Volatility battling higher

With the main indexes closing lower, the VIX managed a moderately significant gain, closing +7.4%  @ 16.60 (opening spike high of 17.49) - the highest close in four weeks. Despite the trend, and the uncertainty about a US Govt' shutdown, VIX 20s look unlikely in the immediate term.


VIX'60min

VIX'daily3

Summary

The VIX was arguably the most interesting aspect of the market to watch today.

The opening hourly candle was a classic black-fail one, and indeed, that was a clear early warning that equities would eventually battle back higher into the afternoon.

Despite renewed equity weakness in the closing hour, the daily closing VIX candle was itself also a black-fail candle, and frankly, that should really concern those equity bears hoping for much lower levels across this week.

Considering the style of price action across the past few weeks..and months, I simply can't envision the VIX above the key 20 threshold in the near term.

On the flip side, equity bulls can not be confident until we see a few daily closes in the sp'1710/20s.

As ever....we'll know soon enough.
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more later..on the indexes

Closing Brief

The main indexes closed somewhat lower, with the sp -10pts @ 1681. The two leaders - Trans/R2K, remain stronger, and declined by just -0.2% and -0.1% respectively. Near term trend remains weak, but once the shutdown has come and gone..the bigger upward trend will likely resume.


sp'60min

Summary

Well, congrats to those on the short side from last Friday...with two good opportunities today.. either an exit at the open..or later into the close.

Today was the 7th daily decline in the past 8 trading days.

Certainly, its been a fair while since we'd seen this consistent (if very minor) weakness.

..and that..concludes Q3.
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the usual bits and pieces across the evening...

3pm update - greater risk of upside...than downside

Today is day'8 of a down cycle that began with the Thursday morning high of sp'1729, and during this whole move lower, the bears have entirely failed to display any downside power. Even this mornings declines have largely evaporated..and the VIX is actually in danger of closing red.


sp'60min

vix'60min

Summary

It is a tricky closing hour to call. Certainly, the broader trend is still lower (if slowly), but a simple look at the hourly MACD (blue bar histogram) cycle, and there is very high risk of a snap higher.

Interesting price action in UAL, STX, and many of the miners.

updates..into the close...


3.07pm.. new Qe-pomo schedule out.. see NY Fed

Bears should certainly be mindful of the sig' QE tomorrow and Wednesday.


3.10pm.. despite the past 8 days of weakness, just consider that the 'old leader' is still a significant 5.5% higher on the month.

The broader up trend....continues
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3.20pm.. despite another wave of weakness in the sp', the two leaders  - Trans/R2K, are holding up pretty well, and certainly not warning of major downside.

Equity bears..and I realise there are a fair few out there today...should be desperate to break the opening low of 1674.99. A daily close at the lows..would indeed be bearish for tomorrow, and bode for a move to the 1660s..which some are suggesting.

2pm update - bears struggling

The opening black-fail candle on the VIX once again proved to be a great early 'cash out' signal to the equity bears. The VIX has significantly cooled down, losing half of its opening gains,,whilst the sp' is now making a play to break into the 1690s.


sp'60min

vix'60min

Summary

Despite an hourly MACD cycle on the indexes that is warning of a snap higher into the close, a daily close in the 1690s will be...difficult, ahead of 'shutdown' uncertainty this evening.
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Regardless, dare I say, I warned last Friday afternoon, be mindful of any opening black candle on the VIX. Those black candles on the VIX..are often very powerful indicators

Notable mover: STX (a company I've been recently highlighting)..

...now significantly higher.
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2.36pm.. Bears remain at high risk of a market that could snap higher into the close. As ever..for the serious/big money...good stops..vital.

Clown finance TV is kinda useful today..with some updates on what the political maniacs are trying to arrange today.

1pm update - a close in the 1690s looks unlikely

Equity bulls are trying to inch the market higher, but despite the jump above the opening low in the sp'1674s, the market looks set to close at least a touch red. VIX is still cooling down, now +7%...and almost 1 full pt below the opening spiky high.


sp'60min

sp'daily5

Summary

Clearly, the trend IS still lower on a multi-day basis.

Yet...does anyone seriously think the 1627 low is in serious danger of being taken out?   As the week progresses, the rising lower bollinger on the daily will be in the 1660s..and that will offer pretty firm support.

For the bulls out there, I can't have any confidence until I see a few daily closes in the 1710s, and even then, there is the small chance of the market putting in the first 'marginally lower high'.
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Notable mover...UAL...which appears have to have found good support at the 200 day MA - as I highlighted this past weekend.

..and that is indeed a reversal candle.
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1.22pm As I said to a few others yesterday evening, just look at the lack of downside power.

A looming Govt' shutdown, and the sp' is -4pts.

Where is the doom? Ohh, thats right...there isn't any.

VIX +5%, at this rate...it might even close red.
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1.38pm... reversal candles everywhere. Trans/R2K indexes...now positive. 

Did we put in a key floor at the Monday open...with a 'last minute deal'...due later tonight...for the sp' to then gap/soar into the 1700s again?

The VIX remains the tell...not least the opening black candle.

12pm update - 'we're off the lows'

The main indexes are moderately lower, and indeed as Queen cheer leader Bartiromo would note '..we're off the lows of the day'. VIX has already considerably slipped from the opening spike high of 17.49. Metals and Oil remain weak, but similarly...'off the lows'.


sp'60min

vix'60min

Summary

What to say? Well, I think many bears have lost themselves in another round of 'this time..its really going to happen' hysteria.

I wish I could believe we're now in the early phase of a massive move lower, but I just can't see it happening whilst the Fed are throwing 1 trn a year at the market.

The US Govt' shutdown, even if it does occur will be very brief, and affect hardly any significant services.
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VIX update from Mr T.



time for tea

11am update - market finds support at gap'3

The main indexes are holding moderate declines of around 0.5%...with the VIX +8% in the upper 16s (but an opening spike of 17.49). Equity bears are clearly still in control of the near term trend, but there remains a general lack of decent downside power/kick.


sp'60min

vix'60min

Summary

*the opening black candle on the VIX, is probably the most important thing to focus on right now. Those black candles are not to be dismissed lightly.
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Hourly MACD cycle on the indexes will be trying to tick higher within the next hour or two, and by late afternoon, the bears could have some real problems if the market is trading back in the 1690s.
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I'm as bearish as they come..and yet, I sure don't see anything that entices me to get involved on the short side.


11.34am.. Two hours into the trading day, and bears look unable to break below the opening low.

Gods forbid some 'last minute deal' occurs..we'd be trading in the 1700s within minutes.
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10am update - don't get lost in the hysteria

The main indexes are lower, but its nothing significant yet. The sp' has dropped to the gap'3 zone, where the important 50 day MA is also lurking. VIX is higher by around 11% in the 17s. Metals are weak, Gold -$10, with Oil -1.3%


sp'60min

vix'60min

Summary

*Chicago PMI: 55.7, thats pretty good, certainly not a recessionary sub 50.
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More than anything since the FOMC high of sp'1729, what has been clear is the lack of downside power. It took 7 trading days just to battle down 2%.

Ohh, sure we're down this morning, but all those getting overly excited..I can only refer them to the price action of the last two years.

Were QE concluded...I'd be short right now.  Yet..its not.
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For those interested..the weekly charts ARE offering a provisional sign of a turn.

So..the bears have 'something', but I'd only change my broad outlook if the weekly candle closes red.
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10.29am.. market offering a turn....and that opening black hourly candle on the VIX should REALLY concern the bears.

sp'1683s.. not that I'm expecting a green close today.

Pre-Market Brief

Good morning, and welcome to the last day of Q3. Futures are somewhat lower, sp -14pts, we're set to open around 1677 - the gap '3 zone, and where the 50 day MA is lurking. Indeed, equity bears should be seeking a daily close anywhere in the 1670s. Metals/Oil are both moderately lower.


sp'60min

sp'daily5

Summary

Well,  this is one way to end the third quarter I guess! Market is lower, but still..its nothing significant yet.


Bears lost in hysteria?

I'm starting to see a lot of crashy talk out there, talk of multiple thousand point drops on the Dow across the next few weeks/months. Haven't we been here before.. a few dozens times since autumn 2011...and how did it ALWAYS end?

QE continues, and any shutdown...won't last long...at which point the market will snap back higher.
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One thing is for sure...at least today won't be dull!


9.43am..black candle on the VIX hourly/daily....bears should be very mindful of that.

stay tuned!