Wednesday 30 January 2013

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.




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.



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.



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%




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.




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

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


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.




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 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.




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 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 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.



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 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


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 maintain an 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





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.