Thursday 30 January 2014

Volatility slips a little

With the equity indexes seeing the first significant gains in over two weeks, the VIX is continuing to broadly cool down - since the Monday high of 18.99. The VIX settled -0.35% @ 17.29, with an intraday low of 15.96.




*the closing hour mini surge, and the daily reversal candle, are offering a potential warning, but with $5bn of QE tomorrow, I find it hard to believe the VIX won't continue falling into the weekend.

Near term target downside remains 15/14.50..before a renewed surge.

The ultimate issue is whether sp' can put in a daily close <sp'1765, which would likely kick the VIX into the low 20s - for the first time since early October.

more later...on the indexes

Closing Brief

The main indexes saw their first significant gains in over two weeks, sp +19pts @ 1794. The two leaders - Trans/R2K, both closed higher by around 1.5%. There is near term upside to the 1810/15 zone, before a likely at least test the 1767/65 zone.



*awaiting AMZN earnings

I'm kinda'll leave it at that.

the usual bits and pieces to wrap up the day..across the evening.

EARNINGS update...

AMZN missed on profits..and the stock has fallen 9/10%..with a recovery to -4/5%
GOOG were roughly in line, and stock is holding +2.5%

3pm update - minor upside into the close

Considering the smaller 15/60min index cycles, the market is set for minor upside, with a daily close of 1795/1800. Metals remain weak, Gold -$24. Oil has lost some of the gains, now +0.7%. Equity bulls look on track to make an attempt to clear the 50 day MA -1812, tomorrow/Monday.



The above chart is probably more than enough right now.

We have one clear bounce day, and more than likely, we'll see some follow through tomorrow.

I realise some out there are now touting new yearly the upper 1800s. Hell, even I'm open to the low 1900s.

As ever..its all about key support/resistance, the MAs, and QE..of which we have $5bn to endure tomorrow. Bears beware!

*AMZN earnings at the close. Did they make any $ this past Christmas?

3.14pm... we have a clear baby bull flag on the hourly index charts...bodes for upside into tomorrow.

*AMZN and GOOG earnings at the tuned!

2pm update - key resistance in the 1810s

The market is holding onto significant gains of around 1.2%, with the sp' in the 1790s. A further day or two to the upside seems likely, before the trembling resumes. Metals remain weak, Gold -$26. VIX is quietly melting lower, -6% in the 16.20s



The 10 and 50 day MAs are both indicative of where the wall is.

Any daily closes >1820..and the near term bearish scenario gets dropped, otherwise...its a simple re-short.

For the big money out there..the risk/reward will be good, 1% upside..whilst downside of 7% or so.


*CNBC continues to provide comedy gold today, with their relief at the market rising.

AMZN have earnings at the close. Did they actually turn a profit in the Christmas season?

Weekly/daily charts offer upside to 425/430, to those who don't care about valuations.

1pm update - making a play for the 1800s

The bull maniacs are pushing hard to re-take the sp'1800s. However, as a fair few recognise, there are multiple aspects of resistance in the low 1800s. We'll surely get higher than the 1810/15 zone. Metals remain weak, Gold -$26, whilst Oil is holding gains of 1.1%



Not much to add.

It really is just a case of sitting back, and letting the bulls push this higher..probably at least into the Friday close.

Notable movers...

FB +15%, TWTR +8%
GDX -2.4%, UGAZ, -17% 

12pm update - bullish break through

With the break to sp'1795, the bulls look set to battle to the 1810/15 zone within the next few days..which will likely equate to VIX 15/14.50. From there, we should roll over again - at least that is what the bigger daily/weekly charts would support.




*you can see VIX is on the slide..and the low 15s look an easy target

Well, anyone on the short side had plenty of opportunity to exit yesterday, if not also the Monday open.

Now..its just a matter of waiting for this bounce to complete.

VIX update from Mr T.

time for tea :)

*just turn on CNBC for a few minutes (if you can stomach it) some of the bullish talk is hilarious. I only imagine how hyper confident they will be on another up day to 1810/15. 

11am update - its all fine now, yes?

With the market holding borderline significant gains, the cheer leaders on clown finance TV are happy and oh so pleased with the world. After all, everything is fine now, the correction is over, right? Arguably, bears should be cheering on a bounce to the 1810/15'll make for an easy re-short level.




Whilst things are kinda quiet, I want to highlight the 10MAs...on both the daily and weekly cycles.

We have a very natural upside bounce zone of sp'1810/15.

*with heavy QE tomorrow, is it arguable that bears should simply sit back and wait until early next week.

Even better of course..another $5bn less QE-pomo a month..starting next week. The underlying bid on this market is at least being somewhat reduced.

Notable strength: FB +15%, TWTR +7%

weakness: BTU, -4.7%, worse coal miner of the day so far..the other miners are only a touch lower

10am update - morning gains

The indexes are battling to build significant gains, with the sp' fast approaching the first key resistance of 1794. Metals are seeing some post taper reaction, with Gold -$26, Silver -2.9%. VIX is on the slide, and looks set for 15/14.50.




*reversal candle on the daily VIX, but I think it is to be dismissed.

No doubt, those holding overnight short are getting real annoyed, but worse..there could be a few days to complete this latest bounce attempt

Underlying momentum on the daily/weekly charts will remain VERY bearish for at least another week or two - even if we get to 1810/15. It remains the case..bounces are to be shorted..or to exit existing longs.

So...key upside re-short zone remains 1810/15. If market can somehow claw to'll be a relatively easy re-short zone.

*notable weakness: UGAZ nat gas prices drop -4% or so.. EIA gas report @ 10.30am. Is it summer yet?

Pre-Market Brief

Good morning. Futures are higher, sp +8pts, we're set to open at 1782. Metals are sharply lower, Gold -$25 (delayed reaction to taper?), with Silver -3.0%. Equity bulls have a very tough task, just to break back into the low 1800s.



*Q4 GDP came in 3.2%. slightly above expectations, whilst jobs data was not so good @ 347k.  As ever.. all such data is to be treated 'carefully'
--- we go again....

Near term threat of a move to the 1810/15 zone - although that will doubtless take at least a few days, but we should still see a broader down least to test the 1767/65 zone.

Considering the price action of last Friday, I'm still highly inclined to think the market has put in a key multi-month high already.

Notable strength: FB, +18% @ $63..on what were good earnings.

TWTR doubt a 'sympathy gain' FB.

9.05am.. sp +14pts...we're set to open 1788.  However, there is strong resistance around 1795..and it'll be tough to break that today.

However, bulls have $5bn of QE market can close in the low 1790s..the 1800s ARE viable tomorrow...with a test of 1810/15 early next week.

Metals sure are weak. Gold was -$31 just earlier, with Silver -3.5%.  Certainly, it seems a delayed taper reaction.

9.38am come the 1790s...but we've been stuck <1795 for days.

FB +14%..cooling down a little.  VIX set for the 15s.

A second QE taper

With QE taper part'2 announced, it was a choppy day for US equities, with the sp -18pts @ 1774. The two leaders - Trans/R2K, settled lower by -1.2% and -1.4% respectively. Bear flags are developing on the daily cycles. The equity bull maniacs are in real trouble if market slips <sp'1765.

sp'weekly7 - bearish outlook

sp'weekly8 - bullish outlook


Things are very marginal right now. We're a mere 0.5% from breaking the key sp'1767/65 zone. Any daily close under that will open up a very fast and nasty move to the 1705/1680 zone - where the 200 day MA, and the lower weekly bollinger are lurking.

Baring a break <1767/65, my best guess...another push sp'1810/15 across the next few days. From there, I'd most certainly be seeking another rollover.

I have to note..weekly'8 was the original outlook - all the way back from last summer. If correct, it'd offer a further wave lower..but to be followed by one final lurch higher, into the 1880/1920 zone by late March/early April.

A hit of the lower weekly bollinger, and sp'1850 will be confirmed as a key intermediate wave'3 top. From that point, it gets 'relatively' easy for the doomer bears.

The 'top is in' scenario.

The following is especially posted for the remaining doomer bears out there. I think it merits at least a few minutes 'staring time'.


Essentially, I'd like to see a hit of the lower weekly bollinger - currently 1681 (rising 10/15pts each week), then a multi week bounce, concluded by a collapse wave - much like late July/August 2011. We can at least dream a little on this, yes?

Looking ahead

We have the usual jobless claims, and pending home sales. However,  most important, the first reading for US Q4 GDP. Market is expecting 3.0%, which seems a pretty bold target.

*next sig QE, is not until Friday, but that is a very heavy $5bn or so.

The second cut in QE

I had expected a reduction of $10bn was kinda pleasing to get that right. Obviously..the next thought was..'Will they cut another 10bn at the FOMC of March 19?'

One view that many had last year - myself included, was that the Fed would eventually reduce QE to 60/50bn..only to then see the market drop 20%..and then spool up the printer to new highs >$100bn a month. After all, why wouldn't the fed also want to start buying US student debt?

The months ahead..sure won't be boring!

Goodnight from London

Daily Index Cycle update

With the Fed cutting QE by another $10bn, equities battled hard to hold the key sp'1767/65 zone, with the sp' settling -18pts @ 1774. The two leaders - Trans/R2K, slipped a significant -1.2% and -1.4% respectively. There are bear flags developing on most indexes.




Summary weekly cycle lows for most indexes. The Trans/R2K look especially weak, and those could be multi-day bear flags forming. If yes, that would suggest the critical sp'1767/65 zone will NOT hold - offering a straight drop to the 200 day MA in the low 1700s.

Sp'500 broke the Monday floor, although the VIX did not break the Monday spike high of 18.99.

Without question, the bulls will face real problems on any daily close <1765, but hourly index cycles look pretty exhausted in the near term. A rally to the sp'1810/15 zone still looks viable, and with heavy QE on Friday, bears should be cautious.

Video update from Oscar

*interesting to hear how bearish Mr Permabull has become. Especially pleasing, is to also see him note the bear flags developing on the daily charts.

As noted, any daily closes <1765..and that is when things get real interesting.

a little more later....