Monday 9 September 2013

Volatility melting lower

The VIX was positive in early morning, despite slight equity gains, yet, with the indexes failing to break lower, the VIX naturally melted lower, settling -1.4% @ 15.63. Near term trend is for lower levels, but VIX looks unlikely to break under 15, even if sp'1680s.




*I'm not sure why the VIX jumped (if only a little) into the close, maybe some 'VIX insurance' buy orders came in?

All things considered, with the sp' in the 1670s, the VIX is holding up 'reasonably' well.

Even if sp'1680/85 gap-fill, I can't see the much lower VIX gap in the 13s being hit this week. That just looks way out of range.

Indeed, with the little closing mini-ramp into the 15.60s, VIX should hold the 15s..even if sp'1680/85.

*I remain long VIX, from the 15.50s.

more later..on the indexes

Closing Brief

The main indexes all closed higher, with the sp +16pts @ 1671. The two market leaders - Trans/R2K, both saw very significant gains of 1.4% and 1.6% respectively. Near term trend remains to the upside, and bulls look set for a second gap fill in the sp'1680/85 zone..either tomorrow or Wednesday.



For the bears..not least yours truly, the week has started off somewhat annoyingly.

The hourly index/VIX charts were all primed for today, and despite a marginally shaky morning - where the VIX was positive for a while, the market just kept melting higher.

With the break above the 1669 high, it looks pretty straight forward from here..another 0.75/1.0% higher..into the low 1680s.

The ultimate question is what happens when we're in the 1680s?

A major reversal?
Or, continued melt into the 1690s....with new index highs on the subsequent FOMC announcement of 'taper only 10/15bn'.

As things are, I'm still short, but more than anything, the bigger weekly charts are starting to look bullish. More on that later.

The usual bits and pieces across the evening...

3pm update - 1680s now look a given

The market is holding rather significant gains of around 1%, with the sp' in the low 1670s. A full gap fill in the 1680s now looks likely Tue/Wednesday. For the bears, the weekly charts are now looking real ugly. VIX is naturally melting lower, in a market of 'hey..its all fine again'.




So..the bull maniacs are seemingly going to manage a double gap fill in the sp'1680s..either tomorrow..or Wednesday.

For those holding short...another 1% 'tolerance'..after that...there would seem no point holding.

I remain short the market, via VIX-long, and things are starting to get annoying, although nothing 'critical yet'.

The stuff of nightmares...


Green candle...and close to breaking above the 10MA.

Obviously, any daily close in the 1680s will be a massive problem. Other than some sort of VERY strong intra-day reversal Tue/Wed, its looking pretty bad for those in bear land.

3.22pm...Nasdaq Comp' breaks new highs...equivl' to sp'1710+

The Trans/R2K are ramping almost 1.5%..but not close to breaking new highs...yet.

I'm certainly still not watching any clown TV today, but I'm guessing they are in full bullish-hysteria mode. Hell, they don't even need to tout 'we're off the lows' today.

3.40pm.. sp'1670...well, regardless of how whether we close above or below 1670 it doesn't matter.

I'm simply resigned to 1680s. The ONLY issue now...whether its just a gap-fill..or the start of another twisted..and baseless ramp.

I'm still guessing..the recent 1627 low will taken out, but hell, if will be white flag time.

2pm update - back to melt mode

The US markets are bizarrely back into melt mode, and we're now testing the sp'1669 high. The 1680/85 gap zone is now seemingly viable by mid week, which would likely equate to VIX in the low 15s. Metals/Oil remain slightly lower.




Hmm, what to say?

If we're trading in the 1690s AFTER mid-week, that would be highly suggestive of new index highs in the coming weeks.

This of course all seems utterly incredible considering the myriad issues out there.

For the big/serious bear money, the last line in the sand for short-stops is arguably somewhere in the 1690s.

*I've not watched one single minute of clown finance TV today. I feel somewhat better for it.

For the hyper-bulls out is one to inspire...

Ford, daily

Clearly...making a break for it. If I see the $18s, I'd have to assume the 20s are similarly imminent, which would bode badly for equity bears.

2.12pm..well, there is sp' the door is open for another 0.75/1.0% higher across the next day or two. 

1pm update - still holding the gains

The market is still holding the gains, with the sp' breaking through the 50 day MA of 1666. Next key resistance is the Aug'26 high of 1669. Despite the index gains, VIX is only marginally lower, -1.3%. Metals and Oil are both starting to slip lower.



Well,we're set to test the late Aug' peak..which is also the 50% fib.

Obviously, any break into the 1670s, will trigger another set of short-stops, and that'd probably ensure another day or two to the fill the big gap of 1680/85.

I still find the notion of new index highs in the near term...very unlikely. There just seem too many issues this month for the market not to break lower.

yours.. holding short

1.34pm... market in  melt mode...same for -1.7% - although on any other day, it'd barely rate as 'noise'.

*AAPL will get a golden cross tomorrow, at the Tuesday open. Maybe a few in the mainstream will pick up on it. For the bulls out there looking for new index highs...AAPL is arguably the most bullish aspect of all.

12pm update - holding moderate gains

The main indexes are holding moderate gains of around 0.7%. The sp' remains stuck just under the 50 day MA of 1666, whilst the Trans/R2K have both broken clearly above. VIX is flat, which is somewhat impressive, although the US/Syria issue is no doubt helping prop it up.



Near term trend remains to the upside. A close in the 1670s would obviously pave the way for a secondary gap fill in the 1680/85 zone.

I am hoping that isn't 'necessary' before the next down wave.

Regardless, with four hours left of the trading day, the best the bears can look for is some latter day Friday.

A close in the 1640s would really help clarify things, but that is probably being overly hopeful again.

*I remain short...via VIX.

VIX update...from a returning Mr T

time for lunch

12.31pm.. well, there  goes the 50 day MA on the sp' test of the 1669 high is going to happen.

A daily close in the 1670s..well, that would effectively guarantee a second gap fill in the 1680/85 zone. For those short the market, this is annoying start to the week.

11am update - the 50 day wall

The market is seeing significant resistance at the 50 day MA across multiple indexes, including the sp'500 @ 1666. Bears should fight hard for a red close in the 1640s, with VIX 17s. Indeed, despite the opening equity gains, VIX is already positive.




All things considered, so long as we close at least moderately red, I'll be very pleased with today.

*yes, the weekly charts are a problem right now, could just be a brief temporary issue.

10am update - testing the Friday highs

The main market is battling upward, and we're testing the high from Friday afternoon. Bulls face strong resistance at sp'1669. Any break over that..and the upper gap zone of 1680/85 is viable. Despite the gains, VIX is only -1%.




Well, I suppose it could be worse for those on the short side. A gap straight into the 1670s would have really nailed the bears to start the week.

Instead, bulls are facing another morning sell off..unless they can keep pushing from here.

*I hold heavy short, via VIX-long. Despite the opening equity rally, I remain seeking the 18/19s within a few days.

In terms of the bigger picture...the worse situation for the bears..


Not only do we have a green candle - the first since late July, but the lower weekly bollinger has jumped to 1590..

I have to think, the notion of testing the June low is completely not viable in the current cycle...and that is assuming we're still falling anyway..which is clearly now in serious doubt.

How we close today will be so very important!

10.14am..eyes on the VIX, which has already flipped to positive.

If equities turn red, could be looking at VIX in the 17s later today.

Hang in there bears!

Pre-Market Brief

Good morning. Futures are moderately higher, sp +3pts, we're set to start the week at 1658. Precious metals are a touch lower, Gold -$6. A very dynamic week for the market appears very likely, primarily due to the building US/Syria tension.



So..we're set to open a little higher, but its nothing significant, and that was after a particularly weak closing hour last Friday.

Bulls should be desperate to break >1664, but frankly, that looks difficult this morning.

Bears only need to close the market <1640 today or tomorrow, and that should then open up a key break of 1627. Once the latter goes, market should in theory just keep falling to the 1580/70s.

*Sunday night posting from Oscar...

We have an interesting week ahead!