Tuesday 10 September 2013

Volatility fails to hold the 15s

With equities still climbing, the VIX simply could not hold the 15s, and closed -7% @ 14.53. The market remains utterly complacent, war fears are falling back to nothing, and there is barely any concern about a likely reduction in QE at next Wednesdays FOMC.




So, the market rally/bounce is now at day'9.

Frankly, any move into the sp'1690s..and talk of a 'bounce' needs to be changed to 'hyper-ramp across the autumn..and into spring 2014'.

It remains a marginal situation of course. It could merely be a double gap fill in the 1650/80s...before renewed downside.

Yet the problem is obvious, the market has already baked in a QE reduction of 10/15bn for next week. Right now, I honestly can't fathom why the market will not just keep on rising for...months.

more later..on those bullish indexes

Closing Brief

The main indexes closed with moderate gains, after virtually zero price action from mid morning. This was day'9 of an up wave from sp'1627. With the Nasdaq already breaking new highs, the equity bears are again feeling the pain. VIX not surprisingly, melted lower into the close, -7%



*naturally, the market breaks new highs in the closing seconds.

A pretty dull day, opening gains...and then effectively flat-lining in the low 1680s for the entire day.

For the bulls though, this is exactly the sort of action we've seen so much of across the last few years.

The question for everyone tonight...was this a simple double gap fill (1650s and 1680s)...or was 1627 a key low..and we're now set for many weeks...or months of ramp?

*I remain long-VIX, but will look for an exit, if sp'1690s..and if price action still offers no sign of an equity downside turn.
The usual bits and pieces across the evening...

3pm update - uncertain closing hour

The market has been stuck since the opening gains. The two usual paths..a late hour snap lower, or another mini ramp to close at the highs. Regardless, for the bears, today was the ninth annoying day in a row. VIX is trying to floor in the upper 14s.




So...another day almost complete. Both big gaps since the decline from 1709 are now filled, and its a case of whether the rally/bounce keeps going..or starts to turn back lower.

For those not already short, it makes for an easy re-short trade, with a short-stop somewhere in the 1685/90s.

*I remain long VIX, but will be looking to exit if sp'1690s..and if price action offering no sign of a turn.

3.33pm...its getting real tedious again.  10yr yield...2.96.

Those bears seeking a major reversal..need a straight up gap into the 3.05/10s..send the market into a tizzy, and there will be renewed downside in equities.

2pm update - market stuck in the low 1680s

The main indexes remain holding gains of around 0.6% or so. The sp'500 is stuck in the old gap-zone of 1680/85. Bears are looking pretty much powerless, yet even a close in the mid 1670s would do nothing to indicate the current 9 day rally is near an end.



A close in the 1670s would be 'something', but really, its turning out to be a dull day..again.

The rate of ascent since Friday is pretty disturbing At this rate, we'll be hitting new highs (>1709) by Friday.

Meanwhile..in bond land..we're really not that far from a daily close, with a 10yr yield in the 3s.

Perhaps equity bears should be seeking a 10yr break into the low 3s...that should open 3.25/30s, which might be enough to trigger a few things.

VIX is lower by around 0.9..in the upper 14s. Certainly, a move back into the 15s is viable late today, but there is simply no reason to expect anything much.

2.29pm... VIX looks floored on the hourly chart.

Yes, its still broadly in 'melt lower' mode, and arguably, bears need at least the low 16s until a clear trend change is apparent.

 2.35pm. For the day traders out there..its pretty simple into the close. Short, with a stop from sp'1684. Downside target is 1677/75, with VIX currently..trying to battle back upward.

Daily VIX chart looks pretty ugly though, offering downside to 13.50. Urghh

1pm update - afternoon weakness?

The sp'500 remains stuck in the low 1680s, with the hourly cycle chart offering moderate weakness into the late afternoon. Bears should be seeking a daily close <1677, with VIX back in the 15s. Metals and Oil remain weak.




Well, 3 hours to go, can the bears at least manage VIX 15s, and sp' under the hourly 10MA..which late day will be 1677?

Certainly, the bulls have had a good bounce from 1627, across the last 9 trading days.

As I will keep noting though, any move into the 1690s..and arguably..bears can drop any realistic hope of short/mid term downside.

1.35pm..another micro-ramp..to 1682..but the earlier high is holding..so far.

Bond yields, 10yr, 2.95. Would a daily close in the 3s be enough to upset this rally? Is that what bears should be praying for ? 

12pm update - initial reversal underway

The market is offering the initial signs of a reversal at the upper gap fill zone in the sp'1680s. Bears should be desperate for a flat..or marginally red close. If the latter is achieved, there is moderate chance of downside in the latter part of the week. VIX remains lower by around 5%.




I suppose I could be more excited about a possible gap-fill top, but really, baring a close in the low 1670s, I can't take any pull back seriously yet.

Clearly though, there is going to be at least some resistance in the 1680s.

Again, the old question 'who wants to go long here?'.

VIX update from Mr T.

time for lunch!

11am update - no reversal yet

The main indexes are holding moderate gains of around 0.7%, with the sp holding the low 1680s. VIX is weak, -5% in the upper 14s. Metals and Oil are significantly lower, with Gold -$22, and Oil -2%. Bears should remain desperate for an afternoon reversal.



*note the upper bollinger, it will be a 'soft wall' at the 1690 border.

Well, both gaps are filled, and now it is simply a case of..does it keep on rising..or are we going to get stuck in the 1680s..and then start sliding?

Right now, the latter sure doesn't look likely, although the hourly charts are clearly over-stretched.

*Ohh, and the Dow industrial index..is getting cleaned up again. See Bloomberg.

Hell, why not just have 30 financial stocks in the Dow?

11.31am..looks like the market has maxed out around sp'1683. 

For those bears on the sidelines...a re-short, with a simple short-stop in the 1690s..would be a valid trade today, although I still have low hope of a major reversal into todays close.

11.48am.. initial reversal underway. Hmm.

10am update - secondary gap filled

With another round of opening gains, the market has already managed to fill the upper gap zone of sp'1680. The VIX is naturally lower, -4% in the upper 14s. Bears need to see a reversal today, but there would seem no news/reason to motivate the market to reverse.




I wish I could be optimistic for a reversal day, but I can't.

There is nothing negative in the immediate time frame.

I guess the market could simply reverse for technical reasons. After all, just about everyone is aware of this gap-zone, and how it is a valid re-short level.

What is clear though, any daily close in the 1690s, and the big/serious bear money will be waving the white flag.

Even though AAPL is lower, it has still managed a 'golden cross'...

For the bulls, it remains a very bullish aspect.

Meanwhile, the metals have lost channel support..

GLD, daily

Rough start for the gold bugs too,

10.26am.. those seeking a reversal, going to need to give it a few more hours. Still, doesn't look like any downside power. At best..a flat close, that is probably being way optimistic.

Pre-Market Brief

Good morning. Futures are higher, sp+10pts, we're set to open at 1682. Precious metals are sharply lower, Gold -$23, Oil is similarly weak, -1.5%. Mr Market is set to fill the upper gap at the open..the only issue is whether it reverses..or just keeps on going.



So...the upper gap is going to be hit.

If we close in the 1690s, I can only think it will be time to wave the white flag, and prepare for 'months' of further upside. Its not like we've not seen this kind of nonsense before, is it?

Bears should be desperate for a reversal day, with a close in the 1660s. Frankly though, I find it difficult to envision that. After all, the US/Syria situation is now almost resolved, and there is essentially nothing to motivate the market lower until at least next week.

yet..even then..the market looks set to rally further next Wednesday on 'taper less than expected'.

As noted, a daily close in the 1690s..and I'll likely call it quits.

9.44am... well, there is the upper gap filled.

Even if we see a reaction back lower here, I can't take it seriously until the 1650s again..and even then..it could just be a brief pull back.

Second major ugly day in a row..and its only Tuesday. URghh

Bears in trouble

With the market starting another week with a day of upward melt, the bears are in trouble again. The weekly charts are now flipping back to outright bullish. If the market closes the week in the sp'1670s or higher, the bears can drop any hope of sub 1600s.




Well, it was a pretty boring day of algo-bot melt. I can only hope this isn't the start of another giant multi-month wave of relentless QE-fuelled melt. I'm tired of the melt...way beyond tired in fact.

Seeing a green candle on the weekly 'rainbow' chart is pretty disheartening. We are still trading below the 10MA of 1674, but since the 1680s now seem likely, I'm really concerned the bigger bearish scenarios are now slipping away.

Without question, any daily close in the 1690s..will wreck just about every bearish outlook for the autumn. Indeed, the bears should now be desperate for some kind of major intra-day reversal, after any break into the 1680s.

Looking ahead

There really isn't any data of significance until Friday. Similarly, there is no sig' QE until Thursday.

The market looks set to simply melt higher for another day or two..into the sp'1680s.

If the weekly charts close as they are..or higher - this Friday, it bodes badly for the bears across the rest of September..and likely all the way into spring 2014.

Ohh, and here is something for the hyper-bulls out there...

AAPL, daily

AAPL looks set to get a golden cross at the Tuesday open. That will no doubt get some media coverage tomorrow, and the algo-bots will sure as hell be buying on such a signal. For all those bulls out there seeking new index highs...AAPL is one of the most bullish signs at the moment.


Video update from Mr Permabull. Not surprisingly..he is bullish again.

Nasdaq has been resilient for weeks, and as I noted at the weekend, it was a mere 1% from new highs. Todays ramp has indeed taken the tech sector into new territory, this could be a precursor to the rest of the market rallying to new highs.

Nasdaq Comp', weekly

On any perspective, its a clear break above the previous six week plateau.

*bonus chart...

sp'weekly8 - the bullish outlook

I realise the counts are always dubious, but still, what if 1627 was a key low? It sure didn't feel like it, and the bounce so far, isn't exactly soaring, but does it matter?

If we close this week above the 10MA..in the 1680s...then really, its all over for the bears. Bulls have a 'Santa rally' and 'green shoots of spring' to look forward to. If 1627 was a key low, then this nonsense is set for relentless ramp for at least six months.

I'm utterly bemused when I talk to the permabull traders out there, and ask 'since we're going up again, why the hell would it stop in Oct/November?'.

*I remain long VIX, but it sure is getting a little concerning. I'll likely wave the white flag, on any move into the 1690s.

Goodnight from London

Daily Index Cycle update

The main indexes all closed significantly higher, with the sp +16pts @ 1671. The two leaders - Trans/R2K, closed +1.4% and 1.6% respectively. A gap-fill in the sp'1680s looks very likely, within the next day or two. The only is question is...what happens then?





The market opened moderately higher, but the bears showed absolutely zero downside power today. In many ways, the bears haven't looked this week since late July.

The R2K is already close to back testing the old snap level - equivalent to sp'1680s, the only issue is what then?

The problem for the bears is that the bulls merely need to consolidate sideways for a few days in the 1670/80s. So long as the Friday spike low of 1640 holds...bulls are now in semi-control.

'Full control' is surely not until new index highs, sp>1709.

I am hopeful though...it won't come to that, otherwise ALL short/mid term bearish outlooks have to get trashed.

For the big/serious bear money, most short-stops will be in the sp'1690s, or at least, no higher than 1705/10.
a little more later..