Wednesday 19 February 2014

Volatility climbs for a second day

Whilst equities saw some interesting weakness into the close, the VIX built gains across the day, settling +11.75% @ 15.50. Near term outlook is for the VIX to remain in the 15/12 zone. However, if sp' breaks <1826, then VIX could briefly break into the 16.50/17.00 gap zone.




It was a bit of a messy day on the VIX.

It was Feb' expiration at the open, but then the VIX cooled down as the sp' broke to 1847. Yet..with the market rolling over into the close, the VIX battled back.

Overall, best case for the equity bears is a VIX in the 16/17s..before the next multi-day down cycle. I certainly do NOT see VIX 20s for some weeks, if not until mid/late April.

more later..on the indexes

Closing Brief

US equities saw some chop, with the sp'500 breaking a new multi-day high of 1847, only to slip lower across the afternoon, settling -12pts @ 1828. The two leaders - Trans/R2K, settled -1.3% and -1.1% respectively. Near term outlook remains broadly bullish.



A somewhat weak closing hour, although the declines were NOT significant. I suppose you could argue the weakness in the transports yesterday was the warning of today?

Generally though, another somewhat tedious day, even though there we did break a new high..just 3pts shy of the January micro double top of 1850.

The big question now is...'is that it?'...or are bigger targets still in play?

I have to hold to the weekly charts, which are still outright bullish.

More later..on the VIX


TSLA, missed badly on rev', almost 10% lower, but profits were 'reasonable'.

Outlook is raised..and the TSLA shorts are getting cooked in AH.

TSLA - as at 4.15pm, +7.5% @ $219 (that gain includes the daily change).

4.26pm.. so far, the TSLA high is $225.00.. no doubt a lot of shorts are covering at ANY price!

As it is, TSLA remains wrapped in media hysteria, and I simply keep an eye on it for 'entertainment purposes'. I have no tolerance to trade such companies.

3pm update - minor chop into the close

The hourly index cycles are pretty clear, having seen sideways chop for the last 17 trading hours or so, we're now primed for another wave higher. With heavy QE tomorrow of $4-5bn, equity bears face major problems for the remainder of the week.




*I realise a few will be getting interested with the second daily gain in the VIX, but really, its a small gain, and equities still appear generally strong.

So..the Fed minutes are out of the way, and other than the geo-political news from the Ukraine, bulls should be fine to resume this latest rally.

Notable gains: UGAZ +12%.  Although front month (March) Nat Gas prices are around 10% higher. Some might expect UGAZ to be up 30%, but..then UGAZ is probably based on multiple futures months..not just front month.

Most recognise..the closer we get to spring...Gas prices are closer to a multi-month peak.

3.12pm.. best case downside into the close 1830, but at that point, we're going to have all the small cycles really oversold.

Considering the QE tomorrow...bears are getting the chance to exit before next wave.

Metals slipping (but slowly)...Gold -$8, Silver -1.5%

3.26pm..well, we're at 1830...things really only get interesting if <1826.

VIX +10% in the 15.30s.... ..metals weak, Gold -$10

Certainly, not exactly boring last hour...but neither are the moves significant.

3.41pm.. market trying to floor in the 1830/29 area.

ALL smaller cycles are very low...highly vulnerable to sig' upside tomorrow

3.50pm... The daily close will certainly off the bears some hope overnight, but really, QE..and from a pure cyclical perspective, it looks a lousy setup for those on the short side.

back at the close.

2pm update - Guardians of the Monetary Base

US indexes remain seeing minor chop ahead of the Fed press release. Considering the hourly cycles, market is vulnerable to breaking back into the mid/upper 1840s by the close. Certainly, the daily/weekly cycles all support such a continuation.



Well, we know what the Fed did at the last meeting, and also know what they will likely do at the March'19th meeting.

Yet, as ever, the algo-bots will be looking to snap way or another on another few pages of fedspeak nonsense.

More importantly though...

Trailer of the year...(so far)

A raccoon with a machine gun, whats not to like?
stay tuned

2.02pm..twitchy market..but with underlying upside...

There doesn't seem to be anything in the Fedspeak that should please the equity bears. Indeed, an talk of 'appropriate change' in QE-taper..that is just least for the very short term.

2.06pm.. Metals are selling a little lower, gold -$7.

2.16pm.. Hmm..the chop continues. Barring a break <1830...this is all noise before the next move higher.

Reading around..Ukraine....Japan/China.....urghh..its looking like a 'conflicted' summer ahead. might be time to lock the bunker doors.

2.27pm... minor chop..STILL.  Bears should be so desperate to break <1830/26, but that just looks overly difficult.

Where is the downside power?

From a geo-political perspective though, there are serious rumblings all over the place. 

2.37pm.. As has been the case for so long..years even....rather than be able to push lower..all the bears are able to do is flat line the market with minor 'weak chop'.

All the while..the hourly indexes have now largely reset, and are primed for another wave...into the 1860/70s..STILL viable by this Friday.

1pm update - still holding above 1826

A minor down wave from sp'1847 to 1834, and no doubt some will be getting overly excited ahead of the Fed press release. There is soft support in the 1830/26 zone, and recent price action offers next to no hope of any break lower. VIX is higher, but much of the gain is arguably technical (Feb opex).



*metals will be interesting to watch post fed minutes. Gold is currently -$2.

Not much to add, on what is a pretty quiet day.

It'd seem the mainstream is merely waiting for the headline indexes - Dow/SP' to break new highs, to again confirm that 'all is well'.

Again, its notable that the Nasdaq has already broken well above the January high, equivalent to sp'1870s.

12pm update - quiet ahead of the fed

Mr Market is seeing minor chop ahead of the 2pm Fed press release. No doubt the algo bots will look to that as an excuse to break out of the current narrow range. Hourly cycles..are prone to upside, with a daily close in the sp'1850s...easily viable.



There really isn't anything to add from this I won't.

VIX update from Mr T. (due).

time for lunch 

12.29pm.. clown finance TV...Fed official Williams...hmm

A small down cycle in equities, but we're still around 10pts above the first wave high of 1826.

VIX +9%..kinda interesting, but we're only in the low 15s.

11am update - up up up

The current multi-day ramp from the sp'1737 low continues, and we're now 110pts higher across 10 trading days. Metals are flat, whilst Oil is moderately higher by 0.2%. Nat' gas continues to hold gains of around 3%. VIX opened higher, but looks vulnerable to a red close.



*at the current rate of increase, we'll hit sp'3000 by mid summer, ;)

So..we're putting in higher highs..and higher lows on the smaller 15/60min cycles, which should scare the hell out of those bears still looking for a break <1737 in the 'near term'.

Daily/weekly charts are offering the 1865/75 zone in the immediate time frame, with 1880/1920 in March.

If Mr Market likes the fed minutes later (2pm)..then we'll probably close in the 1850s, which would probably sway the mainstream into buying the market higher into the 1900s  by next FOMC.

Notable mover..UGAZ

Since its a 3x lev' instrument, charting it is arguably...stupid. However, what is clear, underlying MACD cycle is due to go positive tomorrow..and we should see higher levels.

11.32am... minor chop...ahead of the Fed press release.

Notable strength in the coal miners, most are 3-4% higher.

10am update - strong support in the 1820s

US indexes open a little lower, but the declines are not enough to put much of a micro dent in the broader upward trend.  Metals are a touch weak, Gold -$2. Nat' Gas is higher by around 2.5%.




*VIX opex was at today's open, and the black candle does not bode well for those equity bears seeking a break <1826.

Equity bulls merely need to hold the recent micro high of sp'1826, and that looks a pretty secure level right now.

Q. Will the Fed minutes be the excuse the market wants to break 1850..or will we need to wait another day?

In the bigger picture...the above really doesn't matter, does it?

If the recent 1826/1809 wave a small sub'2... then in theory we should at least battle straight up to the 1890/1910 zone. 

10.15am... sp'1844... well, I guess its probably the 'straight up' then... yes?

Standing by for a mighty truck load of short-stops to get hit in the 1848/52 zone.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -5pts, we're set to open at 1835.  Metals are similarly lower, Gold -$2. Natural gas prices continue to climb, +3.5%, with UGAZ +11%.



So, we're set to open at the Tuesday morning low.

Again, it remains a case, bears lack any downside power.

First line in the sand is 1826. Only if we break that, can bears have any hope of anything remotely interesting in the remainder of the week. Considering the QE, and the bigger weekly cycles, I can't see any sig' downside until after the next FOMC.

Video update from Mr C.


Notable movers:

GRMN +12% in the $53s, earnings (I guess)
- be clear...barring a break <1826 - the previous notable high, bears have nothing to tout. Just how can anyone expect an sp-16pt tomorrow, hmm

The only real catalyst today might be the Fed minutes, but then, we all know the Fed has cut QE, and plans to cut again at the March'19 I don't expect any surprises there.

9.33am... we have two major supports at 1826...rising lower bol'  and previous high.

Considering the MACD cycle..and recent price action, I can't see a break of that. The broader upward trend continues.

All the bears have to hope for is a geo-political issue and the Fed minutes today. Yet, even then, heavy QE tomorrow of 4-5bn. Who wants to be short ahead of that?

Weekly charts remain strong

A choppy start to a shortened week, but the sp'500 still managed a small gain of 0.1%. Weekly charts are offering near term upside to the 1865/75 zone, with a grander target of 1880/1920 by mid/late March - when QE-taper'3 will probably be announced at the FOMC of March'19.



So, a moderately higher Tuesday close for the sp'500, and we remain within easy range of breaking into new historic territory.

Oil breaking higher on geo-political concerns?

It could be argued for pages, but many are starting to agree that Oil is getting pushed higher by the growing civil unrest in a great many countries.

WTIC, weekly

Today's break to $103 was kinda significant, and bodes for at least 105/07 in the next few days. Things really only get interesting though if we get a few daily closes >$110.

Looking ahead

Wednesday has Producer prices and housing starts. However, more importantly, there is the latest Fed minutes - due 2pm. There are two fed officials on the loose, and as ever..any comments they make might nudge the market.

*next sig' QE is not until Thursday

A pretty tedious day to start the week. I'm tired, is it the weekend yet?

Goodnight from London

Daily Index Cycle update

The main indexes closed somewhat mixed, sp +2pts @ 1840. The two leaders - Trans/R2K, settled -1.0%  and +1.1% respectively. Near term outlook is for the market to continue higher, with the sp' breaking above the historic high of 1850, and proceeding to the 1880/1920 zone by mid/late March.





Little to add.

Broader trend remains to the upside.

Yes, the trans - old leader, closed lower, but the other indexes are all comfortably holding together.

Closing update from Mr Riley

a little more later..