Wednesday 9 January 2013

VIX breaks six day losing streak

Despite the main indexes all closing a little higher, the VIX finally put in a daily net positive close, rising 1.4% to settle @ 13.81. This breaks what has been a severe six day collapse from the 23s, to the low 13s. First soft target is 14.50, but a very valid bigger target is a gap-fill zone from 16-18.




So finally an up day in volatility land, but we remain in the bizarre low teens. It is remarkable, considering we have the fiscal cliff delay expiring in less than two months, and then there is the much bigger debt ceiling.

Even if the US President decides to start writing exec' orders to just dismiss the debt ceiling, that might upset the bigger capital markets, and start to bring real caution about what shred of 'fiscal conservatism' remains in the USA.

Best guess, we should see VIX break into the mid 14s tomorrow, and then 16s late Friday..or possibly early next week.

Considering the bigger index cycles, I just don't think the VIX will be able to break 18 until late Feb/early March.

More later..on the indexes

Closing Brief

A bit of a choppy day in market land, with the R2K and Transports breaking to new post 2009 highs. The SP' remains only marginally below the 1467 high. Despite the gains, most indexes again ticked lower on the daily MACD cycle.





There really isn't too much to say. A relatively quiet day.

Bears failed to see any late day weakness, perhaps tomorrow.

*I remain short, seeking an exit @ 1445/40.

The usual bits and pieces across the evening.

3pm update - closing hour weakness?

The market is starting to look a little weak again. The VIX is a touch higher, and a close in the low 14s would be somewhat significant. Bears should be seeking a close back in the mid sp'1450s.




You can see we are just about levelling out on the daily VIX MACD cycle. A green close would finally end 6 horrific red days.

Its hard to count the smaller waves on the indexes right now. Regardless of what the count is, we still haven't even moved to the low 1440s yet. That seems the minimum to expect.

back after the close

BAC, getting trashed.

I think they were slightly downgraded earlier, but still, thats a significant move, and is close to breaking trend support.

12pm update - eyes on the VIX

Whilst the main indexes hold moderate gains, the VIX - having fallen from the 22s, looks like its trying to break back higher, breaking a series of six consecutive daily declines. Mr Dollar is holding moderate gains, which is probably helping to keep the equity gains somewhat limited.




Its almost a bit of a boring day, maybe some more dynamic action in the late afternoon?

Alcoa is not having the most inspirational day, now sporting a huge black warning candle, AA could easily see a few days lower into this weekend

With still 4 hours left of the day, lets see if we can break back lower into the sp'1450s by the close. A red close would be a good sign that we still have a good opportunity for a retracement down to the 1440/25 zone.

UPDATE 1pm  VIX still battling higher..

a break into the 14s would be important by the close, along with sp <1455, anything <1451 would be a bonus.

11am update - holding under the 1467 high

Mr Market is trying to break new highs..and a few indexes have done so - the transports is almost 1% higher in the mid 5500s. The VIX is trying to put in a reversal in the low 13s, near term upside is 14.50, possibly spike into the low 16s.




Seeing the Trans break to a new high is somewhat concerning.

Bears should be seeking a Wednesday VIX close in the 14s, with SP back in the mid' 1450s.

*Metals and Oil remain especially weak, no doubt being pressured by a stronger dollar.

10am update - seeking a break into the 1440s

Minor opening gains are looking somewhat shaky. The VIX is offering a potential reversal at the open, and a move to the low 16s still seems very possible by the Friday close. Mr $ remains higher, a break into the 81s would be very significant.




Baring a move to a new high >1467, I'm not too concerned at the opening minor gains.The underlying daily cycles are still rolling lower.

Notable stock of the day so far, AAPL, which remains weak, -$4

I remain short, seeking an exit around 1445/40 late today or Thursday.

Pre-Market Brief

Good morning. Futures are slightly higher, sp +2pts, we're set to open around 1459/60. For those bears seeking a retracement lower, it will be important to break <1450 later today. The dollar is 0.25% higher, but remains below the important 81s.

sp'60min4 - retracement levels



Well, nothing remotely interesting overnight, and we're going to open within 0.5% of the recent highs.

Considering the VIX is so low, and  hasn't even bounced back to the lower end of the 16-18 gap level, I'm still seeking a move to at least the low 1440s. Even 1425 is still easily within range by the end of this week.

I am short from 1457, seeking an exit @ 1445/40 later today/early Thursday. I will be somewhat disappointed if the market does a moon trip >1467 within the next day or two.

WTIC Oil - mixed outlook for 2013

Whilst the US equity markets are still close to their post 2009 highs, WTIC Oil is well below the April 2011 high of $114, closing today @ $93. The near term outlook appears moderately bearish, but the monthly Oil charts have now flipped to bullish. A break above the big $100 this spring/summer would be pretty decisive.

WTIC Oil, daily

WTIC Oil, weekly

WTIC Oil, monthly2, rainbow


In the very near term, it does look like WTIC Oil will slip at least a few dollars lower. First target would be the 200 day MA @ $91.85. That could easily fail though, and open up the $90 level.

All things considered, it will be difficult for WTIC to break much below 89/88, not least if the main equity market holds above the key December low of sp'1398.

Bigger charts..bullish.

The fact we now have the monthly rainbow charts sporting a bullish green candle should not be too surprising, since we had both the Nov/Dec candles- blue, giving a provisional warning of a turn back to the upside.

The big psychological level of $100 will obviously be massive resistance. A weekly/monthly close >$100 would be very bullish into the spring/summer.

As always, the Oil price will be subject to changes in the US Dollar, and with annual QE of 1 trillion, there is obviously some inflationary upward pressure to ALL asset classes.

*I am short the sp' from 1457, seeking an initial exit around 1445/40.

Goodnight from London

Daily Index Cycle update

The main indexes closed lower for a second day, and despite the declines being very slight, we now have clear rollovers on many of the daily charts. The key downside target zone is sp'1440/25. It would seem very unlikely we'll go below 1420/15 any time soon.





So, a second day lower for the equity market, and the daily charts are displaying a pretty obvious gentle rollover. Certainly, its nothing dramatic yet, and its easily possible we won't get any major down days in this new cycle. A few more days of sp -5/10pts a day could be all that we're going to see.

The important 50 day MA will be around 1420 by the end of this week, and my best guess is that we won't be going anywhere under that.

A brief spike in the VIX into the low 16s seems likely, and that would probably equate to sp'1435/25 later this week.

*I am short from sp'1457, seeking an initial exit around 1445/40, perhaps as early as tomorrow.

A little more later