Wednesday 11 December 2013

Volatility battles higher into the close

With the main indexes on the slide, the VIX battled higher across the day, settling +10.1% @ 15.31 The VIX looks set to max out in the 15/17 zone early Thursday, before renewed equity market upside into end year. VIX 20s still look nonviable until late Jan'2014.




Certainly, an interesting day for those watching equities and the VIX.

The daily close in the 15s most definitely merits some attention, but really, we still only have a VIX in the mid teens.

My best guess for the near term, is a floor for the sp'500 in the 1774/72 zone.- early Thursday. That will probably equate to a VIX in the upper 15s/low 16s. From there, I'd look for the VIX to melt lower

The only wild card is of course the FOMC of next Wednesday. I continue to believe taper this side of Christmas is simply a no-no for a multitude of reasons.

I see no real power on the equity bear side, and VIX 20s look very unlikely until late Jan/early Feb.

more later..on the indexes

Closing Brief

The main indexes closed very weak, sp -20pts (-1.1%) @ 1782. The two leaders - Trans/R2K, both settled -1.6%. There looks to be further downside early Thursday, before normal service resumes. The end year target in the 1830/50 zone..remains.



With the failed bull flag early this morning, the bears took control, and today was probably the best downside we've seen in quite a few months.

This is probably just the C wave of an ABC that I had originally looked for last week, only to scrub yesterday (yeah.. as I titled it..'permabear kiss of death').

Best guess...further downside by Thursday, the sp'1774/72 - as based on the previous ABC down cycle of late Oct/early November.

To those on the short side today...well done!

..I just pray to the all get a decent exit early tomorrow.

more later..on the VIX

3pm update - weakness into the close

The smaller 15min index cycle looks like a clear bear flag, with a probable snap lower into the close, although the 1770s look somewhat out of range. The metals are weakening, with Gold -$10. VIX is battling for a daily close in the low 15s.


GLD, daily


Well, it looks like we have a very reasonable chance of closing in the 1782/78 range today, with VIX 15s.

I am increasingly concerned at the bearish hysteria out there. We're barely 2% from the historic high, and people are now calling for big multi week drops into the low 1700s by early January.

Primary trend remains UP...and I shall be highlighting that tomorrow morning..when I'm guessing we floor in the low 1770s.

updates into the close.....

3.15pm.. breaking through the hourly 200MA 1786...a further 6-8pts viable into the close.

As ever, always threat of gap higher (although I'd guess no)...and bears might be wise to consider exiting into the close.

3.23pm.. in the previous ABC wave of late oct/early nov...the C wave was 6pts lower than A floor...

right now..that'd be equivalent to sp' early tomorrow.

So..BEST guess..we floor in the 1774/72 zone tomorrow, by 11am..and then..UP.

There can be NO Excuses for those on the short side right now.

3.32pm.. 1784...another 2-6pts to go...with a minor drop 11am.

NO EXCUSES ..bears!


3.39pm.. further we fall into the close..the better chance of low 1770s tomorrow.

considering the broader daily charts...very best case, a test of the 50 day MA @ 1760..but I do not see that as viable.

Best guess remains.. Thursday .11am...1774/72.

3.46pm...Well, we're in the end day target zone of 1782/78

Now its a case of how low we are tomorrow morning.

*clown finance TV hosts seem to be getting a bit rattled. Gods forbid..a close -1% or more !

3.51pm.. a close in the upper 1770s would be a real bonus for the bears.

On any basis..should see at least 'some' follow through early Thursday.....go bears !!!

2pm update - micro bounce for the bulls

The market is seeing a natural bounce after the sp'1786 floor. Further chop into the close seems likely. Bears should battle for <1785, which will open up 1775/70 early Thursday. Metals remain weak, Gold -$6, whilst Oil is -1%. VIX is fighting for a close in the low 15s.




*VIX appears stuck around the old break/gap level...not surprising.

For many out there, today is turning out to be a real relief.

On balance, we should see further downside early Thursday, a natural floor would be around 10/11am, in the low 1770s.

Without question though..the bigger trend remains...UP.

2.27pm.. a clear bear flag on the 15min cycle. A close in the 1770s looks..difficult, but further declines tomorrow look very viable.

Notable strength...TWTR, still holding fractional gains of 0.7% in the $52s.

1pm update - afternoon battle

The rest of the day looks set for an interesting battle, with the bears aiming for a break into the 1770s, whilst the bulls fight to hold Dow 15800. Metals are weak, Gold -$5, and remains vulnerable into year end. Even the momo stocks are starting to turn red, ohh the humanity!


Dow, daily


Seeking general weakness into early Thursday, before the next heavy QE-pomo.

A break of the 1779 low looks likely, but the low 1770s should hold in the current down wave.

No doubt, a whole raft of doomers will be posting apocalyptic charts this I like to say...

Don't get lost in the bearish hysteria!

12pm update - bears... briefly in control

With the break of support, the indexes are on the slide..with a primary C wave target of sp'1775/70 by early Thursday. Equity bears should keep in mind the bigger trends..and be mindful of heavy QE-pomo tomorrow. There is noticeable resilience in the momo stocks.



Summary the surprise of some - myself included, we are seeing a C wave.

With the A wave low being 1779, it is reasonably safe to assume a C target of 1775/70.

The very best case for the bears would be a test of the rising 50day MA in the low 1760s, but I find that difficult to envision, considering recent price action.

Frankly, everyone should be delighted with today. Bears are getting a chance to exit...and bulls are getting a chance to buy at somewhat more interesting levels.

VIX update from Mr T.

time for lunch

12.21pm.. weak weak weak. Been a fair few weeks since we saw some consistent downside like this.

The key issue remains....bears have a window...and it closes tomorrow morning, when another truck of benny bux is delivered to the primary dealers.

11am update - Bears getting their C wave

The weakness seen in the Trans/R2K yesterday has spread to the wider market, and it would seem the bears are going to get their C wave after all. Prime downside is the 1775/70 zone. Metals and Oil are also somewhat weak. VIX is making a push for the 15s, late today/early Thursday.




Okay bears...especially to all those I know who have had a damn rough few days...

You're getting your wave lower...I just pray to the gods that you are mindful that this is probably just a C wave lower..and not the apocalypse wave that some are still touting!

Best guess...a brief drop to the 1775/70 zone..before renewed strength in the remainder of the month.

Notable weakness in RIG, having broken under the 50/200 MAs

11.13am.. the momo stocks are catching a bid again.. NFLX, AAPL, AMZN..and the TWTR..all with gains.

Considering the earlier break though, main market should remain weak into early Thursday.

Friday'13th...bears should be out by then..yes?  

11.28am.. A break under the hourly 200MA of 1785..should open up another 10/15pts lower by early Thursday.

I have to say..I think the bears are getting a pre-Santa gift here. 

10am update - minor support fails

Equities open with some mixed chop, and the sp' has failed to hold what was a bull flag on the hourly cycle. Bears have a narrow window to knock the market lower, <1779, to complete an ABC scenario. Metals look weak, stuck under broken support - a significant drop is viable into year end.


GLD, daily


So...we're seeing a market that is actually starting to slide...surprisingly.

..the ABC scenario is back on.

Bears arguably have a very short window until early tomorrow, when another truck load of QE-pomo is delivered. For all those on the short you have a chance...

Downside targets

Primary 1775/70
Secondary: 50 day MA around 1760.

10.14am.. well, no QE real news due...bears have their chance to make their C wave to the low 1770s..which seems 'best case'.

Weakness everywhere...even the FB is lower by 30 cents..ohh the humanity!

10.32am...washing out all the weak bull hands. Another 15/20pts lower..and that should be it.

I realise..a lot will be relieved at this decline...the much needed C wave ! You're getting your chance to exit !

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pts , we're set to open around 1804. Metals are weak, Gold -$6, and remain stuck under old broken support. With the hourly charts looking floored, equity bears continue to have real problems, and the sp'1820s are viable before the weekend.



I'm not really expecting anything of note today, other than a general opportunity for the market to battle moderately upward. There is more chance of new highs tomorrow, when there is heavy QE-pomo.

I realise some are still seeking a C wave lower, but really, where is the downside power? Bears look weak.

Notable early gains in all the momo stocks...

FB +35 cents..with 52/53 viable by the weekend.

Similarly, I'm looking for TSLA to battle into the 150s before the Friday close.

Video update from Mr Carboni...

..who is surprisingly bearish, at least for a day or two.

9.44am.. a few pts lower to sp1800..but really, where is the downside power going to come from today?

9.50am.. hmm, a snap lower..1797. 

Enough of the taper talk nonsense!

There remains an incessantly annoying amount of taper talk again. Clown finance TV is doing the same thing they have been doing all year - get everyone hyped up for a minor reduction in QE, only for the Fed to hold off for another few months. Next week looks set to be no different.

sp'weekly'4 - long term bullish outlook

sp'weekly8 - mid-term bullish outlook



I am sick of this nonsense talk, not least the manner in which the cheer leaders on clown finance TV discuss and present it. How can anyone expect - what would be a major change in Fed policy, a mere week before the Christmas holiday, and ahead of the Bernanke leaving?

Everyone seems to have lost their minds again, but worse, most seem to have forgotten that we went through all this nonsense just a few months ago. Just this morning on CNBC, Liesman was on air touting 'taper on'. Wasn't he the guy who read the same 'taper-on' script across August and early September...and then what? Ohh,  thats taper.

A $15bn cut still leaves a HUGE annual QE

Far more important to keep in mind, even if there is a reduction in QE - whether next week, or in the spring. At most, we're only talking about a cut of 10/15bn. Assume its 15bn, that still gives us $70bn a month..which would still amount to an annualised QE of $840bn !

On any basis, that would remain a HUGE prop to the US capital markets, and what downside pressure there is next year a VERY significant extent be negated.

Looking ahead

There is nothing of significance due tomorrow, only the US Treasury budget, and the usual weekly EIA oil report.

*next sig' QE is not until Thursday.

Goodnight from London

Video from Denniger - a must watch for those interested in the bigger picture.

Regardless of other issues, Denniger is still one of the best when it comes to macro-economics, and as I have stated for some years...

'There is no recovery..there will be no recovery'.

Much of the official data of course would say otherwise, but for those who care to look..we are indeed in a rather difficult situation in most of the western economies. For many people, the past six years have been a deep depressionary phase..and so far..there is no sign of it genuinely ending.

Daily Index Cycle update

The main indexes closed moderately lower, with the sp -5pts @ 1802. The two leaders - Trans/R2K, settled -0.7% and -0.9% respectively. Near term outlook remains bullish, with the 1820s viable this week, and the 1840s by year end.




A pretty quiet day in market land. The only notable action was in the momo stocks, which all saw rather impressive gains.

Now that we're two days into the week, the notion of a C wave lower seems out of range - considering recent price action.

Equity bulls remain firmly in control, and the sp'1820s could easily be hit later this week, especially this Thursday, when there is very heavy QE-pomo.

a little more later...