Friday, 10 January 2014

Volatility melts into the weekend

With the equity market coping with a pretty lousy monthly jobs number, the VIX settled -5.7% @ 12.15. The VIX looks set to remain in the 14/11 zone until late January, whilst the sp' should have battled into the 1860/80 zone. Across the week, the VIX declined a rather significant -11.7%





Little to add. VIX remains low...and set to remain under the big 20 threshold until at least early February..if not the late spring.

more later...on the indexes

Closing Brief

It was a week of very minor price chop, with the sp' settling +4pts @ 1842. The two leaders - Trans/R2K, settled +1.2% and +0.5% respectively. Market looks set to hit the 1860/80 zone by end month, to be followed with a moderate 3% drop into mid Feb.



A little closing hour doubt, greatly annoying those few traders who are still valiantly trying to short the indexes.

If you can....have a good weekend.

the usual bits and pieces across the evening, to wrap up the week.

*the weekend post - late Saturday, will be on the US monthly indexes

3pm update - chop... into the weekend

Not surprisingly, the minor price chop continues, with the sp' stuck in the 1830/43 zone since Tuesday morning. Metals are holding gains, Gold +$16, whilst Oil has clawed a little higher, +0.3%. VIX looks likely to melt into the weekend...settling in the low 12s.




In terms of the indexes.. a pretty dull week, but hey..there has already been some interesting econ/corporate data this year, a fair bit of which suggest all is not well, especially in retail land.

There is little reason to expect a close anywhere above/below where we currently are. The smaller index cycles are mixed.

..can we close now please?


3.29pm.. a micro ramp to sp' doubt annoying those on the short-side. I'd be surprised if we break >1843. Regardless...broader trend sure ain't it?

3.42pm.. VIX in danger of a weekly close in the 11s...look for the hammer to appear at usually does on a Friday.

2pm update - QE taking the edge off?

One aspect that is no doubt helping negate some of the weakness today, another $2-3bn of QE-pomo. The market remains flush with Benny/Janet Bux. Metals are holding significant gains, Gold +$18, with Silver +3.2%. Oil looks set to close with net weekly declines of around -2%


GLD, daily


Not much to add..on what will probably be a quiet closing two hours of the week.

*the transports are set to close with net weekly gains of 1.5%..pretty impressive, and a likely sign of where the rest of the market is headed next week.

Notable movers: UAL +3.7%,  TSLA -1.9%. I'm kinda curious as to the next Tesla earnings, not that I'd ever trade that hysteria-surrounded nonsense.

1pm update - still churning sideways

A micro up wave..with the sp' and Nasdaq turning briefly green - to join the Trans, which has been strong this week. There is little reason to expect the market to break out of the current trading range until next week. Metals are building gains, Gold +$17, now just $20 from the old broken support.



Considering the huge miss in the jobs data, todays market reaction bodes well for the bulls. The intraday price action is just the same nonsense we've seen for the last few years.

No matter how rough the news is..the bears are simply powerless to push significantly lower.

VIX is melting lower into the weekend, -3.6% in the 12.40s. I suppose a weekly close in the 11s is even possible if they bring out the hammer in the closing few minutes - as if often the case.

UAL is pushing higher...but has channel resistance in the $46s

The $48s (primary target) don't look viable until early Feb..if not March - since the market should cool down into Feb..before the final wave higher into late spring.

12pm update - near term weakness, but broader upside

The market remains seeing minor weak chop. The two leaders - Trans/R2K, are holding together very well, and indeed, the Trans even broke a new historic high this morning - as oil prices continue to remain weak. Metals are seeing a bounce, Gold +$14, but remains under old broken support.


Trans, daily


If you were only looking at the daily Trans chart, you'd have to be completely bullish about this market. The old leader usually does indeed lead..and it ain't trending lower, is it?

The headline indexes - Dow, SP', and Tech' are all a touch weak, but really, the price action remains the same as it has for the last two years....'bears have no downside power..even when the economic data does kinda suck'.

Yeah. a sucky jobs number of just 74k...a miss of over 126k from the market consensus, and the market is only fractionally lower. THAT more than exemplifies the underlying strength.

*despite the slightly weak indexes, VIX is indeed marginally red, -2.9% in the 12.50s. Anyone still doubt the 11s next week, with sp'1850s?

time for tea :)

11am update - continued minor chop

The market is still struggling to cope with what was a lousy jobs number, yet is also under the realisation that the next QE-taper is now not likely until the FOMC of March'19. There remains risk of downside to sp'1820/18..even 1810..but the 50 day now draws the line at sp'1800.



Obviously, if we break <1830..we're going to see another 10/12pt drop later today...which, considering the jobs number, would be somewhat understandable.

However, even if we do see a little washout, the broader outlook remains unchanged, with an upside target of 1860/80.

A stock I've not mentioned, but one that has had the biggest two day ramp..I've probably ever seen...


There has been some kind of 'good medical/health product news', now takeover talk..with some suggesting upside to 700/800..even 1000. I've no idea about the real fundamentals, as I don't follow the company.  A few retail traders must have had a good week in that one..even those who were chasing it higher yesterday are up 50% or so.

11.14am.. For those closely watching...hourly bollinger bands are now extraordinarily tight after the last 3 solid days of minor chop..a mere 7pt range from upper to lower bol.

Based on the price action...and the bigger cycles..I'd have to guess we break to the upside. Worse case..I'm wrong, with downside of barely 1%. 

Notable mover:  UAL, +4.1% in the $45s...and the $48s remain primary target.

10am update - bad news is good news

We're back to the old paradigm of 'bad news is good news', after a truly lousy jobs number. Equity indexes are moderately higher, but a weekly close >sp'1850 now looks overly difficult. Metals are rising on the jobs data, Gold +$14.



So....lousy econ-data, and market is rallying.

After all, a secondary QE-taper now looks completely off the table until the FOMC of March'19.

Sears (SHLD) in real trouble...

Support broken, looks headed for the mid 20s...that is a good 30% further lower!

Notable strength: F, UAL, BTU. Of those...UAL is the strongest, after the initial Wednesday breakout.

10.09am.. indexes a touch lower, but really, this is still the same micro-chop that we've been seeing since Tuesday.

Despite the lousy jobs data, bears were unable to snap the market significantly lower.

Again, as I keep saying...the bears have next to zero downside power.

Best bearish case..a break <1830... and then 1820/18..even 1810/00..but we sure aren't falling <1800, as based on the continuing price action.

Pre-Market Brief

Good morning. Futures are moderately higher (ahead of the jobs data), sp +7pts, we're set to open at 1845 - just 4pts shy of the recent historic high. Gold and Oil are both higher around 0.6%. All things considered, market looks set for a weekly close in the 1850s.



*my estimate remains 236k, with 6.9%....

Actual: 74k... headline rate drops to 6.7%........... Wahhhhhhhhhhhhhh?

That's a truly lousy number considering it was Christmas season. Naturally, the headline rate still dropped. Overall, ...truly......this number stinks for the notion of a what should be one of the strongest times of the year.

Participation rate: 62.8%..a new low.

Notable early movers: SHLD: -12%       ANF: +14%       AA: -6.5

Video update from Oscar


8.37am.. indexes slip from sp +9pts to -2pts...

Obviously.. a break <1830...opens up 1820/18..

Certainly, this number is bad..and as even clown finance TV are asking..why are Fed tapering?

Metals are climbing on the bad news...Gold +$14...although it remains a clear $25/30 below old broken support.

8.44am.. price showing only marginal concern with the lousy jobs data. Indexes are back to fractional gains..and this now going to be a 'bad news is good news' day?

After all.. taper is off the table for the FOMC of late January'..yes?

8.58am.. sp +5pts....the indexes have fully stabilised after the bad news, and we're set to climb..the only issue is whether we can punch through 

9.32am...with the jobs uncertainty out of the way..VIX is -2.5%.. the 11s are due.

Can good news be good news?

Mr Market has effectively flat lined in a very narrow 1% trading range since early Tuesday. The next issue for Mr Market is whether good jobs data (if >200k) can be considered as 'good news'. Based on the recent QE-taper reaction...I'd have to guess..yes.



So, another day of minor chop for the main market, but then, it is not entirely unexpected. Across the last two years - during this giant near straight-up ramp from sp'1074, we've seen the bulls often just chop the market sideways for a few days...rather than allow the bears to drive a wave lower.

re: weekly'8. The above scenario still looks on track, with a small 3% down move late Jan/early Feb. At the moment, I do not see <sp'1800 viable until the summer.

Looking ahead

Friday will of course be all about the big jobs data. Market consensus is seeking net gains of 200k, with a static headline jobless rate of 7.0%. Those are not particularly bold targets, and I expect them to be exceeded.

My best guess... 236k...with 6.9%.

*there is sig' QE-pomo to end the week.. $2.5/3.5bn... bears beware!

A fast week

Maybe it is just me, but this week has flown by. Despite the main indexes seeing minor chop, there has been plenty of dynamic action in individual stocks and sectors.

No doubt..things are just getting started this year. If the equity bears are lucky, we'll see that major wave lower, one that chartists and market commentators have been seeking for at least the past year.

Goodnight from London

Daily Index Cycle update

The market saw another full day of minor price chop, with the sp +0.6pts @ 1838. The two leaders - Trans/R2K, settled +0.95% and +0.1% respectively. Near term outlook is a touch uncertain - with the monthly jobs data early Friday, but the broader trend remains very much to the upside.





The ongoing minor price chop is merely building larger bull flags on the daily charts of just about all indexes. There is little reason to expect any downside <sp'1810/00. The fact that the Transports - old leader, climbed almost 1% likely a major clue for how the rest of the main market will trend tomorrow.

Near term upside target remains the 1860/80 zone by end month.

a little more later...