Thursday 10 October 2013

Volatility smashed lower

With the main indexes soaring on hopes that Obama/Boehner will at least kick the debt ceiling can for another six weeks, market volatility has collapsed, with the VIX closing -15.9% @ 16.48. The strong up trend has been decisively broken, and a weekly VIX close in the 20s doesn't look possible.





Suffice to say, a major turn lower for the VIX, as especially seen on the bigger weekly cycle.

Those bearish hopes of a key weekly VIX close in the 20s...have essentially been destroyed..for probably at least a few weeks.

The two spikes on the daily chart were something I wasn't giving enough credence to. If the weekly candle closes red - with the current spike, it'd be suggestive that equities will rally for the rest of October..and into early November.

In which case, you'd have to assume new index highs, with sp'>1729.

more later..on the indexes

Closing Brief

The main indexes closed powerfully higher, with the sp +36pts @ 1692. The two leaders - Trans/R2K, closed with major gains of 2.3% and 2.5% respectively. With Boehner caving in yet again, Mr Market has again smashed the equity bears, and looks to offer more pain tomorrow.



For the was arguably the worse...if not most disappointing day of the year. The sp'1640s now look a very long way down, and considering the size of today's daily candle...follow through to the upside is very likely.

After all, the political maniacs are going to keep playing their little games..

rinse..repeat...for mid-November.

*I hold short silver overnight, and looking to drop ahead of the weekend. I'm not intending to meddle in the indexes for some weeks. I am simply tired of it!

the usual bits and pieces across the evening...

3pm update - holding the gains

The market is holding the sp'1680s, and indeed, looks set to close somewhere in the 1680/85 zone. Metals remain weak, with Gold -$9 and Silver unchanged. Oil is holding up 1.5%.  VIX has massively cooled down, -14% in the upper 16s. A weekly close in the 20s now looks very unlikely.




Suffce to say, a rough day for many.

I can't imagine more than a few were going 'bravely long' yesterday, and even the cheer leaders on clown finance TV recognise that much of today is simple short covering.

Yet..gains are gains..and it would seem Obama/Boehner are going to play nice, at least for a few weeks.

*I see renewed calls for sp'1740/60s...even ZH was touting sp'1800s by year end.

As day at a time.

*I remain short SLV, hopefully will be able to drop tomorrow, ahead of the weekend. I wish I had the temerity to meddle in the indexes..but...I'm just going to leave them alone for some time to come.

I'd feel a hell of a lot safer shorting this nonsense a lot higher in another 2-3 weeks.

*Most of the momo stocks are holding gains of 2.5 to 5.0%. Its been a good year since I even considered getting involved with any of those crazy things.

3.07pm... Clown TV is going guns-blazing 'buy the dip' .(although I think I've been hearing Bartiromo cursing in the background, lack of coffee?). 

A close in the sp'1690s would be one of the nastiest closes for the bears.  I've seen this picture before..and have shorted it..and it rarely works out well.   Gods help the bears not already kicked out of this nightmare.

3.32pm.. in theory..looking at the hourly trend/channel..we could close tomorrow around sp'1710..which is kinda the next major resistance.

Considering the power of today's daily candle, we'll probably be in the 1700s tomorrow, which is no doubt sickening to many of you out there.

3.52pm.. Metals getting the hammer in the closing hour..Gold -$19.. Silver now -1%..which is kinda useful to yours truly.

back at the close...

2pm update - such a disappointment

The main indexes are comfortably holding the sp'1680s, which is a clear 10pts above what was initial resistance. Baring a weekly close back <1670, the bears look done. As ever, the games being played on Capitol Hill are causing havoc for traders attempting to short 'reality'.



It sure doesn't look good. Even if we sell down to 1670 at the Friday open, bears are facing the threat of a provisional agreement before this week comes to a close.

Sure they will still have to vote on it, but it looks like Boehner has already made the decision. The only thing left now is for King O' to accept the six week can-kick offer, and why wouldn't he?

*I'm steering well clear of the current nonsense, am absolutely tired of it. The only thing I'm involved with is an SLV short from Tuesday. Metals remain weak, so...for is actually not that annoying.

Interesting video from someone I regularly follow on YT.

I have to say though, I'd rather have a Treasury CEO that was shorting the housing bubble, than one who didn't see it coming!

The two leaders - Trans/R2K both showing very strong gains, confirming the spike-floor from yesterday.

Trans, daily

It is a bizarre thought to consider new index we are..pushing up.

1pm update - fiercely nasty market

Equities continue to build gains as Boehner has apparently conceded yet again. A daily close in the sp'1690s is not out of the question, and that would flip the weekly charts almost back to outright bullish. Metals remain weak, Gold -$8, whilst Oil is holding strong gains of 1.8%.




*such a major on the VIX weekly right now. If we close the week like that.. urghhh
-- we're going to have a six week can kick...and then what? Ohh, that's right, it will be Santa rally time. This remains one of the nastiest markets in history, and its a wonder there is anyone at all involved.

The momo stocks are all generally lurking around their daily 10MAs.

FB, daily

If Friday sees follow through to the upside..then new highs look likely, which makes a mockery of the last few days.

12pm update - Boehner nailing the bears

The main indexes are building on the opening gains, as Boehner has decided to offer to 'kick the debt ceiling can' into December. As ever, this market remains a difficult place for those meddling on the short side. Metals remains weak, whilst Oil continuing to rally, +1.5%.




*I'm glad to be sitting this nonsense out. Although I do have a small SLV short - which is actually still net gains since Tuesday.

If King O' issues a provisional 'I like the Boehner' idea later today, then the gains will hold.

A very difficult day for many out there..I do sympathise. Those sp'1640s now look a long way down.

From a bearish perspective..Boehner is himself a WMD.

VIX update from Mr T.

time for lunch
- level is the hourly upper bollinger of 1689/90.

How many index calls do you think Boehner was buying yesterday ? After all, he is a politician, and the normal rules don't apply to them!

11am update - short term bears all kicked out

With the break into the low sp'1680s, most of the short term bears will have surely got short-stopped out. Mr Market has again shown how nasty it can be. A close in the 1660s is still viable, but we'll need to see this level out by 2pm. Metals are weak, but Oil is building sig' gains of 1.2%



What to say about this latest nonsense?

Simply urgh.  However, we've seen this pattern before, and with no agreement yet....we should broadly continue to fall.

I will say, if we somehow break >1710 - which many recognise is a key threshold, then..i will be somewhat utterly bemused.

Anyway..lets see if we can level out into the early afternoon, with some 'sell the dumb bounce' action into the close.

11.09am..well, there is an initial turn...sp'1676...a move under 1670 would be useful by 2pm.

11.24am... VIX hourly chart..offering a gap fill (although I realise the notion of gap filling on a volatiility index is bizarre).

Equity bears should look for a Thursday close >18.60..and that should equate to sp' back in the 1660s.

11.40am.. now Boehner is offering a 6 week 'kick the debt ceiling can', enough to get us to early December.

What a joke this has all become. Even worse than last time!

10am update - ramp and fail?

The main indexes are significantly higher, with the sp' breaking above soft resistance of 1670. Next key level is 1680, where there are multiple walls to halt the advance. Considering the daily/weekly charts, the opening gains will probably not last. Metals and Oil increasingly weak.




*VIX getting the smack down...the CBOE had some problems earlier this morning I believe.

Well, as ever..for those who holding short overnight...the open is pretty nasty, but its important to note we've seen all recent bounces fail.

If we get a red close today..that would really be amusing to see. It has been a fair while since we saw such an opening gain completely fail.

Here is a question...

Q. Just who wants to go long this morning in the mid 1670s? Huge downside risk..and unless you think we're going to be confidently breaking new index highs soon, this is merely a 'short the bounce' opportunity.

stay tuned. is clearly stuck just under 1680.

Who wants to go long here?   ..........I didn't think so.

10.37am...well, there go the 1680 short-stops. 

Pre-Market Brief

Good morning. Futures are somewhat higher, sp +12pts, we're set to open around 1668. It will be important for equity bears to hold the market under 1670, with a close preferably <1660. Metals and Oil are both moderately higher.




*note the 10MA on the daily at 1681, that is the line in the sand for the current down trend. So long as we don't go above that, the bears shouldn't have anything to be concerned about. Indeed, anyone wanting to short the opening rally, a simple short-stop of 1680/85 would be the level.

Opening gains

So, there is 'renewed debt talk' optimism I read across a few sites. Really? Its all fine now?

I think this opening rally is pure nonsense, and will not last. Certainly, I expect us to close lower than we open. Whether we can put in a red close...that is difficult to say, but I will hazard a guess that we close at least under 1660.

Arguably, this is merely a sell the opening rally..and short into the Friday close situation. The only reason not to, would be if both Obama and Boehner issue press releases that they have a provisional agreement.

*equity bulls need sp'1670 just to turn the weekly candle back to neutral, and I find it real difficult to envision a weekly close above 1660.

Notable movers in early market are the momo stocks, NFLX is +3.8% @ $299.

8.59am.. Metals (for an unknown reason) just got the hammer..and have swung wildly lower.. Gold -$12, with Silver swinging from gains of 1.8% to flat. 

9.42am.. sp'1675... a break into the 1680s would bode serious problems.

All things considered though, this just seems like a stupid ramp for no real reason. It will be one to short, once things level out.

Market to keep falling until an agreement

With the continuing US Govt' shutdown, and the looming debt ceiling issue, the US markets are increasingly weak. The Dow is the first main index to put in the first lower low (14719), since the Oct'2011 lows. Dow 14500 looks very likely within the next few days.

Dow' weekly

Dow' monthly'2, rainbow


For the equity doomer bears out there, the break of the Dow under the 200day MA today (14727) was very significant. Yes, we closed above it, but still..a a break, and the daily/weekly trend remains very much to the downside.

RE: weekly chart. It is barely noticeable on the weekly cycle, but we did indeed break the Aug' low today, and that is a rather important issue. There should be trend support around Dow 14500, but if the market gets really upset about a lack of agreement..we could break which case things would spiral real fast.

RE: monthly. We have the third consecutive blue candle, and the Dow looks vulnerable to breaking the 10MA of 14760. Next level would be the big 14k.

The first lower low

Without question, the break below the 200 day MA was important today, but perhaps even more notable, was the Dow taking out the Aug' low of 14760.

It is a very basic issue in chart land, but one I think many have seemingly not highlighted today. The Dow is the first major index to have put in the first lower low..since the Oct'2011 low.

In many respects, the Dow is highly suggestive that the two year rally from Oct'2011...has concluded. If that is the case, regardless of what happens in the next few weeks, we should in theory see a multi-month down wave. Dow 12500 would be the natural target. Of course..that is a very long way down.

Dow, weekly2 - bearish H/S outlook

The Dow looks pretty good for a H/S formation, and it would offer a very simple target of 13500/12500 in the coming few months. Certainly, there is triple RSI divergence, and MACD (black line) could still fall for another 6-8 weeks before getting significantly into what I like to call  'flooring territory'.

For those seeking major autumn/winter market upset, I think the above chart is one to stare at for a good ten minutes.

Looking ahead

There is the usual weekly jobs data, but tomorrow will no doubt be consumed with continued chatter about when Obama/Boehner can reach an agreement. Frankly, I can't see that happening this week, in which case the US markets should continue to broadly slip lower.

*the next significant QE-pomo is not until next Tuesday.

An interesting day, and despite the little bounce from the earlier low, the market looks increasingly weak. As many recognise, we've still not seen any major down days in the current multi-week down cycle. I'd be looking for something in the order of at least one day where the dow is -300 or so. That might be enough to wash-out the market, and motivate the political maniacs to reach an agreement before the end of next week.

Goodnight from London

Daily Index Cycle update

The main indexes closed somewhat mixed, with the sp' just 1pt higher to 1656. Most notable today was the Dow breaking below the 200 day MA of 14727, the first time since late Dec'2012. With no agreement likely in the immediate term, the broader down trend looks set to continue into next week.

Dow' daily




The opening minor gains failed within minutes, to see the bulls manage a 1% swing back to the upside by mid afternoon. Yet..the closing hour was again weak, and it would seem we are merely seeing a regular series of 'selling into the bounces'.

Next downside target is the sp' August low of 1627, which looks unlikely to hold..baring an agreement within the next 2-3 trading days..and that sure doesn't look likely.

Bigger downside target is the lower weekly bollinger the 1590s..where the 200 day MA is also lurking.

a little more later...