Wednesday 18 December 2013

Volatility collapses as uncertainty removed

With the Fed cutting monthly QE by $10bn, the uncertainty has been taken away, and equities soared. The VIX naturally has imploded, settling -14.9% @ 13.80. The outlook for the rest of 2013 is for the VIX to decay into the 12s..possibly even the 11s.




Suffice to say...the 6 day run is over..and the VIX daily chart is offering an extremely clear bearish engulfing candle, with a break of the upward trend.

On any basis, the VIX will very likely slip further in the remainder of this week.

VIX 20s look viable no earlier than late Jan/Feb.

more later..on the indexes

Closing Brief

With the Fed cutting QE, the uncertainty is out of the way, and that was a great relief to the market, which soared (after an initial drop to 1767 - a hit on the 50 day MA). The sp' closed +29pts @ 1810. Near term outlook looks bullish, with a year end target of 1830/50.



Well, that was the last big event of 2013.

I sure didn't expect the QE-taper a mere week before Christmas, but ..the reaction is exactly the sort of thing I was concerned about.

I hope you enjoyed it.

The rest of the year should see some follow through to the upside.

bits and pieces across the evening

3pm update - so..err,...the Fed cut QE

The Fed cut monthly QE by $10bn, and after a very brief drop..the market soars...breaking into the sp'1800s, with the VIX getting smashed into the low 14s. Baring an equally bizarre swing to the downside into the close...equity bears are once again...nuked.




Lets get this clear..I was entirely wrong with my QE no-taper outlook until the spring call.

I am indeed very surprised.

However, what I am not surprised at is the reaction of the market. With uncertainty out of the way, the market is soaring...after all..annual QE is still $900bn a year.

Bears face HEAVY QE-pomo tomorrow and Friday...and a weekly close in the 1820s is now very viable.

updates into the close....

3.14pm... market breaks new sp'1803s.

I think we have clarity now on the rest of the year...and arguably..the next 4-5 months.

Target for this grand up wave is sp'1950/2050.

3.29pm...the only issue now is whether the VIX closes in the low 14s..or 13s. Which is one hell of a drop from the mid 16s earlier today.

A lot of good bear traders just got nuked today...some won't make it out alive today.

3.42pm..Bernanke concludes..for the last time.

Market soaring to new highs....incredible...but not unexpected.

No fear.. into 2014.

2pm update - final show for the Bernanke

We have a pretty interesting two hours left of the day. Perhaps even more important than the FOMC announcement, will be the Bernanke press conference. It will be the last one for the Bernanke as Fed chairman, prepare for some stomach churning question/comments from clown finance TVs Liesman.




Well, here we are...endless weeks..and hundreds of posts across many chart sites.

Its the last big event of see what the Fed have.

I'm holding to my original outlook of  'no-taper'. 

..standing by.

2.02pm.. Taper....of $10bn...  that is indeed a surprise.

Market is naturally somewhat upset..but VERY twitchy.

2.04pm..indexes snap..back to green.... Having fun yet?

2.06pm.. in other news...

QE annually still totals $900bn .... market rallying...bears will be understandably outraged!

2.07pm... moon ramp baby!  oh  yeah... Mr Market in the mood to nuke the bears.

End year target remains sp'1830/50.

2.10pm.. extraordinary candle on the hourly charts...VIX getting destroyed.

2.12pm.. hyper-bullish engulfing candles long as the Bernanke doesn't say anything to annoy the market....

we'll close in the sp'1800s, with VIX 14/13s.

Incredible...and for the equity bears out there..this is one hell of a way to end the year.

2.15pm... still pretty unstable..but baring a break back into the 1760s - which seems unlikely, we'll battle upward into the close.

After all..everything is so great now in the economy..we only need $900bn of QE per annum.

Great huh?

2.17pm.... the hourly chart candle truly is...nuts...

As noted.baring a break <1770,...bears are nuked..toast.

2.23pm.. market wants to soar into the 1800s...and smite the bears into early 2014.

There is NOTHING stopping the market from rallying now into the late spring.

The grander target for this post Oct'2011 wave remains sp'1950/2050.

*just look at the VIX....set for a close in the 13s.

2.46pm... sp'1800s...and the Bernanke is speaking....

What a day!

1pm update - AAPL on the edge

Whilst the main market continues to see minor chop, Apple (AAPL) is on the edge of breaking a pretty important rising channel. A break <540 will open up 530/528..where the 50 day MA is lurking. The rest of today will be pretty fascinating to watch.

AAPL, daily


Just an hour to go until the FOMC....this hour will understandably be pretty quiet.

*I will be doing extra intra-hour updates from 2pm..until the close..

For now..its time to get some tea/coffee...and get ready for the big show.

stay tuned!

1.18pm.. a surprising down wave...testing the 1772 low.

Are the bears just being teased here, or is this something big?  I still gotta think this won't end well for the bears...but hey...we'll soon find out.

1.35pm.. VIX is higher for the 7th consecutive day..which is second only to the recent 8 day (record breaking) run.

Feeling the tension yet?

12pm update - minor weakness

A minor down wave, with the sp' back in the 1770s. yet this remains all minor chop ahead of the announcement at 2pm. Metals are largely flat, and remain under old broken support. VIX is a touch red, with some dynamic price movement likely into the close.



The obvious sig' break would be <1772.

Anyway...another two hours of chop..before we find out.

Notable weakness: AAPL, F, RIG, TSLA, TWTR

VIX update from Mr T.

time for lunch :)

12.40pm...AAPL is sitting on channel support..obviously, how the market closes today will determine if this is the start of something major. more on that later.

11am update - Ford having major problems

Whilst the main indexes see minor chop ahead of the FOMC, some notable action is in Ford. Having reduced its 2014 outlook, the stock has snapped lower, and already broken the 200 day MA. There is further near term downside of around the low 14s.

F, daily



*as for the main market, it really is a case of...' see how we close'.

As it is, I'm still bemused at the notion of a policy change before Christmas..and before the Bernanke exits.

10am update - chop before the big event

Equities open a touch higher, but really, this is nothing more than minor chop ahead of the afternoons big event. Equity bulls should be seeking a daily close in the 1790/1800s, whilst bears need to hit..and break under the 50 day MA..currently sp'1768..and rising.



So..we're a little higher, but really..what will matter is where we close.

The break/snap levels are very clear..and equity bears should seek a close <1780.

Interesting price action in Ford...

The low 14s are now on the table..which is one small bearish sign for the broader market.

10.37am.. Ford unable to hold the 200 day MA...another $1.50 downside.. 10% now viable in near term.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pts, we're set to open around 1783. Metals are similarly a little higher, Gold +$3. The FOMC announcement is due at 2pm, and by the close of today, the direction for the rest of the year..should be clear.



Today is the last big trading day of the year, and I expect it to set up another wave higher.

The one thing the bears have on their side today, no significant QE, but there are huge truckloads of new money due tomorrow and Friday.

Video update from Oscar...


As I've been saying for some months...I do not see QE-taper ahead of the Christmas holiday..nor the Bernanke leaving.

Should be an exciting afternoon!

9.11am.. Notable mover, Ford (F), -4.5% in the upper 15s...and as I type, I'm not sure why the big drop.

9.38pm.. Ford breaks the 200 day MA...and the low 14s now look viable, on news its lowering its 2014 expectations.

Awaiting the FOMC

The last FOMC announcement of the year will shape the remaining nine trading days of 2013, and also the first few weeks of 2014. Mr Market has come to only care about whether the QE fuel continues or not. No doubt...the Bernanke is more than aware of this.

sp'weekly'4 - mid term bullish outlook


So..the market is again a little weak, but did manage a marginally higher low of sp'1777.

For the bears out there, we have a VIX that is creeping higher, and if the market is genuinely spooked by the Fed tomorrow, then VIX 20s would be briefly viable, along with a hit of the 50 day MA - in the mid 1660s.

As it best guess remains that the market will cope with a 'no-taper' decision, and then settle into moderate end year upside melt.

Looking ahead

Tomorrow will be the last major trading day/event of 2013.  The FOMC announcement is at 2pm, and we have the Bernanke doing his very last press conference as Fed chairman shortly after.

No doubt, the price action will be pretty twitchy in the 2-3pm hour. How we close Wednesday...whether 1790/1800s...or...1760/50s..will indeed be pretty exciting.

*next sig' QE is not until Thursday.

One thing is for sure, tomorrow won't be dull. and the market will likely pick a clear direction (before the close) and then stick with it for some weeks, taking us into 2014.

Goodnight from London

Video from Gordon T Long, with Charles Hugh Smith

The topic is 'themes for 2014', and for those with an interest in the bigger macro-economics issues, it is well worth hearing.

Daily Index Cycle update

The main indexes closed moderately weak, sp -5pts @ 1781. The two leaders - Trans/R2K, settled -0.4% and -0.1% respectively. Mr Market is in a holding pattern until the FOMC announcement is made tomorrow at 2pm.





Little to add

The rest of the week..and year will be entirely dependent upon how the market reacts to the FOMC tomorrow.

The target levels are clear, bears need a break <1772, whilst bulls merely need a break back into the low 1800s.

Best guess...after any initial wild swings tomorrow from 2-3pm, the market will battle higher.
a little more later...