Tuesday 21 May 2013

Volatility moderately higher

Whilst the main equity indexes managed slight gains, the VIX also gained..if only a little, closing +2.7% @ 13.37. Near term trend is actually to the upside, although just breaking into the mid 14s is going to be real difficult.



From a cycle point of view, the VIX is indeed starting to battle higher. The daily bollinger bands are now getting real tight again.

Volatility remains remarkably low, but then, that can remain the case for more than a year, as in 1995 and 2005, both years where the VIX never got above 20.

VIX opex is at the Wednesday open, so don't be surprised if VIX jumps 7-10% later tomorrow. That doesn't mean the indexes will be down 1% or more, but with the Bernanke talking to US congress....its something to keep in mind.

more later, on the indexes

Closing Brief

The main indexes closed a little higher, but there was certainly a touch of weakness in the closing hour. Oil closed around 1% lower, and is perhaps the most bearish sign out there right now. Metals failed to see follow through after yesterdays strong upside reversal.



Another Tuesday higher, pretty tiresome for those who are tired of the melt.

*I will look for another long tomorrow, in SLV or USO, however if the general price action turns bearish as a result of the Bernanke, I will probably sit it all out until next Tuesday.

3pm update - melt into the close

The main indexes are holding moderate gains, ahead of the Bernanke tomorrow.  VIX is +2%, with the USD slightly higher. Oil is weak, -0.8%, with the metals starting to slip again in the late afternoon.



A quiet day..and its proceeded largely as expected.

Considering the indexes, Oil is noticeably weak. 

2pm update - new highs in the sp'500

Another new high for the Sp'500 and the Dow. Trans/R2K are lagging a little today, warning of possible weakness on Bernanke day? Oil is weak, precious metals are holding together, although are both still lower on the day.



So..sp'1674s....its a scary thought that the 1700s are now less than 2% away, which is easily viable on a strong up day.

I am content on the sidelines again. Oil/Silver long might be an interesting trade tomorrow. Like Oscar though, I am concerned of weakness into the holiday weekend.

*I forgot to highlight this earlier...

Seems a few are buying disaster protection in the June 55s, which even to me, seems ludicrous.

1pm update - sleepy Tuesday

The main market seems in a rather lackluster mood. There isn't any econ-data, in fact the only real 'aspect' of the day is the 3bn of pomo money out there. Noticably, the USD has lost all of its earlier gains, and that will further be helping pressure the broader market higher.




Very quiet day..and thus I have to conclude the algo-bots are back in control..and thats just going to lead to latter day melt.

A close in the mid sp'1670s remains very viable.

*I was just stopped out of SLV @ 21.80..for a moderate gain.

Will reconsider an SLV /USO long tomorrow.

On the small 15min cycle, SLV looks toppy, and I'm glad to be out. It could still close a lot higher, but the risk on the downside.

So long as it can hold yesterdays low, Silver/Gold should in theory generally rally for at least a few weeks....along with Oil

12pm update - another Tuesday close higher?

The main indexes are a little higher, on what is a typical 'rally Tuesday'. There is around 3bn of pomo money sloshing around out there, so it won't be easy for even a moderate lower close. Metals are continuing to attempt a rebound after earlier sharp falls.


SLV'60 min


*i am long SLV from the 21.40s.

11am update - metals trying to stabilise

Whilst the main indexes see further very minor chop, the metals are trying to build a secondary floor. SLV is offering a potential back test against the broken channel..with a higher low. A daily close anywhere in the low 22s would probably be enough to cement a short-term floor. Oil is weak, now -0.6%.




*I am long SLV from the 21.40s, best hope for later today is somewhere in the low/mid 22s.

I honestly don't know how the metals..or the broader market will react to Bernanke tomorrow.

Oscar - who is sure right a lot of the time, would probably be inclined to say Benny will be the excuse market wants to sell down into the 3 day holiday weekend.

10am update - morning confusion

The main indexes are a little higher, but it sure feels weak out there. The small 15/60min cycles look like they will roll lower as the day proceeds. As usual, the counter aspect is QE of 3bn or so. Very risky to short this market, not least ahead of the Bernanke (tomorrow)



So, what the best guess? Weakness into lunch, but QE will mitigate things in the afternoon.

We're seeing some opening reversal candles on gold/silver, and we are still above yesterdays lows.

As it is, I don't feel like hitting any buttons.

Oscar - on a holiday reversal


UPDATE 10.16am.. am long SLV , from 21.47, seeking low 22s late today/early Wednesday.

Pre-Market Brief

Good morning. Futures are flat for equities, with sp'500 unchanged @ 1666. However, there are again sharp falls in the precious metals market with Gold -$22, and Silver -70 cents (-3.3%). Oil is a touch weak, and the higher USD is no doubt part of it.




I'm not surprised at the fact metals are lower - they are way high on the 15/60min cycles, but the size of the falls should be a real concern for anyone long.

Indeed, the 'last ditch' short stop levels are pretty clear, at yesterdays opening lows.

*there is mid-sized QE-pomo today, and if trading volume remains low, then the algo-bots will very likely be able to melt the market across the afternoon.


*I will be considering a USO/SLV long today, although the latter is now in danger of taking out the recent low, and would no longer be a valid target.

The Unthinkable - R2K @ 2K

The Rus'2000 small cap broke the 1000 threshold level today. It has to be asked, is 2000 going to be hit in the current multi-year up cycle? With QE continuing the worlds central banks, there is little reason to assume the next thousand points won't arrive sooner than even the permabulls dare dream of.

R2K, weekly

R2K, monthly

SP'monthly6c, hyper-bullish outlook


Yes, I'm actually going to dare ask the question, is the Rus'2000 going to 2000? Why not? We're now in the fifth year of a rally that has taken the R2K from 341 to 1001 in about 50 months.

If the R2K can triple in 50 months, how about a double in the next 24-30 months?

The sp'monthly6c outlook/count remains something I increasingly like each day. If we can break into the 1800s this summer, it opens up the big 2k as early as this years end. My best guess is we'll see some chop later in the autumn - not least when Merkel of Germany gets the boot, with sp'2000 more likely in spring 2014..as a result.

Looking ahead

There isn't anything lined up for Tuesday, aside from the mid-sized POMO of around 3bn. That money should kick in late morning, and help to give the bulls another positive Tuesday close.

*I am looking to go long Oil/Silver sometime Tuesday morning.

Goodnight from London

Daily Index Cycle update

The main indexes closed a touch lower, after breaking new historic highs in the morning. Most notable aspect of the day was the R2K, which broke the big 1000 psy' level. The sp' hit a new high of 1672, and the mid/long term trend remains very much to the upside.




So..a little weakness into the close, but really, we did break new highs..all time historic highs on most of the indexes, not least the R2K.

With the R2K breaking 1000, what is the next big level, 1100s, 1200s..1500 ? Why not 2000?

Baring an end to the QE-pomo, the US equity market looks set for continued upside. What should be embarrassingly clear to the bears, is that even a pull back of 2-4% looks exceedingly difficult in the days and weeks ahead.

The notion of a 10% - or even bigger, intermediate pull back now looks almost laughably impossible.

a little more later...