Thursday 24 January 2013

Volatility fails to hold the earlier gains

With the main indexes breaking new highs in the morning, the VIX managed to hold fractional gains. With an index reversal, the VIX built gains of 8%..but they largely evaporated into the close. The VIX closed +1.8% @ 12.69. It remains a fearless equity market.




A disappointing end to the day for those on the bearish side. But then, that has been the case since the big turn on New Years Eve. Every day the algo-bots manage a little ramp, and that always helps to cool the VIX down.

Today's VIX action at least showed a little breakout - if briefly, and indeed,  its not enough. Only with a close in the 14/15s can the bears start to get moderately excited about some kind of retracement in the indexes - perhaps to the sp'1450/40s.

It will be interesting to see where the VIX closes Friday. A close in the 14s would certainly confirm today's earlier (temporary) breakout.

I am long VIX from 12.34 (from last Friday), seeking an exit in the 16-18s, sometime in the next two weeks.

More later, on the indexes

Closing Brief

Yet another late day ramp, fuelled by POMO, and aided by the algo-bots, helped to conclude another embarrassing failure for the bears. The VIX lost almost all of the earlier gains, and confirms the complete lack of fear amongst the mainstream. After all, everything is fine..right?





As I noted last night, all those hoping for major index declines - after AAPL was down $50 in AH trading yesterday, were likely going to be disappointed.

*The metals closed especially weak, with the $ a touch higher.

Today's close is unquestionably another failure for the bears. The upside momentum - fuelled by POMO, is just so damn strong, its going to be extremely difficult to get a single 1% index decline any time soon, never mind a multi-day retracement down to 1450/40s.

Despite saying that, I am comfortably holding a VIX call block from the low 12s (from last Friday). VIX spiking into the 16s still seems likely at some point in the near term.

The usual bits and pieces across the evening

3pm update - late day ramp to upset the bears?

Once again the underlying strength is showing through. The SP' is trying to claw back to the 1500 level. The VIX is still holding marginally significant gains of 6%, but those could easily be negated if the market closes back in the sp'1500s.




Despite the threat of a late day ramp - as has occured for most of the last 3 weeks, surely we are finally due a minor pull back?

I'm guessing the VIX has indeed floored in the low 12s across the last few days, and a move to the low 16s is viable in 2 or 3 trading days.

The metals remain weak, but with endless (literally) free POMO money flooding the US markets, a major move higher seems likely into the spring.

back after the close.

2pm update - turnaround Thursday?

The main indexes are showing a touch of weakness, but obviously, its still nothing significant. Even a drop to the low 1480s would do no real damage to the accelerated uptrend. The one marginally bearish aspect today..the VIX..back in the 13s..with potential for 15/16 in 2-3 days.




Impossible to guess if this is anything of significance, we could easily see latter day algo-bot ramp - as we have for the past 3 weeks.

Bears need a daily close <1480, and clearly, that ain't going to happen today, but perhaps..tomorrow.

*metals remain especially weak...and my overall outlook is for a fifth wave lower to GLD 158/55..probably across the next 2 or 3 weeks.

12pm update - POMO fuelled market

The SP'500 is comfortably holding the 1500s, and the Dow is a mere 2.5% from breaking the Oct'2007 high of 14198. Most notable is the aspect that the current trend has accelerated - as first seen in the transports. Metals remain notably weak.

dow, daily

trans, daily


So..the market is going 'to da moon', fuelled by POMO money.

The fact the POMO is not scheduled to end until 'headline unemployment is at least <6.5%)  is something that so few are giving the credence it deserves.

Of course, some might suggest POMO $ aren't really being used to buy equities, but then, I'd merely suggest they look at an index chart from autumn 2010.

How did that work out for the bears then?

There really isn't much else to say...

back at 3pm,
*although I might add to this post between now and then.

Trans, monthly - an astounding gain already this year

Transports 6k is imminent, and 7k really now looks viable later in the year. Hell, why not 10k?

After all, Bernanke is NOT going to stop printing, and by default, most asset classes will ramp accordingly. Congrats to the Fed! They win.

UPDATE 1pm... So..minor intra-day pullback, but most indexes still green.

VIX +3% .almost.. but remains well within even initial breakout level. Even a jump to the 14s by Mon/Tuesday barely ranks as moderately higher.

It will likely be laughable later today, any majorly bearish posts appear. Even a retracement to 1440s does NOTHING to do the massively strong upward trend.

11am update - the big sp'1500

Its been a long time since we saw the sp'1500s. Meanwhile, the Transports is showing continued strength..and its in an accelerated stage. A blow-off top, or just relentless ramp - fuelled by POMO money...for years to come? VIX is holding fractional gains.


Trans, daily



Still no sign of the indexes levelling out, quite the contrary in the Transports shows. The big 6k level is now easily within range.

To my own surprise, I still don't see many out there suggesting sp'1700s - with Trans @ 7k by year end.

The 'Bernanke bux',...are fuelling much of this..and it is scheduled to NEVER end.

Its probably time to get the Birinyi ruler out.

10am update - morning churn

Mr Market is showing marginal gains, despite the hysteria - that is AAPL, falling 12%. Metals remain weak, with the $ a touch higher. The VIX is largely flat, still holding the lowly 12s.



AAPL, daily


So, as I expected, all those who got overly excited last night, hoping the main indexes would plunge was indeed majorly disappointed.

Its going to take a fair few days to turn this market lower, even if we somehow stopped today - which right now, shows NO sign of doing.

The one minor bearish aspect right now is the VIX daily..which appears as though its building a floor. That sure doesn't mean its going up..but its...something.

With Oil slipping lower yesterday, and the metals following today, maybe the indexes will follow tomorrow?

Pre-Market Brief

As I expected, despite the AAPL decline, the main indexes are largely ignoring it, and the sp is set to open -2pts or so @ 1492. Its going to take a lot more than AAPL to upset this market. Metals are especially weak though, with Gold -$13 or so.




I'm not expecting too much today. Maybe we'll finally put in a moderate red close, but really, we'll be lucky to see -0.5% on the main indexes.

AAPL -10% in pre-market, with NFLX + 40% ...FORTY percent, after a 13 cent profit, that works out at a PE of 200 or so. Clearly, a bargain.

A little wave lower, finally?

The market has risen 98pts on the SP'500 across just 16 trading days. Even the close today was bullish, with no sign of any fear in the market. Yet we are well overdue a minor retracement. Perhaps AAPL's moderate concerns for Q1/Q2 will help initiate a minor retracement wave lower in the broader market?

sp'monthly2, Keltner

sp'60min4 - retracement levels

USD, weekly

WTIC Oil, daily


Primary trend remains unquestionably upward. There is easy room for upside to sp'1520, and by early March, that will be around 1540/50. So, those seeking historic highs for the SP'500 and the Dow'30, should look to March/April as the first real opportunity.

Oil closed lower today, and it could be a provisional indirect warning of the much waited for retracement in the indexes.

If dollar lower...everything else up.

The USD looks like a clear H/S on the weekly chart, and if that turns out to be the case, equities are going to surge into the sp'1600s by late spring..and into the summer.

Sp'1700s by mid summer? Yet more crazy talk? Well, what else should we be thinking? Algo-bots +POMO, and endless media hysteria that 'everything is fine', could make for one crazy bubble/ramp into Q3.

Thursday troubles?

With AAPL -10% in after hours - trading in the low $460s, tomorrow looks to be a significant lower open for the Nasdaq. Yet, the sp' is only -6pts (as at 7pm EST), and that barely rates as 'moderate'.

I think anyone hoping to see major declines tomorrow for the broader market are going to be disappointed, not least in the afternoon once the algo-bot melt up kicks in again. Its going to take at least few days to break lower, and even then, I can't see anything <1440 for many....many months.

Goodnight from a disturbingly bullish London

Daily Index Cycle update

The main indexes closed somewhat mixed. The transports and Rus'2000 - both the leaders since mid December, seem especially tired, and closed with a touch of weakness. What is clear, there is still no sign of the current upward trend ending.



SP, daily5



A pretty tiresome day of nothing.

*The gains in the Dow were almost entirely due to IBM.

So...does this keep going?

Right now, there is nothing that is supportive of the current upward trend ending. Even a minor retracement to the sp'1450/40 area would do nothing to dent the underlying bullish momentum.

It has to be asked again, just how crazy high could this market get by the late spring/early summer? Are we looking at sp'1600s, even 1700s, on some kind of mass hysteria wave?

Keep in mind that we know the following...

-The debt ceiling WILL be raised, whether by the house, or by exec order
-The Fed is throwing 45bn of new money via POMO every month, and this ain't ending
-If there is any sign of economic weakness, the Fed will have an excuse to increase purchases to 100/125bn a month.

Yes, there are endless economic time-bombs ticking out there, and probably a whole flock of black swans even Taleb hasn't thought of, yet...baring any of those...this market is comfortably battling higher.

A little more later