Volatility explodes

The market increasingly struggled across the day, and with a particularly weak close, the VIX exploded higher. In the 15 mins of AH trading, the VIX closed +43% @ 17.27. This ranks as one of the strongest VIX daily closes ever, and a very real warning that the market has 'issues'.


vix'60min

vix'daily3

Summary

Suffice to say, the closing hour - and those 15 minutes of after-hours trading, was a real mess in market land. The VIX soared, and the close in the 17s is now the first real sign that the market is in trouble.

Next target is the recent spike in the 19s. Yet, what is infinitely more important is a break into the 20s. A weekly close in the 20s would suggest VIX 30/40s are viable within the next month or so - which is something we've not seen in over 18mths.

Daily index cycles are weak, but there is VERY strong support @ sp'1538. If that holds tomorrow, VIX will cool back down into the 15/13s.

Any failure to hold 1538..and VIX will likely break into the 20s, which will really open a hornets nest of trouble later this week.

more later...on the main indexes

Closing Brief

The main indexes failed to rally in the late afternoon, with the sp' closing in the low 1550s. First target for the bears is the 1538 level. If that is taken out, a swift move to the 1485/70s seems viable within days.  VIX soared around 38%, but this is still a historically low VIX.


sp'60min

Summary

A very weak closing hour, after what seemed like a possible rally around 2.45pm.
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I am content to sit on the sidelines, and see how we trade early Tuesday.

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What is clear, a 'safe' chase it lower level is <1538..with a good 60pts of 'free money' for the bears. Its something to consider in the days ahead.
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More later.

3pm update - bounce underway

Market is choppy, it appears there is a bounce underway on the smaller 15/60min cycles. Bears should literally be running for cover right now. VIX had gains of 25%, but this still only took it into the low 15s. Metals breaking new lows...Oil looks like it will rally into the close.


sp'60min

Summary

We have a possible floor spike on the index hourly chart.

Bears should surely be out of this market with the cycle this low?
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*I will sit on the sidelines overnight, and will seek a major re-short tomorrow. Its been a good day anyway.

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3.01pm...Bounce...FAILED.

Bulls failed a few mins ago...and we've flipped from 1568 to 1561.

Its getting a little wild out there!

UPDATE 3.15pm..breaks into the 16s..and is now a good bearish sign for the days ahead.

Next target is the recent spike high of 19..with the big 20 threshold!


UPDATE 3.33 bulls still failing..and the key 1538 level is now within reach for early tomorrow.
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back at the close.

2pm update - minor bounce still viable

The sp' is holding in the mid 1560s..and any hope of closing the day green..is gone. VIX is holding gains of 20%, but is starting to cool down a little. Metals and Oil remain battered, but the latter is especially suggestive of minor strength into the close.


sp'daily5

vix'daily3

Summary

Bears look okay for the mid-term..sp'1480/70s look a given in my view.

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* I remain on the sidelines watching USO /Oil. Uncertain if I will short into the close (again)...right now..I think I'll wait until Tuesday.


2.49pm...ohoh, here comes the bounce

1pm update - a look at the metals

The sp' is back in the 1560s..any close under previous resistance of 1576 would be bearish in the days ahead. Meanwhile, precious metals look obliterated, but there is massive downside still due in the months ahead.

*I'm going to skip the hourly/daily charts, a bounce is due today. Lets take a look at the hugely important monthly charts.

Both charts are my bearish outlook into the early summer


GLD, monthly1

SLV, monthly1

Summary

I see absolutely no reason why anyone should be trying to knife catch this current collapse wave.

Best guess is GLD 120 - which is Gold $1250....and SLV 21/20 (add $1 for spot Silver price)
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Whilst equities are propped up by QE-POMO, what I am very confident about is a significant fall in Oil into May/June.

USO, weekly3 - downside target

USO in the 28/27s seems very reasonable to target in the weeks ahead.

*I am sitting on the sidelines, and watching USO carefully. It might be a viable short in the late afternoon..just have to see what sort of price action we get.

back soon!

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VIX, daily3

VIX +23%...and its now at the upper bol 'on the daily... good support at the rising 10MA - in the 13s.
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This is something I am keeping in mind, but for now..its HIGHLY speculative. Bears need a break <1538, just to have a hope of this..

Kinda interesting though

12pm update - afternoon bounce?

Equities are choppy, we are holding above earlier lows of 1575, but if they fail..a close in the low 1560s is viable. VIX is +9%, and warning of minor trouble. Metals and Oil look due a bounce into the afternoon. How we close today, thats too hard to call right now.


sp'60min

VIX'60min

Summary

I've not posted them yet today, but the daily charts ARE suggestive that the bears should be okay for a few days, yet the hourly charts are pretty low.

Shorting at current levels seems overly risky, and this especially seems the case for the precious metals and Oil.
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*well, within seconds of posting this..market breaks 1575..and thus opens up the low 1560s by the close.

UPDATE 12.05pm..interestingly, Gold and Oil and holding up..whilst equities slipping.

I still smell a nasty afternoon bounce.

VIX update...




stay tuned

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12.40pm...equities in the 1560s...but Oil is rallying.

Delayed equity reaction...or are bears just getting teased before afternoon recovery ramp?
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11am update - equities holding together

The equity market is already seeing a provisional bounce..and it has to be said..the hourly charts offer the possibility of a green close. Precious metals remains nuked...Oil is still slipping. Dollar is a touch lower, with VIX higher, but only barely 8%..and its back <13.


sp'60min

Summary

I remain VERY suspicious of these opening declines.

VIX is still saying market is fearless..and as ever..every day is a QE-POMO day.
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I am sitting back..and wondering if I'll catch Oil on a late day bounce.


UPDATE 11.29am... indexes slipping again, and VIX trying to bust a new high.

Tricky day, and I'm glad to be merely watching this nonsense.

Notable movers... GDX, ..and all the miners... HL, FCX, SCCO.  

10am update - tough to break this market

Bears are having problems just breaking this market into the sp'1570s. Precious metals are seeing extreme declines, with Oil similarly weak - but not severe. Until we're trading <sp'1538, bears have no reason to be confident. VIX is higher, but is already cooling off.


sp'60min

vix'60min

Summary

Interesting open, but it barely ranks as 'moderate' declines.

I suppose we could trade down to the 1560s today, but that does seem unlikely.
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*I exited USO at the open. I will consider a re-short later today, but that will be dependent on price action.

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UPDATE 10.34am.. I don't trust this morning equity declines at all.

Both the 15/60min cycles are low, a bounce is possible at any time.

VIX is +9%, but 9% of a small number..is still a low VIX.

Pre-Market Brief

Good morning. Futures are somewhat lower, sp-10pts or so, we're set to open in the upper 1570s. Overnight action in the precious metals market was nothing less than nuclear bombardment, with Gold -5%, and Silver -10%. Oil is following their lead.


sp'60min

sp'daily5

Summary

For those watching, I think we're seeing some VERY distinct 'little earthquakes' in market land. We've seen Copper break a few weeks ago. The precious metals are now smashed, and Oil is following.

I expect equities to follow, yet..as ever, with the QE-POMO, declines are to be treated with HIGH caution..at least until we're <1538


Best guess for this morning...we level out around sp'1575, with VIX in the mid 13s.  Then its merely a case of seeing how high the usual 'latter day recovery' takes us.

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*I am short Oil - from last Friday afternoon, USO, and will seek an exit at the open.

Near term outlook is mixed, and I'll sure take profits when I have them.

USO, daily2

USO, weekly3

Mid-term objective on USO is 28/27 by June...which would imply Oil in the 80/75 zone..at least.
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updates across the day.. and week.

Good wishes for the trading week ahead

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UPDATE 9.19am...Empire state data came in pretty bad, still not quite recessionary, but it sure ain't bullish for the tail end of Q1.

SP' looks set to open -8pts or so..and maybe that'll increase to 13/15pt by 11am.  Considering the 15/60min cycles are already low, its hard to believe we'll close down more than 1% today.

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Regardless, I look to exit USO (short) at the open, and then sit back....for most of the day.

9.35am... EXITED USO short.   Now..lets see how we trade into the afternoon.
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