Wednesday 8 May 2013

Volatility knocked lower at the close

Whilst the main indexes held moderate gains across the day, the VIX similarly managed fractional gains. However, as we've seen happen many times in the past, the VIX was knocked lower at the very end of the day, closing -1.3% @ 12.66. Near term trend looks weak.




It does look like we're back to the old 'kick the VIX lower in the last few trading minutes of the day' game. This game can last for a very long time...certainly a fair few weeks, if not months.

There is also seemingly near zero probability of VIX 20s this side of the summer.

more later, on the indexes

Closing Brief

Another very quiet day in market land, with the headline indexes holding moderate gains of 0.4%. The Trans/R2K were red at times, but both also closed green. The Transports close in the 6400s is testament to the underlying power in this QE-pomo fuelled market.



A pretty dull day, but then that is to be expected in this new phase of algo-bot melt.

What is bemusing to me each day is seeing some of those I follow shorting into the current rally.

The issue I have is that the bears FAILED just last week, and we've seen a move from sp'1580 to 1630s, and they believe 'thats it'. Err, no, that makes no sense to me

The Transports weekly chart remains the big one, and I'm going to highlight it day out, until it breaks below the up trend.

Anyone think we can't get a weekly close in the sp'1640s ?

bits and pieces across the evening

3pm update - a touch of weakness

The market has had a good run upward since last Wednesdays low of sp'1582. A little weakness into the close, and perhaps early Thursday would make for a very natural minor down cycle. Oil has built further gains this afternoon, +1.1%, the weaker USD is no doubt helping.


USO, daily2


It remains very quiet out there. Any bears getting excited about a pull back from 1630 really need to go stare at the weekly Transports chart for a few hours.

*I remain content to be on the sidelines, not least after last weeks key bear failure.

UPDATE 3.30pm.. well, Trans back >6400, and other indexes holding up. Bears can't even get a few pts lower.

back at the close.

2pm update - one more push higher for Gold

Gold is holding gains of $20 so far today, although the sister metal of Silver is struggling to hold evens. GLD has reasonable chance of a further $4/6 upside. The 147/148 level has strong resistance, and a further significant down wave looks likely across June/July.

GLD, daily


Despite many calling a low, it just seems unlikely that some sort of multi-year low is in.

We have a rather clear bear flag/channel on the daily GLD/SLV charts.

Further, on the weekly charts, the declining 10MA is going to be real tough to close above

*I will look to short Silver when GLD 147/148, although that might not be hit for another week or two. There is no hurry on that trade.

1pm update - a year under VIX 20 ?

The indexes continue in melt mode. There is little reason to assume a significant drop any time soon. Meanwhile, the VIX is flat lining, and so far this year, VIX is yet to breach 20. Are we looking at an entire year under VIX 20?

VIX, 20yr, rainbow


The last year that failed to see VIX (at least briefly) in the 20s, was 2005. Before that, 1995.

One interesting stock right now is FCX. Its trying to break out of a bear flag, and long term down channel.

FCX, daily

A daily close >$33, this week would be impressive.

UPDATE 1.17pm.. after a mixed morning, metals are starting to ramp, especially Gold, which is on the edge of breaking into the next zone of open air.

A viable 40-60$ upside across the next 3-7 days.

12pm update - just another day of melt

No news is good news in market land. With no sellers, and just a few buyers, the algo-bots are easily melting the market higher. The fact that almost every day is fuelled by QE-pomo, is merely making it that much easier. Metals are mixed...Oil holding moderate gains.


Trans, weekly3, count/outlook


Perhaps it will annoy those who only want to see bearish charts, but hell, I'm going to keep posting that Transports weekly chart. It is probably the most useful chart I have right now to express the viable upside this summer.

Trans now in the 6400s, only another 600-800pts to go, which will equate to sp'1800s by late summer.

I will note, that I am increasingly inclined to the 'ramp and crash' scenario. Yet that is MANY months away. Its going to take a huge amount of patience to refrain from index shorts until Aug/Sept.

Perhaps a drop from sp'1800 to 1400/1300 in the autumn?  Certainly, NOT a 2008 collapse, but more of a 1987 drop. fast/furious, then climbing into spring 2014.

VIX update...from Mr P.

Nothing really going on, aside from minor buyers of long term calls.

11am update - mixed indexes

The headline indexes (sp, dow, nas) are all moderately higher, but the two market leaders - Trans/R2K, are still a touch lower. Primary trend remains to the upside, and with low trading levels, there is no reason to expect we close red. Oil report was slightly bullish, although Oil initially slipped.

Trans, daily

USO, 5min


A close in the sp'1630s looks very easy for the algo-bots to attain. 

*I remain very content to sit back and watch. In my view right now, the safest trade will be to short Silver, but that still looks it could battle a little higher.

10am update - fractional weakness

The main indexes are a touch lower, but it barely rates as noise. Underlying trend looks likely to continue, with latter day algo-bot melt to the upside. Gold opens $17 high, Silver flat, Oil up 0.75%. Oil report due at 10.30am.



No reason to expect today will be any different than yesterday. Very low sellers, a few buyers...fuelled by QE.

Gold, daily

I'm keeping eye on the metals, they still look weak on the larger time frame, but clearly, near term, there is still threat of further upside

UPDATE 10.22am..well, there go the red indexes..back to green, sp'1628.

As I feared last Friday, sp'1630/40s viable by end of this week. All the 'serious' bear money got the kick @ 1597. VIX is flatlining.

Here is a scary thought, how about a year when the VIX never breaks above 20 ? I don't know when that last happened, if ever.

Checked... years where VIX not above 20...     2005.. and 1995.

Pre-Market Brief

Good morning. Futures are flat, sp is set to open @ 1625. Precious metals are showing some distinct strength though, with Gold up $17. Oil and Silver are up just slightly. USD is again weak, -0.3% @ 82.05.



Again, there is nothing much in the way of econ-data today, only the oil report at 10.30. Perhaps we'll see Oil knocked lower this morning on underlying weak demand?

Latest update from Oscar...

I do think its useful to keep in mind what the market permabull has to say.
*I remain on the sidelines, but am looking to go Long oil, and short silver. I'm in no hurry though.

Call me when we get a red candle

It still looks like last weeks bear failure was a key moment. The market now reeks of relentless slow motion algo-bot melt. This could last for weeks, if not a very viable 3-4 months, with Trans 7000s, and SP'1800s. Until we see a closing red monthly candle, bears have nothing to tout.

sp'monthly3, rainbow


It remains the most remarkable fact that its been 20 months since the last closing red candle on the rainbow 'elder impulse' monthly charts.

Even the decline of last summer was not enough to merit a red candle. Instead, bears have merely been teased, over and over.

Personally, I'm more than tired of it. Until I see 2-4 blue candles..and then a red candle, this market is clearly still 100% bullish.

One other thing to note is the monthly 10MA, currently @ 1490, but rising fast. We didn't even come remotely close to breaking that in April, and now we're 135pts above it! Incredible.

That's all for today, I will be around for all of tomorrow.

Goodnight from London

Daily Index Cycle update

The US indexes all closed higher for a fourth consecutive day. The headline indexes (Dow, SP, Nas) all held gains of around 0.5%. Yet it was the two leaders - Trans and R2K, that lead again, with gains of 1.6 and 0.8% respectively. Near term trend shows no sign of changing.





A pretty straight forward day. No sellers, a 'few' buyers, aided by QE-pomo, and melted higher by the algo- bots.

The scary thing is that this type of price action could last for some weeks, if not 3-4 months - as the transports weekly chart would suggest.

I continue to see some bears taking new short positions, yet this just seems outright crazy considering what was a very important bear failure last Thurs/Friday.

a little more later