Monday, 10 February 2014

Volatility melts lower

With the equity market continuing its climb from the Wednesday low of sp'1737, the VIX continues to weaken, closing lower for a third consecutive day, -0.2% @ 15.26. Near term outlook is for VIX to remain in the 17-14 zone.




Little to add. VIX looks set to remain under the big 20 threshold until sp' breaks back under 1770, and that looks rather unlikely in the immediate term.

more later..on the indexes

Closing Brief

The US indexes closed moderately mixed, sp +2pts @ 1799. The two leaders - Trans/R2K, settled -1.0% and +0.2% respectively. Near term outlook offers small opportunity for a retrace to the 1770s, regardless.. a new multi-week up cycle - from sp'1737, looks to be underway.



A very sleepy trading day to start the week.

Maybe if we're lucky, Yellen will give a few 'interesting' answers to some questions tomorrow, causing at least 'some' moderate price action.

Aside from that, there really isn't anything to add.
more later..on the VIX

3pm update - stuck at 1800

The US markets are in extremely slow motion melt mode, with the sp'500 making a play for the big 1800 level. A failure here, will open up a move to the 1770s later this week - for whatever 'reason' the mainstream might attribute to it. VIX is confirming the underlying strength, -1% in the 15.10s.



Sleepy day...although a break..or fail..might at least wake up a few traders into the close.

Everyone is merely waiting to see how Yellen manages tomorrow in from the of the US house commit'.

Notable strength still in.. GDX, TWTR, and AAPL. one wants to buy >1800. So.....still a chance of the 1770s..although that will surely take 2 trading sessions..which will get us into late Wednesday..if not Thursday - when Yellen part'2 is due.

3.28pm... still stuck...just under 1800.

Well, overly risky to be short...but anyone long is getting the chance to exit, with possible re-entry in the 1770s Tue/Wed.

VIX turns green....confirming the slight weakness.

3.44pm...most tedious day of the year so far?

Regardless, at least we have Yellen tomorrow for some mild entertainment. 

2pm update - afternoon index chop

The US indexes continue to churn sideways, whilst the smaller cycles reset themselves after the 60pt ramp from sp'1737. There remains moderate risk of downside to re-test 1775/70, but arguably, higher risk of upside to test and break the 50 day MA, currently @ 1809.



So....we have the smaller cycles , arguably already having reset at least 45/50% - whilst prices have merely flat lined. This does not bode well for equity bears.

At best, we'll get a brief wave lower to re-test 1775/70..only to then ramp.

Any break >1800..and a test of the 1770s can likely be dropped.

A broader climb into the next FOMC of March'19 seems probable.

2.20pm.. well, we're a mere 2pts from breaking into the 1800s, and as noted...if we manage that, the chance of a retracement to 1775/70 will look increasingly unlikely.

I see a fair few out there talking about a renewed strong push lower, <1737, but really, that simply doesn't look viable...even with somewhat lower monthly QE-pomo (of which there is nothing significant in the remainder of this week).

TSLA pushing again, +6.3%.  A daily close in the 200s looks very doubt..a lot of stops will be there!

2.45pm.. market trying to break can see its getting real stuck.

This is line in the sand for inv H/S idea that some are looking for.

VIX is red, so that is confirming the continuing equity strength.

1pm update - TSLA and AAPL on the rise

Whilst the broader US equity market remains quiet, there is noticeable strength in two of the big names.. Tesla (TSLA) and Apple (AAPL), higher by 5.6% and 2.3% respectively. Notable weakness in Natural Gas, with the bullish (3x leveraged) ETN of UGAZ -10%.

TSLA, daily

AAPL, daily


TSLA has just broken a new historic high, breaking the Sept'30' high of 194.50. I'm frankly bemused at this. Oh well, earnings are due next week. Did they sell 3 cars in Q4, or 4 ?

it remains one of those days when the indexes are stuck in nano-chop mode. No doubt, the earlier QE is helping to negate what sell side there is out there.
So long as Yellen doesn't say anything stupid tomorrow morning, equity bulls should be fine, with long-stops in the 1775/70 zone.

A quiet afternoon ahead.  Anyone who can stay awake...deserves a prize.

12pm update - lunch time chop

It continues to be a very subdued day. Mr Market appears on semi-shut down, merely awaiting the testimony of Yellen tomorrow morning. Metals are holding moderate gains, Gold +$8, Silver +0.5%. VIX is battling to hold the mid 15s, on what is a QE fuelled day.



*Trans is -1%, more on that later though.

A very quiet day. Action on the small cycles is very muted. A break >1800 would be...surprising, but then, neither is a break <1790 least until tomorrow.

I will note, there IS a real opportunity for the bears to push briefly lower, to 1775/70, but..underlying MACD cycle is already reset 40% or so. Its going to be overly difficult for the bears to break <1770 again.

A fair question to anyone still seeking new lows (<1737) in the days ahead....

If the equity bears can't break lower on a day when monthly jobs misses by 70k consensus, then how are they going to do it any other day?

Notable weakness...


Probably another 15/20% to go in the current wave, the fact that we're another day closer to the spring, can't be helping!

VIX update from Mr T

time for tea :)

11am update - it sure is quiet out there

An especially quiet start to the week, and the indexes appear almost frozen..much like the weather. Precious metals are the one main strength, Gold +$9, with the first break >100 dma since early November. VIX looks stuck in the 15s.

GLD, daily

VIX, daily


*with the indexes flat, I'll revert back to the usual 'other things'.

Action in Gold is kinda interesting, but hey, the broader trend is weak, and I'm still looking for the big $1000 level to be tested no later than mid 2015. That seems like a long way out, but really, its not.

I sure see a lot of Gold bugs still touting end 2014 Gold >2k, which frankly, seems crazy, much like the 'hyperinflation, with dollar collapse' mantra.
If the rest of the day continues like this, I'll end up digging up BDI and CRB charts!

*notable strength: the miners, GDX +3.0%, no doubt helped by the rising metals.

10am update - sleepy start to the week

The US indexes open somewhat muted, holding the mid sp'1790s. The precious metals are offering some initial strength, Gold +$7, with Silver +1.0%. With sig' QE of around $2-3bn, equity bears face the usual problems.




*I want to highlight the weekly, since we have the lower weekly bollinger, which has now jumped to 1706. Any hopes of sub 1700 should be dropped.

There remains moderate chance of a pull back to the 1775/70 zone tomorrow. Mainstream would doubtless attribute part of the reason to whatever Yellen says tomorrow.
It increasingly looks like we'll rally into the next FOMC of March'19, at which point we look set for taper'3, although with the past two jobs numbers being lousy, its a bit uncertain.

Does the Fed really 'want out', or are they just playing more games?  Cool the bubble a little in mid 2014..before spooling the printers up to 'nuclear meltdown' level.

Notable strength: TSLA, +4.3% (earnings are due next week, I believe)

Pre-Market Brief

Good morning. Futures are moderately lower, sp -2pts, we're set to open around 1795. Metals are showing moderate strength, Gold +$8. The coming week will be largely about what the Yellen has to say in her testimony to the US house/senate - this Tues/Thursday.




Well, another week begins, a week which will largely revolve around what Yellen has to say to the US house/senate - this coming Tuesday and Thursday morning. I'm guessing she will be able to refrain from saying anything 'stupid' that might upset the capital markets.

A little talk of 'the Fed will do everything necessary' should be enough for the bulls to attain a weekly close in the low 1800s. A close >1810 - where the 50 day MA lurks, would be decisive.

As many recognise, sp'1770 is the level equity bulls need to hold in any initial pull back. It will be important for anyone not to get lost in bearish hysteria early this week, if we do slip 20/25pts or so.

One thing to look for at the open, the weekly lower bollinger, should jump into the 1700s, and along with the rising 200 day MA (probably 1712 at the open), equity bears probably won't see the 1600s until the summer (if at all).

*there is sig' QE today, so..bulls should have the edge as the day proceeds.

Interview with 'Aftershock' author, Wiedemer

It is a somewhat interesting chat, for those who want something to listen to over breakfast.

9.08am Really quite dull to start the week, sp now flat, and a brief break into the 1800s looks viable before the first chance of a pull back.

Notable movers: TSLA +2%,   UGAZ -5%, GDX +1.5%...on the back of higher gold prices.