Tuesday 11 February 2014

Volatility continues to melt lower

With equities gaining for a fourth consecutive day, the VIX naturally continued to melt lower, settling -4.9% @ 14.51 (intraday floor of 14.08) - the lowest level in over two weeks. Near term outlook is for the VIX to attempt to battle back to the 16.50/17.00 zone




When taken together, the equity hourly..and the hourly VIX charts are offering a possible ceiling/floor respectively.

Best guess...sp' slips, with a natural retracement to 1800/1780, with VIX jumping back to 16.50/17.00
Considering the broader turn in the weekly index cycles, I'm resigned to general equity upside into March/April...to new historic highs. If that is the case, the VIX will very likely slip lower to the 12/11s.

more later...on the indexes

Closing Brief

The US capital markets coped with the first major appearance of Fed Chair Yellen, building significant gains across the day, sp +19pts @ 1819. The two leaders - Trans/R2K, settled higher by 1.1% and 0.9% respectively. Near term outlook offers minor retracement, but with eventual new historic highs.



*from the closing hour price action, we probably have a multi-day top of sp'1823.

Downside fib-retrace..1790/80, although we could easily get stuck at the big 1800 level.  The point is...the notion of sub 1770 now looks completely off the table.

..and thus concludes the first 'Yellen' trading day. Certainly, for the few bears out there, it was a day to forget.

With the daily close above the 50 day MA of 1809, things are now fully back to the bullish side. This has been an especially power rebound, since last Wednesday's spike floor of 1737, which now looks a very long way down.

With the weekly 'rainbow' charts now turning to an outright bullish green candle...the bulls are back.
more later...on the VIX

**every closing bell on clown finance TV should be drowned out by cheesy music.

3pm update - Yellen into the close

US equities are holding significant gains, with the sp' comfortably above the 50 day MA in the upper 1810s. VIX confirms the gains, -6% in the low 14s. Clearly, Yellen is going to solve ALL our economic problems within her first year (idiocracy reference..anyone?)



*oh jeez, Yellen is STILL talking..   see cspan'3   I can normally cope with 2 hours of fedspeak..but 4, 5...urghhh

Clearly, we're due some kind of retracement after the ramp from 1737 to 1820, but hey...guessing a small cycle top is damn tricky.

The fact we're already above the old floor of 1815 (remember how that was a key break?), should be enough for anyone still short..to be waving the white flag.

However you want to count this nonsense..the trend sure ain't down, is it?

Notable strength in UGAZ, +13%.

Is it getting cold again? There is the usual problem of decay though. Daily MACD cycle is kinda low..., but it doesn't look so great as a long.

*watching the Yellen..into the close.... VIX looks set to lose the 14s.

3.02pm.. If you listen closely, you can hear cries of 'make it stop...make it stop'.

sp'1821.....a mere 29pts to new historic highs.  I don't expect that this week. or even next (since its opex), but in March...absolutely.

3.20pm.. 1823...and just like Yellen...this market keeps on going.   VIX set to lose the 14s.

3.40pm.. looks like we have a multi-day top of sp'1823...

Hourly MACD cycle is starting to rollover...nothing decisive yet..but for the swing traders out there, makes for an easy short-stop.
*Yellen has finally stopped talking (I think).

3.43pm.. first retracement target...would be big 1800 psy level

Looking at the fib levels...1790/80 zone would be the primary target zone, before new historic highs.

3.50pm...1823 is a good ceiling....downside retrace to 1800/1780...but certainly NOT <1770, with the weekly charts now bullish.

3.57pm...rolling over............ back at the close !

2pm update - powerful gains

US equities are higher for the fourth consecutive day, and these are now significant gains, price action is powerfully bullish, with a VIX -6% in the low 14s. With the weekly index cycles confirming a broader turn, equity bears look toast until mid/late March at the earliest.



So...the 50 day MA has been decisively broken, and we're barely 30pts from new historic highs. Such a powerful 4 day ramp. Clown finance TV say its the strongest ramp since late 2011.

Something I am watching...

IRBT, 60min

A new historic high...there will be a fair bit of chatter in the finance sphere after the close about that one.

1pm update - weekly charts turning outright bullish

US equities are holding borderline significant gains, with the sp'500 above the important 50 day MA of 1809, confirmed with the VIX that continues to melt lower, -5% in the low 14s. Notable strength in the precious metals...as reflected in the miners.


GDX, daily


*GDX breaks the 200day MA, first time since Jan'2013, a pretty major break through. How metals/miners close the month will now be paramount.

So...the market has coped with Yellen..but there is also the US Senate this Thursday morning.

The weekly 'rainbow' charts are really turning in favour of the equity bulls, and we're seeing the sp'500 flip to a green candle, confirming last weeks blue..as a turn.

Best guess..a key inter'3 top..late March/April...monthly charts will be offering the low 1900s next month..which is a disturbing thought.

The 'big short'....target will be 1900s...down to 1625/1575....some time in the Aug-Oct' time frame.

Anyway...back to the near term action...

1.03pm...and Yellen is still at it, but I'm sure they wrap up any minute..for 30mins, and then a tranche of other Fed officials will appear.

1.16pm... a fierce market....sp'1818...a mere 32pts from breaking a new historic high....incredible!

Notable strength in IRBT, +16%...upside target is the $50 psy' level.

1.36pm bulls battling for dow 16000, not that its 'necessary' today.

12pm update - longing for the Bernanke

The US capital markets are so far content with the statement and answers from the Yellen. Yet.. a fair few traders/web posters are starting to acknowledge.... we'd rather have the Bernanke back. Metals are noticeably higher, Gold +$16, and aiming for the 200 day MA.

Fading memories..of the Bernanke


Coming from yours truly, noting a wish to have Bernanke back probably sounds bizarre, but hey...I did note it many months ago, that I had wished the Bernanke would have taken a third term.

The notion of 8 years of the Yellen....it is amusing to see many posters venting their horror at the realisation that we have many years of the Yellen ahead.


The break above the 50 day MA is clearly significant, and we're now almost 4% higher in barely 5 trading days.


VIX update from Mr T.

time for tea

SUPER bonus chart for lunch...


We are now outright bullish on the weekly 'rainbow' chart. 

11am update - 8 years of the 'sensible central banker'

As the market makes a play to break the key 50 day MA - sp'1809, it is kinda disturbing to reflect upon the fact that we have a probable 8 years of the Yellen. Eight...long....years. Metals are trying to break higher, Gold +$14, with Silver +1.0%


GLD, daily


Yellen '...I believe I am a sensible central banker'.

Ultimate oxymoron?

..and yes, the more interesting action of the day is in Gold, which is managing to rally, despite continued recovery in equities.

11.08am.. a mere 1pt from re-taking the 50 day...

after that..empty air to soft resistance of 1815/20..but really...any daily close >1810..and those hoping for another down wave should be waving a white flag.

VIX melting lower..

11.21am.. and there goes the 50 day MA....

72pts straight up..since the Wednesday low....incredible.

11.24am.. all the remaining shorts getting hit..and another wave of bull chasers are appearing.

Fiercely nasty market...and we're now just 39pts below the historic high..thats  barely 2%.

10am update - here comes the NIRP monster

The sp'500 breaks into the low 1800s, despite some market concern about taper'3 (seemingly likely at the FOMC of March'19). Metals are holding moderate gains, Gold +$7, VIX is a touch lower, but seems to be able to hold the mid teens whilst we are yet to clear the 50 day MA of 1709.



So...we're on the rise...for the fourth consecutive day, and the inv. H/S formation should be ditched about now.

Equity bulls should mere target a daily close >1810..which opens the door to new historic highs in March/April.

yours....awaiting..the monster...

*Anyone who touts NIRP as a valid monetary policy..IS monstrous...besides being academically stupid.

We already know the Yellen statement, what will be interesting will be her answers, and perhaps more telling, the manner of such answers. As ever, Mr Market is often more concerned with image..than the reality. Bears...beware!

ps. if Yellen appears in anything green this morning....yeah, ..that'd figure.

10.12am... oh great..its Maxine waters.... at least she seems able today, to distinguish between the Fed chair..and the Treasury secretary. Thats progress..I guess.

Market holding sp'1800...comfortably.

10.24....ohh jeez...8 years of this...probably. urghhhh

Market making a play for the 50 day MA..around 1810

10.45am.. watching Maxine Waters question Yellen...ohh the humanity!

Pre-Market Brief

Good morning. Futures are moderately higher, sp + 6pts, we're set to open at 1806 - a mere 3pts shy of the 50 day MA. Metals are stronger, Gold +$11, with Silver +0.6%. The market is now patiently awaiting the first big Yellen day.



So, the sp'1800 looks set to be broken through, and those looking for an inv. H/S can probably ditch that scenario at the open.

A daily close >1810 would be important, and open the door to new highs in March/April.

Video update from Oscar...


..awaiting the Yellen press release at 8.30am

8.42am ...the Yellen statement is out..and taper'3 is on the table...for March'19.

Market is holding 1800..just.

Certainly...interesting day ahead!

Notable mover: UGAZ +5.5%.. GDX +1.4%

9.00am  I realise many out there are getting bearish now, but hell, we only need to close +11pts - a mere 0.6%, to break the 50 day MA..and that wrecks any of the bigger near term bearish outlooks.

9.18am  indexes set to open...FLAT.   Hmmm

Even the metals are slipping...Gold +$4..after +10

9.34am... well, we've clearly broken the 1800 threshold, VIX is a touch red, but...not much.

A tricky morning ahead, but daily/weekly momentum is still turning back to the bulls.

TSLA, breaks to $202.20 in pre-market...who is crazy enough to still short ?

New Fed Chair, same Fedspeak?

The US capital markets are quietly awaiting the first major statement of Janet Yellen. No doubt, equity bears will be ready to pounce on any hint of taper'3 at the next FOMC, whilst the bulls will be looking to clear the big sp'1800 level, on any mainstream consensus reaction of 'isn't Yellen great?'.




It remains a somewhat scary thought that we will probably have to endure the Yellen until the year 2022.

As for the charts..

weekly'8 - is something I've broadly held to since last summer, barring a break <1770, I'll again hold to this outlook.

weekly'4 - remains an even broader outlook, and I still think there is a high probability for a major decline this year. Primary downside would be to the old 2000/2007 double top in the upper 1500s. I'm still broadly resigned to further upside into late 2015/early 2016.

Looking ahead

There is wholesale trade data at 10am, but really, the market will only be concerned with...

...the Yellen. There is a press release of her statement at 8.30am...whilst Yellen should appear before the US house around 10am...and that will likely last at least two hours.

*there is no sig' QE until next Tuesday! Equity bears have a 5 day window, not that I think they'll be able to manage anything much from it.

The Yellen monster

Since Yellen was lurking in the background last year..and once it became clear that she would be the successor to Bernanke, I've been very concerned. What is my concern about this tiny little old lady? Well, she is one of the most well known supporters of negative interest rates.

The very basis of the modern economy - one that many expect to grow in 'perpetuity', requires capital formation. ALL capital formation is the result of savings. Yet...we have a number of high profile 'experts' not least the new Fed chair, who are open to the notion of negative interest rates, if it might mean people spend more of their savings, helping to boost the consumer based economy.

We can probably all agree there are a great many ongoing serious economic issues, and that another financial crisis will hit within the next few years. The problem is that next time, not only will bank bail-ins be the chosen 'solution', but you can bet the USA, along with the EU would likely move to NIRP - negative interest rate policy, from ZIRP (zero interest rate policy'.

Yeah..NIRP.   See 'Financial System's death Knell'.. a good read.

Quite frankly, anyone with savings - of whatever amount, has a great deal to be concerned about, as they watch the Yellen tomorrow morning.

Goodnight from London

Daily Index Cycle update

The main indexes closed moderately mixed, with the sp +2pts @ 1799. The two leaders - Trans/R2K, settled -1.0% and +0.2% respectively. Near term outlook offers a small chance of a retrace into the 1770s, but regardless, a test of 1810/15 looks likely at some point.




*the weakness in the Trans, could be a sign that we are still going to re-test the sp'1770s.

So, a third day of gains for sp'500, and we're right on the border of the big 1800 threshold. Clearly, there is some resistance here, as we saw in the closing hour.

Best guess...even if we do drop to the 1770s across Tue-Thursday, it will very likely hold, as the weekly/daily cycles are starting to build upside momentum.

Closing update from Mr TopStep

a little more later...