Wednesday 9 October 2013

Volatility in minor retracement

With equities seeing some chop, the VIX cooled a little, settling -3.6% @ 19.60. With the Tuesday break into the 20s, the broader trend is for increased market volatility, and with no agreement on the shutdown/debt ceiling likely until next week, the VIX has a chance to spike into the mid/upper 20s.





Again, more than anything, equity bears should be seeking a weekly VIX close in the 20s. If that is achieved, it would be highly suggestive of much lower equity index levels next week, at least to the sp'1600/1590 level - where there is a cluster of support.

The VIX hourly has a possible upward channel, where we saw some natural resistance today.

Regardless of how the market opens Thursday, VIX looks set to be trading back in the 20s, the only issue is whether it can accelerate into the mid 20s before this week concludes.

more later..on the indexes

Closing Brief

The main indexes closed somewhat mixed, with the sp +1pt @ 1659. The two leaders - Trans/R2K, closed +0.2% and 0.35% respectively. Near term trend remains weak, and the other indexes look set to follow the Dow, with a hit/break under their respective 200 day MAs.



*another weak closing hour, a good example of 'selling into the minor bounces'.

So.. with two trading days left of the week...bears have already achieved a great deal, not least with the Dow. A weekly VIX close in the 20s would really confirm the building tension/concern out there.

The question still stands...'how much do the markets need to fall to motivate Obama/Boehner to reach an agreement?'

What does seem agreement is going to happen this which case..we fall into the weekend.

more later...on the VIX

3pm update - another snap lower into the close?

The last few days have seen rather impressive closing hour falls for the bears. Today we've already seen a bounce from sp'1646 to 1662. Arguably, the bulls have had their bounce...and some selling into the close would seem more likely than not.




*VIX is cooling down, but it should at least hold the 19/18s..before the next big jump higher -which would be a target of 23 - the Dec' spike high.

All things considered...this is a very weak market..and the bounces are to be shorted.

*metals and Oil both remain weak..despite the mainstream realisation that QE taper is off the agenda until next year.

3.08pm.. sp'1662/61...and looking kinda stuck. Equity bears should be content with any close back in the 1650s.

King O' due to formally announce Yellen as nominee for the new money printer CEO  job.

3.31pm... Well, Yellen will get the blame (at least partly) for the next collapse luck to her with that, lol

Market looking a touch bear hope would be a close under the 10MA of 1657.

Good work if you can get it!

3.46pm..the rats are selling into the close again. Who the hell would be going long anyway, not least with the Dow screaming all sorts of trouble.

Seeking a close <1657

3.50pm..look at those stinky rats sell. No reason to be long until an agreement is reached..and that sure won't be this week.

2pm update - time for some fed-speak

The main indexes have bounced from morning lows, but we're only talking about very minor gains of 0.25% or so. The FOMC minutes could easily be used as the excuse to push higher. Equity bears really just need to hold any bounce <1670. VIX is naturally lower, but is comfortably holding the 19s.



...well, lets see what money printing maniacs were saying last month.

Considering the oversold condition (although I never really liked the term) maybe another hour up....but weakness into the close.

After all, the likelihood of an agreement before next week..appears to be which case we should continue to broadly fall into the coming weekend.

Momo stocks continue to be especially weak...

AMZN, daily

$280/270s don't look too hard to hit..if sp' fails to hold 1627 low.
- is a touch higher..but really, its nothing significant, and if we again see weakness into the close, a weekly close in the sp'1640/30s looks viable.

2.19pm.. market smells ...WEAK. Something that not many note noticed...Oil is down 1.8% Metals remain somewhat weak, with Silver -2%

1pm update - waiting for the two leaders to break

The two market leaders - Trans/R2K, are both holding within their broadly bullish pattern. Yet, with the Dow now having decisively broken all key supports, it would appear it is just a matter of time before the two leaders break, offering a further 4-6% lower.

R2K, daily

Trans, daily


*we have the FOMC minutes at 2pm. Do not be surprised if the market uses it as an excuse to ramp, on the notion that QE will remain at $85bn until next spring - which I'm guessing is now a given.

Regardless of the rest of today, the damage to the Dow has been done.

I'm actually somewhat bemused how I seem to be the only one who is noting that we have just seen the first lower low on a main index since Oct'2011.

Maybe I'm just not reading around enough?

Miners having problems (as ever)...

GDX, monthly

The 2008 lows look to be hit..eventually, not least if Gold/Silver continue to broadly decline into 2014. Very heavy trading volume in GDX, although a large part of that is simply due to the lower price.
- doubt a few are concerned of FOMC chatter ramping this market into the close.

Market testing the hourly 10MA, which has largely held as resistance for some weeks.

12pm update - broken market

The main indexes are increasingly broken, with the Dow breaking the 200 day MA of 14727 just earlier. Regardless of any minor bounces..further declines seem likely until an agreement is reached. The recent key low of sp'1627 looks likely to be broken..and that will be the first lower low since Oct'2011.




Little bounces are to be expected..very hard to guess the timing/size, but what is clear...especially via the weekly charts...

we're broadly headed downward, at least until a provisional agreement is announced..and frankly..that now seems unlikely until the tail end of next week.

*keep in mind we have the FOMC minutes due at 2pm..and that could be an excuse for the market to briefly spike higher..before renewed selling.

VIX update from Mr T.

VIX in the mid 20s..I guess is a given if you assume sp'1627 will be taken out in the coming days. A brief spike into the 30s...- which we've not seen since 2011..would make things pretty exciting next week.
time for tea.

11am update - minor bounce still due

The main indexes remain weak, and the bulls are really struggling to get a bounce underway. A small jump to the low sp'1560s looks viable into the afternoon, but with daily/weekly momentum increasingly bearish, another weak close is likely. Metals and Oil remain weak.



A bounce does seem likely, but at most..maybe 0.5%. Overly risky to go long..merely a case of short the bounces..when they occur.

We're another day closer to the debt ceiling being hit..another day closer to the zombie apocalypse?

*the momo stocks continue to see significant follow through from yesterday...

NFLX is a typical example...

The 50 day is failing. The real question is whether the 200 day MA is viable in any panic drop.

SPECIAL note..

The Dow just broke the Aug' 14760 low..


This is the first lower TWO YEARS. The Dow is suggesting the two year rally from Oct' over.

11.29am The market breaks into the sp'1640s..and VIX 21s.

The Dow remains the leader, warning of major downside viable in the days ahead.

Dow in the 14600s will be decisive enough to open the door to a severe (if brief) drop.

10am update - very weak open

The main indexes are very weak, and the opening gains lasted mere minutes. This market is starting to get really unsettled, and a further drop of 3-5% looks viable in the very near term. Metals and Oil are similarly weak. The VIX is a touch higher.




The current declines won't likely hold for long though, we're still due some kind of a small bounce into early afternoon.

Best guess, market jumps..7-10pts..only to sell lower into the close - after the FOMC minutes are released.

Mr Permabull is getting rattled!

If Oscar can acknowledge and recognise the QE is why this market has risen, I am still bemused why some of you out there are still in denial.

*the target he seems to be looking for is the June low of sp'1560, although I find it difficult to envision any initial break lower under 1600/1590.

Notable fallers - the momo stocks, FB, TSLA, AMZN...they're all getting hit hard, even though market is trying to bounce again.

10.28am.. market trying (again) to put in a spike floor....

Regardless of any many stocks out there with really ugly charts now...

Pre-Market Brief

Good morning. Futures are moderately higher, sp +4pts, we're set to open at 1659. Equity bears merely need to contain the minor bounces, and keep pushing lower this week to break <sp'1627. Precious metals are lower, with Gold -$11.Oil is similarly weak, -1.1%.



So, we're set to open a touch higher, but really, this is a very minor bounce.

Hourly index cycles are certainly on the low side, so..we could easily just trade largely sideways..before renewed weakness late today (FOMC minutes?), and make a break into the 1640s tomorrow.

What is absolutely clear, until an agreement on the shutdown and debt ceiling provisionally agreed..and announced..this market is going to be just continue to broadly slide lower.

Considering the speed of the trend...we'll should at least be testing the 1627 low no later than middle of next week.

Monthly rollover due on the mighty Dow

The Dow'30 remains particularly weak, with next key support just fractionally lower at 14760, and then the 200 day MA of 14720. However, most notable of all, if the Dow doesn't claw back higher into end October, the monthly cycle will likely go negative in November.





First, I'm always adverse to cherry picking one index out above others, not least since it opens up all sorts of inherent biases. However, as many others have also noted the Dow has been effectively stuck for the last six months.

The daily chart break today was significant. The weekly charts are looking weak, and if we see Dow in the 14600s, the market is in real danger of spiraling much lower - if only 'briefly'.

As I often note, the monthly charts out-gun the daily/weekly cycles. What is now clear, unless the market can bounce back in the second half of October, we'll open November with the Dow monthly chart issuing the first big sell signal since Nov'2012.

Looking ahead

The main aspect for tomorrow will be the FOMC minutes (2pm). Mr Market will no doubt be looking to see who said what, and the chatter across tomorrow afternoon on clown finance TV will no doubt return to 'taper delayed...probably until 2014'.

If that is the case, the indexes might see at least a small bounce, although the broader down trend should hold, so long as we hold under sp'1670/75.

*there is no sig' QE until next Tuesday.

I'm tired of this market. Having been whipsawed for some weeks, I'm largely done with it, at least until this debt ceiling nonsense is out of the way.To the rest of you still involved...good luck! At the very least I will endeavour to offer something 'useful' in these pages.

Goodnight from London

Video from Gordon T Long, part'2 of a discussion on the Fed

If you've not already seen part'1 yet...see... HERE !

Daily Index Cycle update

The main indexes closed significantly lower, with the sp -20pts @ 1655. The two leaders - Trans/R2K, naturally saw heavier falls of -1.4% and -1.7% respectively. Near term trend remains very weak, and the sp'1627 low is now within range of being tested, certainly before the end of next week.




The Dow remains especially weak, and without question it has broken key support on the daily and weekly charts. The monthly cycle on the Dow is also weak..but more on that issue later.

Clearly, we're in a steady downward trend. The bears are still unable to see any major downside action, and from what I gather..sell side volume remains relatively light.

In many ways..both bears and bulls alike should be seeking some sort of capitulation day, although as anyone who has traded this market for more than a few years will some cycles, we don't always get such clear wash-out days.

a little more later..