Tuesday 14 January 2014

Volatility back down again

With the equity indexes battling higher across the day, the VIX lost most of the gains from Monday. The fact that the VIX slipped into the 11s for the second consecutive day, was again testament to a market that has zero fear. The VIX settled -7.5% @ 12.28, with an intraday low of 11.96.




Little to add. Market remains very confident in the near term, and with the VIX breaking into the 11s today - something even I thought might not happen this week, equity bears look toast...again.

The big VIX 20 threshold...sure does look a long way up, and I remain wondering if we'll see VIX 20 at all this spring.

more later, on the indexes

Closing Brief

Equities battled consistently higher across the day, with the sp +19pts @ 1838. The two leaders - Trans/R2K, both settled higher by 1.3%. Near term outlook is that we have a C wave floor at 1815, and we're now set for new historic highs..moving into the sp'1860/80 zone by end month.



For the bears getting overly excited at the Monday declines, I can understand the disappointment with today's daily close. After all, wasn't yesterday the start of the long awaited major correction? Hell, even clown finance TV was a little rattled at seeing the sp' -1.4%.

Yet..here we are again...one sig' down day..and the market has already almost entirely reversed the losses.

With the bigger daily cycles starting to show initial turns to the upside..there is now viable upside into next week.

Weekly/monthly charts are both offering the 1860/80 zone by end of the month...when Yellen will take over as CEO of print-central.

more later...on the VIX

3pm update - a strong rebound

Equity bulls should be more than content with any close in the 1830s, were the 1840s to occur, that would merely me a bonus. VIX reflects a market that has zero concern in the near..or even mid term. After all..the Yellen will soon be taking her chair..and this is bullish..yes?



So...a mere 7 trading hours after we were in the 1815s..here we are..with the threat of a daily close in the 1840s..which would no doubt really nail the bears for the rest of this week.

Notable weakness: Gold -$12, and that is harming the miners...GDX -2%.

As I will keep saying about the mining stocks...it won't matter whether sp'2000..or 2500. If spot gold/silver prices are low...the mining stocks are NOT going to be part of the broader market rally.

My Gold target remains 1050/950...very viable in the months ahead.

Next soft resistance is 1842, but hey...with the daily trends turning back upward....it really doesn't matter if we see a few hours of churn of 5-10pts.

3.10pm. miners continue to slip... GDX -2.5% @ $22.10..and sub' 20s will occur when Gold breaks the June 2013 lows.

3.21pm.. sp'1838...a nasty market for the bears....a daily close in the 1840s would really smite those who once again got 'lost in the bearish hysteria'.

VIX told the tale..and the question needs to be asked...will we see single digit VIX in the current multi-month ramp..before the next intermediate top?

3.33pm.. TSLA bears getting nuked.... +15% @ $161... I think 170 will clarify the doomer downside is off the table for that one.

Main market...a daily close in the 1840s..would be a massive victory rebound for the bull maniacs. VIX sure confirms it.

3.45pm.. Look for a VIX knock lower into the 11s...in the closing minutes. A daily close in the 1840s..very viable now.    What a rebound day. almost an exact mirror of yesterday.

2pm update - holding the gains

Equities are powering higher, and the Monday low of sp'1815 is now looking a fair way down. Most notable remains the VIX, -9% in the low 12s/upper 11s. Metals are stuck below old broken support, Gold -$10. Oil is following equities, +0.7%.




*with the VIX in the low 12.10/11.90s zone, this market is indeed...fearless.

With each hour we hold above 1830/35, the chance of breaking the Monday low looks ever more distant.

Considering the HEAVY QE due tomorrow morning (and Friday), I think it is arguably safe to call 1815 a floor, and now it is just a matter of when we break new highs.

Notable strength: TSLA, +11.2% @ 154,  UAL +3.4%

2.45pm.. bulls really holding onto the gains very well. Next to no downside power...as reflected in the VIX

TSLA +12%..and that probably sums up just how bullish can flip..in the space of 7 trading hours..

1pm update - market trying to break out

We have a number of marginal technical breaks to the upside, and there is increasing likelihood that sp'1815 was the C wave low. More than anything, the VIX is highly suggestive of a market that is ready to break new highs, having already broken into the 11s..for the second consecutive day.



The broader upward trends are holding, especially clear on the Trans/R2K.

Anyone still think the 1700s are viable? I just can't see it. VIX says.... NO !

Notable strength (of which there is a lot today): TSLA, +8%, DRYs +3.8%, RIG 1.9%, STX 2.9%

TSLA, daily

*I'm really not sure what to make of TSLA, it remains a bizarre momo stock..and earnings will be fascinating to see. Regardless, any daily closes >170..and market will be gunning for new highs.

1.34pm.. TSLA +10.9%....crazy. A rough day for anyone shorting that nonsense.

Main market looks okay. Vulnerable to a small wave lower in the next hour..but 1830 would be a natural level to hold.

Daily cycles turning upward...upside into next week.

12pm update - battling it out

There is a key battle now being played out after a 50% retrace of the Monday declines. Bulls need >sp'1835..whilst bears merely need to stall this mornings rally..before attempting a latter day sell down. VIX however is highly suggestive that the market remains very strong.


Trans, daily


*the two leaders - Trans/R2K, both looking pretty strong.

If the market can put in a daily close of 1835 or higher, that will pretty much clarify that the recent week of sideways weak chop has concluded.

The fact the VIX has already slipped a very considerable 9% to hit 12.00..is again testament that the market remains strong.

12.08pm..  Two fed officials due to speak across the next two hours. If they allude to no-taper...you know Mr Market will be 'inspired'..and make a clear break >1835.

Bears at real risk here...and the VIX most certainly supports it.

time for tea :)

12.26pm.. sp'1836...market is clearing the danger zone..and breaking out.

Bears on the run now...!

11am update - bulls need 1835 to offer a real turn

The main indexes are trying to build gains, but until the sp' is back >1835, there is no clear turn yet. The VIX is reflecting a market that has no fear, despite the significant Tuesday declines. Metals are mixed, with Gold trying to turn positive.



So...we're pushing higher, but until we see a few candles above the hourly 10MA - 1832 (and declining each hour)...I won't be confident that a C wave floor is in at 1815.

Still risk of a further minor wave lower into early tomorrow.

Regardless, as noted yesterday..in the closing hour...bears had an opportunity to exit at 1818..with VIX in the mid 13s. How many are now complaining about this mornings rally?

Notable strength: DRYS, +3.3%

... but until it re-takes $4, it remains vulnerable.

11.07am..market testing the hourly 10MA...so..we're at high risk of a failure here.

I could almost understand the day traders shorting in this 1830/35 zone, but hey...the bigger trends are bullish..so..its overly risky in my view.

UAL +3.3%...  RIG +1.5%, the latter trying to recover from a strong Monday decline.

11.24am..bulls starting to take control.  Perhaps most notable... VIX -9% @ 12.00

Precious metals snap lower.. Gold -$12

10am update - opening moderate jump

The main indexes open moderately higher, but clearly, the gains aren't strong enough to clarify that 1815 was the floor of what has been six days of largely sideways chop. Metals are weak, Gold -$3. VIX is a little lower, back in the 12s.



Considering the decline yesterday, it'd be a little surprising if we don't see another minor wave lower...to fully test the 1812/10 zone...but first..a test of the declining hourly 10MA..currently in the low 1830s.

As I will continue to note, baring a break <1800, I can't take any of the recent weak chop seriously. It is the same thing we've seen for the past two years.

Notable strength: UAL, +2.5%

Upside target remains the 2007 double top of $48s

10.18am... Dow needs to hold 16150 today..to not break the broader up trend, daily cycle. Reasonable chance of that..and with QE tomorrow....bears will face increasing problems.

VIX -6.6% in the 12.40s....a daily close in the 11s this week would be very bullish into end January.

UAL.. gaining altitude...+2.7%

Pre-Market Brief

Good morning. Futures are moderately higher, sp +5pts, we're set to open at 1824. Having lost 1830..and first fib support of 1818, equity bulls should be fighting hard to hold the semi-critical zone of 1812/10 for the rest of this week. Metals are weak, Gold -$5, whilst Oil is +0.5%



*Retail sales: 0.2% vs 0.0% expected. Overall, the number is weak, but market it is acceptable to the market. November revised lower, from 0.4 to 0.1. 

So...the week has started with the first significant down day in over a month, and the bears have even taken out a few support lines. Yet..there are so many levels of support from 1812-1800, I find it very difficult to imagine that the market will go much lower from here.

Recent price action (not including yesterday) has not been in the least bit bearish, and even yesterday morning, had the VIX in the 11s.

Equity bulls just need to hold things together until early Wednesday, when the next round of sig' QE-pomo will kick in.

Video update from Mr C.


Notable early movers: INTC, +1.8%. F, +1.1%

stay tuned!

Crash calling maniacs

With the main indexes closing lower by around -1.4%, some of the remaining doomer bears are at it again, invoking the 1929 (amongst others) analogy, and calling for a huge crash wave in the coming months..if not weeks. Suffice to say...the primary trend actually remains to the upside.


Dow'monthly2, rainbow


I read a fair bit over the weekend (once my ISP finally let me view Google based sites), and frankly, a fair amount of what I saw was laughable nonsense.

Once again, people are posting up the 1929 chart, overlaid with current price action, and calling for a key multi-year top literally..tomorrow.

Today's index declines were significant, but hell, wasn't sp'1818 a target that a fair few (myself included) were recently seeking? Its not like there wasn't a chance of another little wave lower in the early part of this week.

Bears still have no perspective

No doubt..across the web this evening, you'll be seeing some of those who were touting doom across the weekend, posting 'see.......I told you!!!!'. Those same people care little for the grander issues, and frankly, just about all of them have been calling a top each week since the Oct'2011 low of sp'1074...some 70% lower.

re: chart weekly'8.   My best guess is that we'll see a 3% decline - in a larger sub'4, but not until we first hit the 1860/80 zone...probably within the next few weeks.

Looking ahead

Tomorrow will see retail sales..and it will certainly be interesting to see how sales were across the holiday month as a whole. There are also two fed officials speaking, and like today...that might give the market a kick..one way or another. After today's reaction to Lockhart, do you think Plosser and Fisher will be somewhat more inclined for 'no-taper' talk?

There will be various company earnings of course, but as is often the case, a given company can trade one way, whilst the main market trades the other way. A fair few analysts seem to be placing a lot of emphasis on the financials, but I think the market has bigger issues to deal with.

*next sig' QE is not until Wednesday

Ohh the irony

I realise my comments on those calling for a crash are highly ironic. After all, I was doing just that last spring, yet with the decisive break into the 1600s last summer, and proceeding significantly beyond..I can't take the bigger bearish scenario seriously anymore.

No doubt a few of the doomers - who do believe in an imminent crash, will be dismissive of what I've said..but hey...I do understand. I myself am now beyond that mindset. Call it what you wish.

Goodnight from London

Daily Index Cycle update

The main indexes opened with minor chop, but with the break <sp'1830..the weakness gathered some momentum, sp -23pts @ 1819. The two leaders - Trans/R2K, both settled lower by around -1.4%. Baring a break below the big 1800 threshold, the primary upward trend remains intact.





For the bears it was the first decent down day in over a month. I'll certainly call the daily net decline 'significant', but still, it wasn't anything too major. When was the last 2/3% daily decline? It has been so long, I can't even recall without looking at a chart.

The bears managed to break the 1830 support line today, but there are multiple walls of support at 1812/10/08..and then 1800.

I just can't see the bears being able to break all those levels of support. The fact that the VIX earlier today was in the 11s, was again a reminder of just how fearless this market is.
a little more later...