Friday 6 December 2013

Volatility crushed into the weekend

With equities building significant gains into the weekend - on good jobs data, the VIX was naturally smashed lower, settling -8.5% @ 13.79. Across the week, the VIX climbed 0.7%. Near term outlook is for the VIX to melt lower into year end..perhaps into the 11s





..and thus concludes the 8 day record run of gains for the VIX.

It would seem the 15s are the new 'spike high' range for the VIX. It is pretty incredible really, but then, maybe I am just easily surprised?

Suffice to say, VIX 20s look more than ever out of range, until late Jan/Feb 2014.

more later..on the indexes

Closing Brief

The market held onto the opening gains, and built upon them, with the sp +20pts @ 1805. The two leaders - Trans/R2K,. closed up 0.6% and 0.8% respectively. We have a provisional bull flag breakout on most indexes, with open upside to sp'1840s by year end.



*the above hourly chart still includes a possible ABC outlook, but considering the bigger cycles..I'm guessing it won't pan out that way. A break >1814 will trash any hopes of a move <1800.

I realise for many bears, today was a deeply frustrating..and annoying day. For whatever it is worth, you have my sympathies.

Yet..nothing has changed. The market is just doing what it has done across much of this year. Little minor decline teases..only to whipsaw the indexes back upward.

As for next week...I can only think that with continued QE (especially next Monday)  we'll see follow though, with new index highs.

To all out there... have a good weekend.

*the weekend post will be on the US monthly indexes

3pm update - all must have prizes, yes?

The market has been teasing the bears all week, only for it to end with a rather significant daily gain. A closing hour sell off seems unlikely, and with another large QE next Monday, equity bulls have little to be concerned about for the rest of the year.



Hey, can't everyone claim something good from this week? The bears had 4 days of declines..and the bulls saw a significant gain to close the week.

As the dodo would say ...'‘everybody has won, and all must have prizes'.  :)

re: a possible B' wave.

There remains a small possibility this is just a B' wave bounce - as many recognise.

However, that scenario faces the usual issues of QE, and the broader weekly/monthly cycles are pushing higher anyway.

I certainly still think this market is untradeable on the short side.
updates into the close..on what has been a pretty interesting week.

3.11pm  The 15min cycle will be offering upside into the closing 10 minutes. A spike to 1808/10 is viable, which would be a net weekly gain for the sp'500.

3.15pm.. first support is now 1800/1798...bulls should be able to hold that, before another wave up.

3.29pm.. 5min cycle looks floored at 1802. A close >1806 ..still viable.

3.35pm.. a clear baby bull flag on the micro 5min cycle...offering a close 1806/08

3.45pm.. 1802...still time for a little spike into the weekend. 

3.52pm..and here comes the closing spike.

2pm update - Dow is the one to watch

With the November monthly close giving a clear breakout - from a six month tight trading range, the Dow is giving the clearest trading signal. There is December upside to 16400/600, with 17000/500, by late spring 2014. With QE set to 'largely' continue across 2014..bears face major problems.

Dow' monthly



..ignoring the minor wave nonsense today...and keeping in mind the grander cycles.

The November close for the Dow was indeed particularly impressive, and was the clearest warning that December will likely give some follow through to the upside.

Right now.. a Dec/year end close in the 16400/600s looks viable.

Notable weakness in the momo stocks.. FB, NFLX, TSLA, TWTR.. all somewhat lower. Even AAPL is -1%..although that is hugely up possibly just cooling down. 

2.32pm.. Dow holding 16k... sp'1800s.. Nasdaq.. broke a new post 2009 high earlier...not that many noticed!

1pm update - text book back test

Of all the indexes, the Dow is offering the clearest picture of what is currently going on. We have a classic text book example of a back test of old resistance...which is now support. With the monthly chart offering Dow 16500 before year end..equity bears are understandably dismayed at the current gains.

Dow' daily



I'm trying to refrain from getting 'lost in the minor noise' I'll keep to daily/weekly charts for a bit this afternoon.

So..Dow 16000 looks set to be hit in the next hour. I don't think its important for a close there..but for the hyper-bulls..that would be the target..along with SP >1806.

The weekly 'rainbow' sp' chart is offering the same kind of price action that we saw from Feb-April of this year. Endless little teases to the bears..but always bouncing right back.

As remains a nasty market.

*ohh..and bears holding short across the mindful...there is HEAVY QE-pomo next Monday of around $4-5bn.


12.59pm..and there is Dow 16000. 

12pm update - Dow fighting for the 16000s

The mighty Dow is fighting hard to re-take the 16000s. However, equity bulls sure don't have to close in the 16000s...the onus is on the bears to break the bigger trend..which remains to the upside. Arguably, today is day'1 of a new up wave...that might take us into year end.

Dow' daily



*It would seem certain the VIX 8 day climb is over. A weekly close..somewhere in the 14.50/13.50 zone.

We have a text book back test of the old support on the Dow.  I can't think of a clearer example in recent years.

VIX update from Mr T.

time for lunch :)

12.26pm market holding the sp'1800s...the idea of a swift reversal from the low now off the table for today...if not...completely.

Notable mover: STX (seagate). +1.9% in the $50s

12.43pm.. Dow making a play...for 16000...bears on the run. 

11am update - bearish growls of pain

The main market is holding much of the opening gains, and with heavy QE today, what sell side volume there going to be largely negated. Equity bulls should be content with a weekly close above the bull flag line of sp'1793. Metals are holding gains, Gold +$7.



So..what now?

There remains a chance this is merely a wave'B...with a C' that will last most of next week.

Problem for anyone short this...if we close today at least >1793, there is further sig' upside potential across Mon/Tuesday.

All things considered, the Dow daily/monthly charts should scare the hell out of the bears. They continue to warn of major upside into the spring, Dow 17000/500.

As the sun sets..over the city of London...

stay tuned..

11.13am... a weekly dow close in the 16000s will be decisive enough to confirm much higher levels.

Indeed..a successful back test of the old resistance now a floor...classic text book.

I don't think I've seen a clearer example for a main index in quite a few years.

10am update - the snap higher

The market has already broken into the sp'1800s, and with very heavy QE today, the bulls have just about everything on their side. A weekly close >1806 would be a net weekly gain, and that would really crush  the bears into the weekend. Metals gaining, Gold +$7. VIX -7%..having lost the 14s.


Dow, daily


*Dow...classic back test of old support.

Rather than get lost in the minor noise..I think the daily charts are more important.

We have a very clear bull flag formation..and if we can close today in the 1800s, that is pretty bullish for next week.

Lets be clear..a weekly close of 1806..would be extremely bullish.

*Monthly charts offer Dow 16500, sp'1840s...this month.

Notable strength in BTU...confirming the move  yesterday...

A very good company..I'm a real fan of that one!

9.56am.. consumer sentiment comes in at 82...another good data point for the bull maniacs.

I'm finding it increasingly hard to believe this wave won't hold..and build into next week.

Tough day for the bears... VIX -8%....a close in the mid 13s..would be the target.

10.30am.. market battling to hold the sp'1800s.

The problems for the bears are numerous..

1. primary trend remains UP.
2. hourly MACD cycle is offering 2-3 days of upside.
3. Heavy QE today..will help to negate any 'selling into strength' .

Rest of the day is going to be real important, and frankly..I don't see much hope for the bears.

VIX -8% in the remains a fearless market.

Notable mover: TSLA, -2%

Pre-Market Brief

Good morning. Futures have jumped higher, sp +12pts, we're set to open at 1797.  Precious metals are choppy, with Gold +$5. Equity bulls look set to break back into the sp'1800s today, but can they hold them? With heavy QE...the bulls have a real chance of closing the higher!



*monthly jobs: 203k net gains, headline rate down significantly to 7.0%

Notable mover + DRYS +10 cents @ 3.70. The 4s would make things very interesting early next week.

For a net weekly gain...bulls need to close +21pts to 1806..that is just about viable...


Action in the metals is pretty wild already...Gold has swung from -$12 to +$9. Wild day ahead.

stay tuned!

8.50am.. market..and media starting to get a little hyper.. sp +16pts.. we're set to open at 1801.

Indeed, the notion of a net weekly gain...VERY viable.

8.55am.Fed official Plosser on clown finance TV, he sure is anti-QE, lol. I'm not sure if Mr Market is going to take notice of him right now.

sp +18pts, set to open 1803. going nuts..  Cramer '..its Cinderella'.

So..the big question we close? Another weekly net gain >1806... a new high. >1812..or...a reversal?

VERY tricky to guess, but with the primary weekly/monthly trends UP..the default reasoning would have to be to the upside.

I can only imagine the horror out there this morning..not least if these gains hold into the weekly close.

9.19am...The daily charts will be offering a confirmed bull flag...if we close in the 1800s..

For the bears..this could be the worse end to the week of the year..  Upside to 1820/30s next week..if we close >1800 today.

9.40am.. Well, we're  holding 1800..and with a bullish MACD cross on the hourly chart...we could battle higher for the next few days.

There IS a real chance this is just a 'stupid' B wave bounce..but it might not be.

Anyone short/ looking to short...clearly, the short-stop line is around 1810/15.

The good news is bad news situation

Once again we're in the rather crazy situation where Mr Market might interpret the next big jobs number in terms of 'good jobs bad news' - in relation to the continuation of QE. It remains a twisted and bizarre market, and it is a wonder that anyone is involved at all!



It is usually hard to count these waves. As for the above chart, I suppose its possible we're now in sub'4 (blue)...with a likely hit on the rising 10MA in the 1770/50 zone.

Regardless of the micro moves..I'm still holding to the broader upside outlook into early next year, where I would then be looking for a stronger down wave (5-7%) than the current wave (2-4%) - probably to be inspired by the usual debt ceiling/budgetary concerns.

Looking ahead

Tomorrow will of course be all about the monthly jobs data. Market is seeking net gains of 180k, with a slightly lower headline rate of 7.2%.

There is also personal income/outlays, consumer sentiment, and consumer credit.

There are two fed officials on the loose, whose comments might push the market around a bit.

*there is VERY heavy QE of around 4-5bn...bears...beware!

Miscellaneous chart of the day

US, 10yr yield, monthly, 15yr overview/outlook

I have to guess we'll eventually hit 4-5% in the current multi-year economic cycle. A peak in late 2015, would match up perfectly with Armstrong's ECM cycle peak in 2015.75.

Doomer bears want good news..for the market to fall, lol

So we're again in the situation where good jobs data might mean the market decides that Fed QE-taper is a little closer. As many have come to accept, the market cares for virtually nothing else, other than its QE liquidity fix/prop...fuel..or whatever you want to call it.

What is my call on the jobs number?  Probably >200k, which would likely be enough to make the market seriously wonder if the Fed might taper at the next FOMC of Dec'18. Not that I think that is going to happen, for which I won't get into this night.

It has been a reasonably interesting week, hopefully we'll see some dynamic price action to end the week with a little excitement - even if that is to the upside.

Goodnight from London

Daily Index Cycle update

Equity indexes closed moderately weak, with the sp -7pts @ 1785. The two leaders - Trans/R2K, settled flat and +0.1% respectively. Near term outlook is moderately bearish, whilst the broader trend remains to the upside into Jan'2014.





The fifth consecutive decline for the sp'500, although the two leaders were effectively flat on the day.

The near term remains moderately weak, but baring a few daily closes under the old ceiling - which is dow 15800/700 and sp'1760...the trend is clearly to the upside.

Indeed, if bulls can manage a new wave higher within the next few days,,and push higher into end year..the recent weakness was nothing more than a classic back test of the old resistance (now support).

a little more later...