open..or later into the close.

Today was the 7th daily decline in the past 8 trading days.

Certainly, its been a fair while since we'd seen this consistent (if very minor) weakness.

..and that..concludes Q3.
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the usual bits and pieces across the evening...

3pm update - greater risk of upside...than downside

Today is day'8 of a down cycle that began with the Thursday morning high of sp'1729, and during this whole move lower, the bears have entirely failed to display any downside power. Even this mornings declines have largely evaporated..and the VIX is actually in danger of closing red.


sp'60min

vix'60min

Summary

It is a tricky closing hour to call. Certainly, the broader trend is still lower (if slowly), but a simple look at the hourly MACD (blue bar histogram) cycle, and there is very high risk of a snap higher.

Interesting price action in UAL, STX, and many of the miners.

updates..into the close...


3.07pm.. new Qe-pomo schedule out.. see NY Fed

Bears should certainly be mindful of the sig' QE tomorrow and Wednesday.


3.10pm.. despite the past 8 days of weakness, just consider that the 'old leader' is still a significant 5.5% higher on the month.

The broader up trend....continues
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3.20pm.. despite another wave of weakness in the sp', the two leaders  - Trans/R2K, are holding up pretty well, and certainly not warning of major downside.

Equity bears..and I realise there are a fair few out there today...should be desperate to break the opening low of 1674.99. A daily close at the lows..would indeed be bearish for tomorrow, and bode for a move to the 1660s..which some are suggesting.

2pm update - bears struggling

The opening black-fail candle on the VIX once again proved to be a great early 'cash out' signal to the equity bears. The VIX has significantly cooled down, losing half of its opening gains,,whilst the sp' is now making a play to break into the 1690s.


sp'60min

vix'60min

Summary

Despite an hourly MACD cycle on the indexes that is warning of a snap higher into the close, a daily close in the 1690s will be...difficult, ahead of 'shutdown' uncertainty this evening.
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Regardless, dare I say, I warned last Friday afternoon, be mindful of any opening black candle on the VIX. Those black candles on the VIX..are often very powerful indicators

Notable mover: STX (a company I've been recently highlighting)..

...now significantly higher.
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2.36pm.. Bears remain at high risk of a market that could snap higher into the close. As ever..for the serious/big money...good stops..vital.

Clown finance TV is kinda useful today..with some updates on what the political maniacs are trying to arrange today.

1pm update - a close in the 1690s looks unlikely

Equity bulls are trying to inch the market higher, but despite the jump above the opening low in the sp'1674s, the market looks set to close at least a touch red. VIX is still cooling down, now +7%...and almost 1 full pt below the opening spiky high.


sp'60min

sp'daily5

Summary

Clearly, the trend IS still lower on a multi-day basis.

Yet...does anyone seriously think the 1627 low is in serious danger of being taken out?   As the week progresses, the rising lower bollinger on the daily will be in the 1660s..and that will offer pretty firm support.

For the bulls out there, I can't have any confidence until I see a few daily closes in the 1710s, and even then, there is the small chance of the market putting in the first 'marginally lower high'.
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Notable mover...UAL...which appears have to have found good support at the 200 day MA - as I highlighted this past weekend.

..and that is indeed a reversal candle.
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1.22pm As I said to a few others yesterday evening, just look at the lack of downside power.

A looming Govt' shutdown, and the sp' is -4pts.

Where is the doom? Ohh, thats right...there isn't any.

VIX +5%, at this rate...it might even close red.
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1.38pm... reversal candles everywhere. Trans/R2K indexes...now positive. 

Did we put in a key floor at the Monday open...with a 'last minute deal'...due later tonight...for the sp' to then gap/soar into the 1700s again?

The VIX remains the tell...not least the opening black candle.

12pm update - 'we're off the lows'

The main indexes are moderately lower, and indeed as Queen cheer leader Bartiromo would note '..we're off the lows of the day'. VIX has already considerably slipped from the opening spike high of 17.49. Metals and Oil remain weak, but similarly...'off the lows'.


sp'60min

vix'60min

Summary

What to say? Well, I think many bears have lost themselves in another round of 'this time..its really going to happen' hysteria.

I wish I could believe we're now in the early phase of a massive move lower, but I just can't see it happening whilst the Fed are throwing 1 trn a year at the market.

The US Govt' shutdown, even if it does occur will be very brief, and affect hardly any significant services.
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VIX update from Mr T.



time for tea

11am update - market finds support at gap'3

The main indexes are holding moderate declines of around 0.5%...with the VIX +8% in the upper 16s (but an opening spike of 17.49). Equity bears are clearly still in control of the near term trend, but there remains a general lack of decent downside power/kick.


sp'60min

vix'60min

Summary

*the opening black candle on the VIX, is probably the most important thing to focus on right now. Those black candles are not to be dismissed lightly.
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Hourly MACD cycle on the indexes will be trying to tick higher within the next hour or two, and by late afternoon, the bears could have some real problems if the market is trading back in the 1690s.
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I'm as bearish as they come..and yet, I sure don't see anything that entices me to get involved on the short side.


11.34am.. Two hours into the trading day, and bears look unable to break below the opening low.

Gods forbid some 'last minute deal' occurs..we'd be trading in the 1700s within minutes.
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10am update - don't get lost in the hysteria

The main indexes are lower, but its nothing significant yet. The sp' has dropped to the gap'3 zone, where the important 50 day MA is also lurking. VIX is higher by around 11% in the 17s. Metals are weak, Gold -$10, with Oil -1.3%


sp'60min

vix'60min

Summary

*Chicago PMI: 55.7, thats pretty good, certainly not a recessionary sub 50.
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More than anything since the FOMC high of sp'1729, what has been clear is the lack of downside power. It took 7 trading days just to battle down 2%.

Ohh, sure we're down this morning, but all those getting overly excited..I can only refer them to the price action of the last two years.

Were QE concluded...I'd be short right now.  Yet..its not.
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For those interested..the weekly charts ARE offering a provisional sign of a turn.

So..the bears have 'something', but I'd only change my broad outlook if the weekly candle closes red.
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10.29am.. market offering a turn....and that opening black hourly candle on the VIX should REALLY concern the bears.

sp'1683s.. not that I'm expecting a green close today.

Pre-Market Brief

Good morning, and welcome to the last day of Q3. Futures are somewhat lower, sp -14pts, we're set to open around 1677 - the gap '3 zone, and where the 50 day MA is lurking. Indeed, equity bears should be seeking a daily close anywhere in the 1670s. Metals/Oil are both moderately lower.


sp'60min

sp'daily5

Summary

Well,  this is one way to end the third quarter I guess! Market is lower, but still..its nothing significant yet.


Bears lost in hysteria?

I'm starting to see a lot of crashy talk out there, talk of multiple thousand point drops on the Dow across the next few weeks/months. Haven't we been here before.. a few dozens times since autumn 2011...and how did it ALWAYS end?

QE continues, and any shutdown...won't last long...at which point the market will snap back higher.
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One thing is for sure...at least today won't be dull!


9.43am..black candle on the VIX hourly/daily....bears should be very mindful of that.

stay tuned!

Weekend update - US weekly indexes

The US equity indexes generally saw moderate declines of around 0.8-1.4%. The two exceptions were the Nasdaq and R2K, which both saw fractional gains. The broader mid-term trend remains clearly to the upside.


Lets take a look at six of the main US indexes

sp'500

The sp' fell a moderate 1.1%, and that only took it back to the lows of FOMC week. First key support is the weekly 10MA of 1678 - which is where the 50 day MA is also lurking.

Baring a few daily closes in the 1670s..or lower, equity bears face the broader mid-term trend, which remains starkly to the upside. However you choose to count the waves from the key Oct'2011 low, the trend sure isn't down. Again ,its notable that in the two more recent pull backs, neither hit the lower weekly bollinger. This remains a very strong market.

In terms of upside, the 1800s are viable as early as late October, but far more likely in Nov/Dec. A yearly close in the 1900s is not impossible, but will be difficult - not least if there is another sporadic pull back of 5-7% - which does seem likely before the year concludes.


Nasdaq Comp'

The Nasdaq actually managed fractional gains of 0.2% this week (hey bears, are you listening?). The 3800s look likely within the next week or two..and the big 4000 level remains an obvious psy' level target before the year concludes.


Dow

The mighty Dow remains particularly weak, and slipped 1.25% this week. Interestingly, despite the declines, the Dow still managed to hold the 10MA..a mere 3pts below at 15255. First key support are the 14700s, - equiv' to sp'1627.

For those bears who are seeking major declines this autumn, the big support/trend to break - as of October, will be in the 14500s. That seems difficult to achieve. On the flip side, first upside target are the 15700s, and then the big 16k level.

Frankly, if I see a few consecutive weekly closes in the 16000s..I will consider 17k an easy target...and then the big 20k by late spring 2014. 


NYSE Comp'

The master index slipped 0.9%, if the main market can resume upward in October, the big 10k is the obvious target.


R2K

Despite general weakness in the market, the R2K closed fractionally higher. The R2K remains in its accelerated up trend - since last November. Upside target for Q4 is 1150/1200, which seems viable.


Trans

The old leader was especially weak, slipping 1.4%, but is comfortably above the 10MA, and the 7000s really aren't that far away. Despite the declines, underlying MACD cycle ticked higher, although there is no bullish cross yet.


Summary

So..a week where the market saw moderate declines, although certainly it is important to note the fractional gains in both the Nasdaq and the R2K.

Without question, the broader mid-term trend remains to the upside. To say otherwise..is simply outright doomer-bear denial.
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Primary trend remains bullish (at least for a while)

Despite a moderate decline of just over 1%, the sp' closed the week with a green candle on the 'rainbow' chart. There really isn't anything bearish here.

sp'weekly4- hyper-bullish outlook

My best guess is that we still have a major wave higher to play out before ANY chance of 'significant' downside. Considering the usual 'santa rally', and then the 'green shoots of spring' rally...this wave could just keep on pushing higher for another six months.

Worse case for the bears...by April/May 2014, the sp' is in the 2000/2200s...and even a 20% pull back will only bring the market back down to the 1800/1700s..before the final hyper-ramp phase across into 2015/16.


Looking ahead

Things are a little uncertain, due to the possible US Govt. (limited/temporary) shutdown. From what I gather, any US (Govt' based) econ-data releases - including the big Friday jobs data, would likely be delayed..

*there is no sig' QE on Monday, the POMO schedule for October will be released Mon'3pm.
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*I remain long the indexes from a week ago, am underwater, but considering the price action of the last week, I'm not overly concerned.

I will probably be back on Monday

Moderate weekly declines for the bears

US equities closed the week on a moderately bearish note, with the sp' managing to hold the 1690s. Across the week, the sp' declined around -1.1%, which is clearly nothing for the doomer bears to get overly excited about. Broader mid-term trend remains outright bullish.


sp'weekly2 - rainbow, 2yr

sp'daily3 - fib retrace levels

Summary

Clearly, a week for the bears, although the declines aren't significant, and this could easily just be a very minor retrace, before the next wave higher.

It should be noted though, with the break <1691, the door is open to a further moderate wave lower to the 1680/75 zone, where the 50% fib retrace is, along with the 50 day MA.

So, at worse, bulls look vulnerable to a further 1% lower, before renewed upside in October. Considering the style of price action this past week, i just can't see the bears managing any daily closes in the 1670s, never mind taking out the recent key low of 1627.

For the moment, the mid-term trend remains outright bullish. For those who are seeking much lower levels, first target should be a break below the weekly 10MA...into the mid 1670s.

If the market can close in the 1670s next Friday, then I'll be open to a much more bearish outlook this autumn, but really, I find that hard to believe considering the ongoing QE.

Goodnight from London
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*next main post, late Saturday, which will be covering - in more detail, the US weekly indexes.

Daily Index Cycle update

The main indexes closed moderately weak, with the sp -7pts @ 1691. The two leaders - Trans/R2K, slipped -0.6% and -0.4% respectively. Near term remains weak, but the recent seven trading days could easily be a bull flag, with target upside in October to the 1750/75 zone.


sp'daily5

R2K

Trans

Summary

The market closed the week in a relatively quiet state, despite a closing hour appearance by the US President. The market is obviously looking for a resolution to the potential Govt. shutdown.

The primary trends remain to the upside, and based on the past few years of trading action, I have to assume the market will simply break back upward to the upside some time next week.

Lets be clear, the bears have seen the sp' decline for 6 of the last 7 trading days, and that has only achieved a decline from 1729 to 1691...a mere 2.3% or so.

That is simply not good enough, and once the bulls do manage to turn the market back upward, they'll be more than capable of breaking new index highs.
--

a little more later..to wrap up the week

Volatility melts higher into the weekend

With the main indexes seeing continued moderate weakness into the weekend, the VIX battled slowly..but consistently higher across the day, settling +10% @ 15.46. Across the week, the VIX gained 17.8%. Despite the weekly gains, VIX 20s do not look viable any time soon.


VIX'60min

VIX'daily3

VIX'weekly

Summary

So, the VIX did make it into the 15s..something which seemed difficult just a few days ago.

Yet..equities sure don't look particularly weak, despite a broad..but very slow decline from the Sept'19 high of sp'1729.

All things considered, even if VIX opens higher next week, it'll be prone to a major fail (be on the look out for a black candle on the hourly/daily charts, early Monday morning).

I just can't envision the VIX back in the 20s any time soon. This market remains powerfully bullish, and with the Fed still throwing $85bn at the US capital markets each month...how are we going to see any significant equity declines?
--

more later...on the equity indexes

Closing Brief

The main indexes closed the week on a bearish note, with the sp -7pts @ 1691. The two leaders - Trans/R2K, slipped -0.6% and -0.4% respectively. Market concern was reflected in a VIX that closed +11% in the 15.60s. Across the week, the sp' saw a moderate decline of  -1.1%.


sp'60min

Summary

Well, another week comes to an close, and it was certainly one for the bears, but across the week, the main indexes only declined by around 1%.

With the Friday break <1691, there remains the threat of further downside to the 1680/75 zone.

Bigger weekly/monthly charts remain outright bullish though.

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*I remain long the US market, am underwater, but continuing to look for much higher levels in October.

Have a good weekend everyone!
--

*next main post, late Saturday - on the US weekly indexes

3pm update - moderate market concerns

The main indexes are holding moderate declines, with the sp' again breaking lower into the 1680s. The VIX continues to melt higher, now +10% in the 15.40s - the highest level since Sept'9. As is always the case, equity bears are at risk of a major reversal on any last minute political agreement.


sp'60min

vix'60min

Summary

Certainly, in terms of the VIX, today is showing some consistent strength. The entire formation from early Sept' could be argued is an inverse H/S formation - target would be the upper 16/17s.
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Regardless of the closing hour, I remain resigned that this market will eventually battle back upward..and break new highs in October.

As many recognise, even if there is a shutdown, at most, it would last just a few days, and impact relatively few (if any) important services.
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Those bears who have been short across this week, would probably do well to exit into the weekend, rather than risk a significant gap higher, whether next Monday..or later in the week.


3.21pm... VIX continuing to melt higher, almost 12% higher in the 15.70s.

*King Obama due to speak at 3.30pm. Will he spook the market? 

Worse case downside target into the close is 1680/77.
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UAL continues to dive bomb into the weekend, -8.8%.

Another $1 likely lower on that..before first opportunity of a reversal.
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3.35pm.. Naturally, his highness is late. Market on edge...but looking prone to a stupid spike higher into the close.

I have to think, those long VIX right now, should be closing out for the weekend. We're seen a 2pt gain from the mid 13s. to the mid 15s. I simply can't envision VIX 20s any time soon.

3.44pm ahh. there he is..only 12 minutes late. His time keeping is improving!

First upside target 1693..any move over that..and bears will be covering into the weekend.


3.53pm.. well, we're almost done. Sp' holding the 1690s...and I'm guessing this nonsense will rally in October.

I sure wish I could believe otherwise..the short-side is where the big money is made in options land, but..no. If an agreement is made....this market is going to ramp hard.

Its not like we've not been through this many times in the past few years.

2pm update - quiet afternoon

The main indexes are still moderately lower. Most notable, the VIX is quietly melting higher - +7.8% in the 15.10s, due to increased uncertainty about whether there will be a US Govt' shutdown. Equity bulls should be content with any weekly close in the 1690s.


sp'60min

Summary

*I've been updating my chartists/blog links. I'm always looking for new sites to add, let me know if you know of any other good ones! I especially like to highlight the little/starter blogs, rather than the huge sites like Zerohedge or Slope of Hope, which we certainly are already aware of!
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As for the market..its turning into a very quiet end to the week. Yes, there is weakness out there, and yes there is uncertainty over the US govt' funding/shutdown issue..yet..despite a break into the sp'1680s earlier..the primary weekly trends remain bullish.
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To me..the whole situation is starting to smell just like late Dec'2012...and we know how that turned out. The difference between now and then?

Ohh yeah, around 300pts on the sp'500.  Urghh

1pm update - bulls tired, bears tired, market tired

The main indexes are holding moderate declines ahead of the weekend. Yet, Mr market is relatively muted, and both bulls and bears alike look tired. Bulls look unable to break back into the sp'1700s, whilst bears look unable to push much lower, until the US Govt' shut down issue actually occurs.


sp'60min

sp'daily3 - fib retrace levels

Summary

Price action since last Thursday has been a very consistent melt lower.

Effectively, we're at day'7 down, relative to the 13/15 day up cycle.
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For the bears, you can see on daily'3, the next target will be the 50% fib retrace (of the wave 1627/1729)...where the 50 day MA is also lurking.

Any daily closes in 1670s should be a real concern to those on the long side, not least since it would start to turn the bigger weekly charts to the downside.

12pm update - bulls trying to hold the sp'1690s

The main indexes are holding moderate declines, with the sp -7pts @ 1691. The VIX is showing slight market concern about a looming US Govt shutdown (however temporary that might be), +5% in the 14.80s. Equity bears should be clawing for a weekly close in the 1680s.


sp'60min

Summary

Certainly, the bulls are not showing any real sign of power, although the MACD hourly cycle will be likely be looking floored this afternoon.
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Considering the US Govt' shutdown issue, the obvious question is 'who wants to go long across the weekend'?'

Thats right...very few. So, for those on the short side..there remains the possibility of a down move to the 1680/75 zone, if not today..then next Monday.


*something I've not mentioned, the USD is -0.4% in the 80.10s. Any daily closes in the 79s will bode for 77s in October, which would help to negate any general market downside. I'm sure many will cover that issue across the weekend.


VIX update from Mr P.



time for tea!

11am update - Friday confusion

The main indexes remain weak, and despite the break of the sp'1691 low, the bears still don't look as though they are capable of any significant downside power. VIX is cooling down a touch, back in the upper 14s. Bulls should be gunning for a weekly close in the sp'1700s


sp'60min

Summary

The bears are clearly still in control, which is indeed a little ironic, after the Fed maintained QE at $1trn a year.

The problem is..these sorts of minor moves are just not good enough, and once the bulls do manage to get a full turn upward..then bears are going to be ground down...as they have been dozens of times in the past two years.

Indeed, we're coming up to the big Oct'2011 low anniversary..when the sp' was a mere 1074.

Imagine that..1074. Two years...a rally of around 60%.

Why not project out..autumn 2015...another ..say 50%..call it 700pts.. giving sp'2400. Just a thought!
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sp'weekly8

Even a Friday close of 1690 will do nothing to dent the primary trend. Actually the situation is very similar to Dec'2012.

10am update - bears achieve a break

With the break <sp'1691, the bears have opened the door to a continued push lower to 1680/75, which will is certainly viable today. VIX is showing mild concern, +6% in the 14.90s. Precious metals are benefiting from concern about a seemingly likely US Govt. shut down...if only temporary.


sp'60min

vix'60min

Summary

So...the end of the week, and bears are managing to push the market lower..if at a relatively slow pace.

The big issue is whether some last minute agreement (as is usually the case) can be made, preventing a temporary shut down of some US Govt' services.
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Notable mover...UAL, downgraded to neutral from 'buy'.by someone the market considers important.

With Oil close to $100 again, is this merely a good level to jump aboard? Obviously...the big target is a test of the 200 day MA, around $30, but that is another 4% lower.


10.33am...from an hourly MACD cycle perspective, I sure would have a VERY tight stop now.. sp'1693/95.

Yes, we've broken a level, but bears still look weak. The only slight issue is a VIX that has finally broken back into the 15s.

*note the R2K, is only down 0.2%. Generally, in a decent bear market, the R2K would be leading the way lower..and yet...its clearly only a touch lower.
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