Friday 7 February 2014

Volatility... destroyed

With the market managing to rally - despite lousy jobs data, the VIX was crushed for the second consecutive day, settling -11.3% @ 15.29, back to the levels when sp' was trading around 1815. Across the week, the VIX declined a rather huge -16.9%.





Arguably, it is the third chart, the weekly, that is most important. Once again, we've seen the VIX attempt to break..AND hold above the 200 MA..only to fail.

This week sure was a mixed mess. The Monday break to 21.84 was particularly powerful - on the back of the sp -40pt daily decline.

As I noted at the time, despite a lower low early Wednesday morning, with sp'1737, the VIX did NOT confirm with a higher high.

Typically, with such a huge fail/turn in the VIX weekly cycle, equities will likely rally for at least a few weeks, if not a month or two.
more later...on those rallying indexes

Closing Brief

Despite some weakness in pre-market (sp -11pts) - on bad jobs data, the market showed strong follow through from the Thursday gains, with the sp'500 settling +23pts @ 1797. The two leaders - Trans/R2K closed higher by 0.8% and 1.1% respectively.



*a pretty strong closing hour, and there is now absolutely nothing for the bears to cling to.

In many ways though.. a rough week for both sides. Bulls getting a major scare..with a Monday fall of sp -40pts, ..flooring at 1737 on Wednesday...but clawing higher into the 1790s for the weekly close.

As ever, Mr Market seems to do its best to annoy the greatest number of traders.

Thank the gods...its the weekend

*the weekend post will be on the US monthly indexes

3pm update - Transports confirming an initial turn

The first sign of a turn is being offered by the old leader - Transports, which has flipped from a blue candle in the past hour. Trans' held the broader up trend from late 2012 (R2K was the only one that broke), and 7k is now initial key support.

Trans, weekly'2



*VIX weekly remains something to keep in mind for next week. With that magnitude of a fail - at the 200 MA, it doesn't bode well for the equity bears for some weeks at least.

So, the last hour of what has been a bit of a crazy week. We've seen the VIX break into the 21s...only to get smashed down to the 15s, as the sp' rallied from 1737 to the 1790s - despite lousy jobs data.

Any of the doomer bears who have managed to restrain themselves, and not throw a brick through their desktop screen, should consider it a major achievement.

3.05pm.. sp'1795, bears running for their lives now..and bull chasers are appearing.

A weekly close in the sp'1800s would be a real spiteful way for the market to close the week.

*metals are picking up.. Gold +$9, currently, a weekly gain of 1.7%, but STILL stuck at the old broken support level of GLD 122

3.42pm.. micro 5/15min cycles..both bullish into the close. Regardless though, week ends in favour of the bull maniacs.. as confirmed especially by the VIX.  

3.50pm... sp'weekly..'rainbow' chart now also confirming a turn... red candle..flips blue.

back at the close.

2pm update - VIX continues to collapse

With the US market having no concern for weak jobs growth, the VIX has continued to collapse from a Monday high of 21.48, now in the low 15s. Sp' looks set to close in the 1790s...just over 1% from re-taking the 50 day MA. Metals are holding moderate gains, Gold +$6




*still a third red candle on the weekly charts, but we're set for a net weekly gain on most indexes (the exceptions remain the two leaders, Trans/R2K

VIX is highly suggestive of 'bears go away..come a month or two.

A late day update from Mr T.

The only thing stopping the bulls from climbing across next week is..the Yellen. So long as her script writing team don't have her say anything stupid, market looks set to climb higher.

Momo stocks are all doing is one notable climber....

NFLX, daily

a new historic high. Would the $500s now be viable by late spring for Q1 earnings?  I realise its at the top of channel, but still, it would make for an overly risky short.

2.18pm With continued strength, the Trans - old leader, has just offered the first real turn on the weekly charts.  more on that later.

Notable weakness, UGAZ -14%...weekly nat' gas charts would suggest a further 15% to go.

1pm update - who needs job growth, FB broke a new high!

The market is building upon the morning gains, having swung from sp -11pts in pre-market. The last two months of job gains are nowhere near enough to counter the underlying US popn' growth, but hey, it doesn't matter, since Facebook (FB) has just made a new historic high!

FB, daily



Besides the strength in the momo stocks - also Twiter (TWTR), which has held the big $50 level, the weekly charts still look a bit of a mixed mess, most especially on the 'rainbow' candle perspective.

Yellen looming

I just have to wonder what the Yellen will be saying next week - she will give testimony to the US house/senate next Tue/Thursday.. Effectively, the TV networks will be giving her blanket coverage across next week.

*we're now 3% above the Wednesday low, and with seemingly no more power on the looks like the wave from 1737, a multi-week loss of just over 6%

As for the upside now viable...daily charts are offering sp'1870s, but that is at least some weeks away.

*the spike-floor candles on the weekly charts are starting to get pretty decisive now, especially seen on the Dow.

12pm update - morning gains holding

The US equity indexes are holding, and trying to build upon the somewhat fragile opening gains. Despite obvious 'cheer leader' disappointment at the latest monthly jobs data, the market doesn't care, and with the VIX crushed into the mid 15s, the current multi-week down cycle looks..done.

NYSE Comp', weekly


*I've been battling to find a chart that is a fair balance...ended up choosing the NYSE Comp'  the 'master index' as I tend to call it.

We have a clear hold of the primary trend from Nov'2012. Notably, the only index that has so far broken the Nov'2012 trend is the R2K.

So...what now?

Barring a full swing lower in the afternoon - which now looks highly unlikely, weekly'7 is trashed, and...(ironically) I revert back to weekly8.

I realise many out there will again be dismayed at the markets twisted reaction to this mornings latest data, and I myself am bemused that the market couldn't break lower to the 200 day MA in the 1710/1690 zone.

12.01pm...we're now 51pts above the Wednesday low...3% in around 15 trading hours.
*net issues, I can't access youtube, VIX update

time for tea

11am update - bit of a mess

It is something of a mixed mess in market land. The VIX has been crushed back into the mid 15s, whilst equities have seen follow through to the mid sp'1780s. However, the weekly charts on most indexes are still failing to conclusively show a bullish turn.

VIX' daily3



*the two leaders - Trans/R2K, look much the same, still with net weekly declines of -1.5 to -2.0%

Indeed, even the sp'500 is STILL sporting the THIRD consecutive weekly red candle.

Barring a daily/weekly close back <1770, it'd seem crazy to get involved on the short side at the moment, not least with the VIX failing to break and hold a weekly close >19.50.

Arguably..a market to leave alone, at least for today.

*Yellen is talking to the House/Senate next Tue/Thursday.

11.30am.. Despite the hopes of some...we're just not seeing a morning reversal. Sp' holding the 1780s, and we're now fractionally higher on the week.

10am update - back to normal service

With the monthly jobs data coming in pretty lousy, the market has swung from a pre-market low of sp-11pts to +11pts. Equity bulls should be seeking a weekly close >1783, which would be a marginal net gain. VIX is confirming a market that once again...simply doesn't care.




*another major fail to break..AND hold the VIX weekly 200 MA

The recent 1737 low is now looking a long way down, and the bigger bearish trashed.

No doubt the big money shorts are all bailing here (if they didn't already yesterday)..and there is simply no reason why the bull maniacs won't carry it higher into the weekend..and beyond.

Clown finance TV is now in over drive, and hyping up the Whitehouse PR guy who is trying to convince everyone (not least himself) that job growth is headed 'in the right direction'.

Yet..sure it is. Tell that to the tens of millions of long term jobless in North America and the EU.

10.04am  VIX back in the mid 15s, almost right back to where we were before sp' broke the key 1815 floor. 

10.25am Weekly charts are still technically bearish, but having risen from sp'1737 to 1788, who on the short side hasn't already bailed?

It remains a bit of a mess, but having 'survived' the monthly jobs data, the market is 2% high from the Wednesday low.

VIX says 'its over bears'

Pre-Market Brief

Good morning. Futures are moderately higher (ahead of the jobs data), sp +4pts, we're set to open around 1777. Metals are a little higher, Gold +$5. Equity bulls need a Friday gain of 10pts to 1783 for a net weekly gain.




Monthly jobs:   113k net gains, 6.6% headline rate.... vs market expectation 181k, 6.7%

Notable early mover: UGAZ -10%, with probably another 10% to fall to come...that'd get Nat' Gas prices back to $4.50, which was my target from two days ago.

Major day ahead, one that will determine at least the next week or two.

Video update from Mr C.

Looks like Oscar is back in full permabull mode. Nice to see him highlight the weekly 200 MA though. As I've noted, equity bears need to see a weekly close >19.50..otherwise...cycle complete.

8.31pm...   113k net gains, 6.6%

Frankly,...weak.. and market has swung to sp -8pts...

Equity bears MUST close <1750 today, to negate the Thursday bounce.

8.33am.. sp-11pts....having swung from +4pts.

Getting kinda interesting, but really, bears need to be extremely cautious today.

8.35am.. well...sp -7pts, least we're not +15/20pts.

'bad news is ...bad news' ?

8.39am.. sp -2pts...urghh....this is not looking consistent for the bears.. market still trying to rally.

8.43am  sp-5pts... its getting a bit wild west out there.

*note the Dec' number was effectively unchanged at econ-bulls have a lot to be concerned about.

8.47am..It only took 17mins for the market to flip back to evens.   This is looking a real mess for equity bears..even though the data was significantly weaker than consensus.

sp +2pts...1775, if we opened now.

8.55am.. sp +8pts, we're set to open at 1881....we're back to the old madness again!

9am.... so..lets get this clear....

Pretty bad econ-number, market swings 15pts lower to -11....30mins later...swings 20pts higher to sp +9pts

Anyone playing indexes in pre-market, has just got whipsawed to hell.

Madnessssss.   We have a CRAZY day ahead

Denniger..see last paragraph, sums it up. Market Ticker 

9.10am... The metals jumped on the bad data, but...Gold is now just +$2. Metals have been trying to break higher for months...still failing, and that sure won't help the mining stocks.

9.20am.. so..we're set to open moderately higher, sp the low 1780s.  

9.36am  Despite the initial drop, it looks to be over for the bears. 1783...and we're now net higher on the week, ending the multi-week down cycle.

VIX almost back in the 15s, having fails to hold above the weekly 200 MA.

Train Wreck Friday?

Mr Market now awaits the monthly jobs data for January. We have seen a reasonable bounce from sp'1737 to 1773. Is this the start of a new multi-week up wave, or was Thursday the mere conclusion of the latest 'stupid bounce'? Friday should be pretty dynamic, one way or another.

sp'daily7 - bearish outlook

sp'daily8 - the bullish outlook


Considering the fact we still have THREE consecutive red candles on the weekly 'rainbow' (Elder Impulse) index charts, I'm highly inclined to hold to the original outlook.- of weekly'7.

For those doomer bears seeking much lower levels this spring/summer, they really should be seeking a hit of the lower weekly bollinger, currently 1690 - which will jump to 1700/05 next week.

More than anything, recent price action is nothing like what we saw in 2013.  Indeed, the recent two major daily declines of -38 and -40pts on the sp'500, are 'something new'. Since the break of 1815, I have to hold to weekly charts, which remain bearish.

Looking ahead

Market is seeking monthly job gains of around 181k, with a static jobless headline rate of 6.7% Frankly, I find it hard to believe we'll see a gain >100k, but hey, its the BLS data, and that is always tough to 'guess' their calculations.

Besides the monthly jobs data, there is also consumer credit data in the late afternoon.

*there is no sig' QE until next Monday

Got popcorn?

So...we now await the next big econ data point. Last month saw 74k net job gains, which really surprised many - myself included. If tomorrows number comes in <100k, then surely we'll lose all of today's gains..and keep falling?

The hourly index and VIX cycles are both arguably exhausted, and there is certainly the potential for a major drop tomorrow. Equity bears should be seeking a weekly close <1750, with a VIX of 19.50..or higher.

Perhaps the following outlines what I believe is viable tomorrow in what remains a twisted and bizarre market...

Goodnight from London

Daily Index Cycle update

The main US indexes closed significantly higher, with the sp +21pts @ 1773. The two leaders - Trans/R2K, settled higher by 1.5% and 0.9% respectively. Near term trend is highly dependent upon how the market interprets the monthly jobs data. Market remains vulnerable to 1710/1690.





From a bearish perspective, today could easily be just a 'stupid bounce'.

Perhaps most importantly, the daily indexes still closed under the 10 MA, which itself is still declining, and is first key MA resistance.

Those who are now bullish on the US market really need to keep in mind that the sp' needs to clear the 50day MA - currently 1809, which is a good 2% higher.

As most would agree, regardless of today's higher close, what now matters is how the market interprets the Friday monthly jobs data.

Closing update from Mr TopStep

a little more later....