Thursday 23 January 2014

Volatility spikes into the low 14s

It remains somewhat ironic to even note, but a VIX spike in the 14's remains an extremely low level, and is absolutely nothing for the equity bears to get excited about. VIX settled +7.2% @ 13.77 with an intraday peak of 14.66. VIX 20s still look very unlikely for some weeks..if not months.




So..the VIX battled into the 14s, but this is without question, a bizarrely low level in the scheme of things.

I'm certainly not surprised to see the VIX max out in the 14s, and overall, I don't think 15s are viable for some weeks. As ever...we shall see.

more later..on the indexes

Closing Brief

The indexes saw some significant declines, but a moderate latter day recovery, sp -16pts @ 1828. The two leaders - Trans/R2K, settled +0.3% and -0.8% respectively. Near term outlook is bullish, baring a decisive break <1815.



*earnings due at the close: MSFT, SBUX.

So..we saw the second wave of significant declines in 8 days.

The real issue for those touting 'omg, the crash is coming', how are we going to see that rare event, if the market never sees more than one big down day in a row?

We remain in what is almost a full month of sideways chop in a range of less than 2%.  How is that in the least bit bearish?

I hold to the original upside target zone of 1860/80

more later, on the VIX


4.33pm... MSFT results were good, stock jumped 5/6%.  SBUX... reasonable, stock -1% or so.

3pm update - closing hour recovery?

Equity indexes have seen the second significant decline in 8 trading days. remains notable that equity bears are still utterly unable to string together two such down days. Regardless of where we close today, the real question is how we close the week.


Summary interesting closing hour ahead.

Considering the 5/15/60min index cycles, there is high risk of at least some recovery into the close. Equity bulls should be seeking the low 1830s..which really isn't that bold a target.

Notable weakness: FCX -3.0%, RIG, -3.5%, UAL, -2.3%

Strength: AAPL, TSLA.  I can only imagine the annoyance those who are on the short side of TSLA...still gaining, whilst the main market got smacked.

3.12pm.. market wants to break into the 1830s. Are the algo-bots going to frontrun tomorrows sig' QE ?

Bears are getting a chance to exit here..whilst there is major risk of >1850 next week.

3.30pm.. sp'1830/32 , first upside target..still viable THIS hour.

3.40pm... watching CNBC, Gartman talking about divergences...he is cherry picking his indexes.

Dow is weak..yes...but ALL other indexes are strong. Even then, the Dow is STILL within a broad up trend.

2pm update - week four of sideways chop

Despite the borderline mild bearish hysteria - most evident amongst the cheer leaders on clown finance TV, it remains the case that the market is still stuck in a very tight range of sp'1850/1815. Yes, the Dow has moderately broken a key low, but all other indexes are still comfortably above key supports.




*I'm valiantly trying to keep things balanced here..something that is often difficult to do

So..we have a Dow  that has broken <16174....whilst the sp' holds >1815. Meanwhile, the two leaders - Trans/R2K are still very bullish, and the Trans is even threatening to close with net gains.

All things considered, bears face tough resistance in the days ahead. If the last few weeks have reminded us of anything, it should be that the down waves..rarely last long.
Post-earnings movers...

NFLX is holding the bulk of the gains, whilst EBAY has failed..and the 10% AH gains are now a distant memory. I happen to favour the latter, not least with a very real possibility of a paypal breakaway.

2.21pm..99mins of the day left... Equity bulls should push for a daily close >1830.

There will no doubt be a lot of bearish talk tonight...the 1700s..even 1600s will be back on the minds of some. I can only refer any of them to a monthly index chart. 

1pm update - Mr Market teasing the bears

Another micro down wave, fractionally breaks the Dow 16174 key low, but now we're seeing another rebound. With the VIX looking toppy in the low 14s, equity bears are getting considerable opportunity to exit at what is a borderline significant intraday decline. Metals remain strong, Gold +$25




*that is a reasonable flooring-spike on the current index candle.
--- it really just another tease to the equity bears? Based upon the past few weeks (if not years), you'd have to go with a yes.

There sure doesn't seem any panic out there?

Increasingly, it looks like we'll rally into..and after the next FOMC of Jan'29. Whether the Fed do another minor taper..hard to guess.

1.27pm...still over 2.5hrs to go...equity bulls should be battling for a daily recovery into the 1830/35 zone. That'll give a near 1% buffer zone, without breaking <1815.

*watching clown finance TV earlier, amusing how they all see so bearish and concerned about a correction..whilst we're not even 2% from all time historic high. They simply can't cope with even an intraday drop of 1%.

12pm update - Dow holds the line

The Dow came within a mere 4pts of breaking the key 16174 level. Sp'500 is somewhat stronger, and despite the morning weakness, bears were still 9pts from breaking the 1815 low. Metals are holding gains, Gold +$25, but remaining under old broken support.


GLD, daily


There is a lot going on today..kinda hard to keep up!

We've certainly seen yet another weak morning..but we do appear to have formed a floor around the usual time of 11am.

Equity bears should be - as ever, keeping in mind that QE does indeed continue, with sig' QE due tomorrow.

*I'll add that even if the Fed do taper'2 next Wednesday, we're still left with around $60bn a month, which is an annual rate of $720bn..not exactly to be dismissed yet, is it?

time for tea!

12.29pm... Dow re-testing the earlier floor in the 16170s.

Lets be clear, equity bears need sp' <1815...and Dow <16174, only then can they justifiably start to suggest something new has started.

12.43pm... a fractional break <16174...only to see another micro bounce.

Mr Market is likely just teasing the it as done..incessantly since the Oct'2011 low.

11am update - typical turn time

We're at a time when the market will usually exhaust itself on any morning weakness. With the Dow holding (just) above the key level of 16174, the equity bears are now very vulnerable to seeing yet another latter day recovery.



*Gold and miners are both holding significant gains, but again, it has to be noted, the metals remain under old resistance.

So..yet another morning of you remember what normally comes next?

Anyone getting overly excited about ' it comes'..I can only refer them to the past few weeks..if not past five years of price action.

Notable weakness: RIG, -3.9%

A weekly cycle low is probable in the 44/43 zone. A truly bizarre valuation, borderline single digit PE, with a yield of 5/6%.  Earnings for HAL were fine, and I'd expect RIG to be similarly...fine.

11.05am... dow 16178.. 4pts....this sure is a key hour.

11.15am.. first sign of a turn..Dow back above 16200. A daily close >16300 would clarify that this morning was just another tease to the bears.

With almost 5hrs left of the day..lets see how much of a latter day recovery we get today.

11.35am... smaller 15min cycle, offering a more decisive snap to the upside around 12.15/30pm.

VIX..cooling down..a little.

10am update - nothing has changed... yet

Equities are seeing a mini washout, but remain within a very tight sp'1850/15 trading zone. Baring a break <1815, equity bulls have little to be concerned of. Metals are seeing strong gains, Gold +$21. VIX is +7%, but still only in the upper 13s.




*look for the VIX to get stuck around current levels..very vulnerable.

Lets get this clear...despite yet another down wave...we know how this tends to end..right?

We've learnt this..after 150/200 previous instances..yes?

Notable movers: DGAZ -7% @ $6.12,  FCX -2.3% - which is kinda odd, considering the other miners are doing very well.

RIG -3% @ $45.40. remains a broken stock, under declining resistance in the $47s. Arguably, one of the most bizarrely under valued stocks.

*NFLX and EBAY both positive of course..on earnings, and all sorts of rumours.. the latter on a possible Paypal spinoff.

10.29am.. so..the indexes are lower by around -1%. Certainly, kinda interesting, but we're still almost a further 1% above the key level that the bears must break to do any real damage.

*looks like 'Trending waves' has the more likely correct micro-count.

With no QE today, market more prone to sideways chop, than latter day recovery.

Metals/miners building gains, Gold +$26..   GDX +3.3%. Key issue remains.. Gold is STILL under the old broken support.

10.36am.. key issue... Dow 16174...a break under that...opens up much lower levels. For those 'buying the dip'...this makes for an obvious stop level...a mere 35/40pts lower.

Considering we're approaching the typical turn/floor of 11am....bears are getting a chance to exit here...or at least tighten short-stops.

Market trying to floor at Dow 16200... VIX looking toppy.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -5pts, we're set to open around 1839. Metals are sharply higher, Gold +$17, with Silver +1.9% - the lower USD, -0.4%, is no doubt helping. Baring a break <1815 in the days ahead, equity bulls have little to be concerned of.



*weekly jobless claims: 326k. All things considered, I guess you could argue it is a reasonable number, although 'real net monthly' job growth pretty much is barely able to offset the underlying population increase.

So, we're likely to open a little lower, as has often been the case lately, but you know a latter day recovery is coming...right?

Notable early movers: NFLX, +17% @ $392,  EBAY, +1.7% @ $55 - but well below the 10% gains in AH.

8.55am.. market snaps a little lower,... sp-11pts, we're set to open in @ 1833

A fair few movers... FB -2.3%... UAL -3.8%, although the latter is still hugely higher (around 25%) on the month.

9.19am... metals look kinda strong, but remain under old broken support. Gold is still 10/15$ below the key level.

*I don't normally mention it (if ever),  DGAZ -10% in pre-market. A 3x lev' ETF, so..nat' gas prices must be around 3.5% lower or so.

Considering the daily/hourly charts, this is probably a washout move, sig' chance of an intraday reversal here. 

It's not been easy

Just another day in the US equity market, mostly sideways chop, a touch of morning weakness, only to see another latter day recovery. This remains a tough market to be part of, one that looks likely to cause some real trader upset, and increasing strain, as the year proceeds.



I'm tired, I'm not exactly at the burn-out stage..but...hell, its been tough.

The first few weeks of this year have already seen more traders/posters disappear, We've seen the market repeatedly tease the equity bears, tiny little pull backs - usually in the morning, only to be reversed later almost every day.

re: weekly'4. That remains my best guess for the mid-term. I am trying to keep in mind the possibility that we'll just go straight up - much like 2013, but I find it hard to believe that we won't see a 15..or 20% intermediate wave lower.

Looking ahead

Thursday will see the only significant econ-data of the week...jobless, leading indicators, and some housing data.

*next sig' QE is not until Friday.

Goodnight from London

Daily Index Cycle update

Whilst the headline indexes (sp', Dow) saw continued minor chop, sp +1pt @ 1844, the two leaders - Trans/R2K, broke new historic highs yet again, settling higher by 1.0% and 0.5% respectively. The broader market looks set to climb into the next FOMC of Jan'29





Little to add. The last few weeks have been largely chop, but the underlying strength is still there to be seen, as reflected in the two market leaders.

Upside target remains sp'1860/80 by end month.

a little more later...