Monday 4 March 2013

Volatility significantly declines

With the main indexes recovering some early morning declines, the VIX failed to hold opening minor gains. The VIX closed -8.8% @ 14.01, and looks set to test the low 12s, if not break a new low into the 11s..or even 10s by late March/early April.




So...the VIX falls into the close, and it was a pretty significant decline.

*Mr T (from option monster) noted how VIX futures trading volume is only 20% of what was being traded last week. It is simply near dead in volatility world.

It would seem we're set for at least 2-3 weeks of VIX melting into the 12s..but we could briefly fall much lower..and break a new low.

VIX 11s..with sp'1550/60 by late March,...that would be my best guess right now.

more later on the indexes

Closing Brief

A very quiet start to the week. The main indexes all closed only marginally higher, and the bulls failed to get a daily close above the recent high of 1525. Despite the lack of significant upside, the bears sure don't have anything to tout, with the VIX slipping back into the low 14s.



It looks like we're back to a few weeks of low volume algo-bot melt.

I do foresee a major down wave coming, but really, even 10% will only get us back to where we started the year.

Unless the Fed pull the QE..the underlying trend..will remain upward.

3pm update - running the bear stops

A minor up cycle, and many of the bear short-stops will be getting triggered. Dollar remains a touch lower, with Oil and precious metals still weak. Bulls should be seeking a close >sp'1525. The VIX is decaying this doesn't bode well for the bears.




The VIX is probably the tell of the day. An opening black candle, often a sign the bears are failing from the open.

VIX 11s look viable if sp'1550/60....the only issue is whether VIX single digits will occur before the next major down cycle in April/May.

back after the close

2pm update - miners under severe pressure

Market remains largely in a holding pattern. Most notable though, the mining sector which is seeing some severe weakness. Dollar is a touch lower, but Oil is now under the important $90 threshold. Copper again briefly broke the 3.50 level. Mr Deflation is..lurking.

Hecla (HL), daily

FCX, daily

GDX, monthly


Main market is largely, I thought the miners deserved to be highlighted.

How low might HL go, not least if Silver <20 ? HL @ $1 ?   FCX, $15 ?

If the deflationists are right, then despite the fed printing 1trn a year, its not enough to offset the underlying vapourisation of digital $.

So far today, the break in Oil <$90 is the second warning - after Copper, that Mr Deflation is still out there.
more on the miners later.

12pm update - quiet Monday

There really isn't any clear direction today. Main indexes are flipping red/green/red..but its all minor noise. Dollar is flat - but holding last weeks big gains, with the metals showing a touch of weakness VIX has failed to hold the opening minor gains.




It really is a bit of a dull day. No reason to expect the rest of the day will be any different, although of course underlying bias is to the upside - via algo-bot melt, fuelled by POMO $.

Perhaps tomorrow will offer something.

I expect higher index levels by the end of the week, perhaps 1540s.. on perceived 'good' jobs data.

I'm sitting on the sidelines.

A major re-short around sp'1550/60 would be a far more 'comfortable' level.

back at 2pm.


10am update - morning chop

Good morning. Market is already recovering early minor losses. Most noticeable.. VIX on the hourly, a black candle, suggesting a failed gap/rally. Metals a touch weaker, dollar is flat.




Well, those overnight moderate declines sure didn't intensify. A long day ahead though, but I really don't think bears have much chance this week of anything <sp'1500.

In fact, if the jobs numbers come in better than expected later this week, we could easily close the week in the 1540s.