Friday 28 February 2014

Volatility slumps across February

With equities breaking new historic highs (on some, not all) indexes, the VIX slipped to an intraday low of 13.49. However, with some Ukrainian concerns, the VIX spiked to a brief high of 14.79. Across the month, VIX saw very broad declines, falling a very severe -24%.





*bonus chart...VIX 5min

I'd not normally highlight such a small cycle, but it does illustrate the useful warning that a black candle can provide. With a spiky black candle at 3.10pm, we saw a clear peak in the VIX, and a corresponding floor in the sp' of 1847.

The fact that the VIX closed fractionally red, is not a surprise.

Overall, we've already seen the bulk of the decline on a multi-week down cycle. We'll probably slip into the 12/11s by mid/late March..before the next up wave begins.

I expect VIX >21 in the next wave - breaking the 2013 high, probably by late April.
more later..on the indexes

Closing Brief

US equities closed the month with some wild late afternoon swings,  sp +5pts @ 1859. The two leaders - Trans/R2K, settled +0.4% and -0.4% respectively. Outlook for March is bullish, with primary target upside to 1880/1920.



So..........that was one hell of a way to end the week. It sure has been a fair few months since we closed a Friday with that kind of intra-hour price swing.

Overall though, what matters is the bigger picture..and this is STILL looking bullish into mid/late March.

*As I have been noting for months..I expect the next multi-month down wave to be due to geo-political issues, NOT recessionary concerns.

I hold to the original weekly'8 outlook..and am really looking forward to seeing if the price action is primed for a key turn around the next FOMC of March'19.

Have a good weekend everyone!

the usual bits and pieces to wrap up the week..and the month, across the evening.

*the weekend post will probably be on the world monthly indexes


4.02pm... VIX turns RED in the 13.90s.

4.18pm.. VIX closes -0.3% @ 14.00

3pm update - minor chop into months end

A minor down cycle this afternoon, but as has been the case for the last 17 trading days, the bears lack any real downside power. Equities look set to close with minor gains, having decisively broken new historic highs in three of the main indexes. Metals are weak, Gold -$6. VIX is back to flat.



*minor down cycle, should conclude shortly. A red daily close would seem..unlikely.

Regardless of the close, it has been a strong month for the equity bull maniacs, with most indexes seeing net monthly gains of 4-5%.

updates into the close..if I am still awake. sp'1856.....hmm, with the Nasdaq and R2K turning red.

I suppose a few will be getting overly excited about it, but hey..I can only suggest they go look at a monthly chart for a few minutes.

It remains bizarre how many are still trying to trade these tiny after day...after day.

3.04pm.. amusing to watch the maniacs on clown finance TV.

They are swinging from hyper-bullish mode to 'omg, what about the Ukraine' in a matter of a few hours.

Clearly, a few of the weaker bulls are bailing ahead of the weekend, but really, this is just the same nonsense we've seen across February.

No doubt though, a lot will be top calling this weekend...but then, they been doing that all month.

3.10pm... sp' i'm getting a little surprised. We're a clear 20pts lower in barely two hours.

VIX +5%.... hmmmm

3.15pm... market trying to re-take the 1850s....a little drama to end the week after all.. at least i won't fall asleep ! is starting to whipsaw and annoy all of the day traders...

Now the micro 5min cycle is offering strong upside into the close, although the 1860s look kinda hard to get..considering the last hour.

*meanwhile..on clown TV, some guest is claiming there is NO evidence Fraking causes enviro' problems.

Is it a full moon yet, or is Jupiter opposite Neptune or something?   Things just feel a little twitchy today.

3.25pm... the new QE-pomo schedule.... 2 sig' QEs next week. A mere $34bn of 'Yellen bux' to prop up this charade for another month.

5min cycle

That is a pretty interesting afternoon drop...but still, part of it is probably end month closing trades.

3.30pm...if we somehow close back in the'd make for one of the most dynamic late day ramps we've seen in a very long time.

*amusing to see half of the financial web light up like a Christmas tree on fire, with an hourly swing of just over 1%...ooer..the drama!

3.32pm...hyper micro ramp....the bear chasers on the downside..getting nuked now! What an end to the month!

sp' 3pts for a crazy close in the 1860s.

Don't you love volatility? lol

3.35pm.. 5min MACD cycle hasn't even gone + cycle yet..and we're already at 1857...this is crazy!

Whipsaw market turmoil!

3.38pm.. if we can close >'ll make for one hell of a floor-spike on the hourly index cycle.

VIX in danger of turning red again....

3.40pm... VIX is telling the story..with a black-fail candle on the micro 5min cycle

day-trading bears...rough doubt about that.

3.43pm...clown TV noting 'bad weather for New York' next Monday, and it could be an issue for the market.

Regardless...looks like the bull maniacs recovered the day, with one of the most powerful closing hour recoveries we've seen in a fair few months (at least that I can remember).

3.45pm  The hourly 10MA is @ 1860...would be useful to the bulls.. to close above that.

Considering we were 1847 just earlier..that's a pretty strong swing of 0.7%

VIX turning RED !

3.49pm... another little snap lower...but bulls should hold the earlier low.

What a closing hour to end the month!     even TSLA went red...ohh the humanity!

3.52pm... chop chop, bulls sure got a little scare...but still look to close with powerful monthly gains.

*VIX will probably turn red in AH... will know by 4.15pm..when the final print appears.

3.56pm.. bulls still fighting for the 1860s.....amazing.   BACK at the close !

2pm update - a fearless market

After the minor scare in late Jan/early Feb, the US capital markets are back to full complacency mode. There is simply nothing on the mind of Mr Market that concerns it. Most notable, VIX is set for a major decline of 26% or so this month.




*I rarely post a VIX monthly chart (who does?), suffice to say..look at how tight the bol' bands are..and how we are still getting stuck around all those clustered MAs.

So..equities are seeing minor afternoon chop. A few pts up..a few pts down.

..and that is one way to end the month.

The real question is how high will the spike in the next multi-week up wave. Can we break the 2013 high of the 21s? We've already come I'm on the 'yes' train...and next stop would be the 27 high of 2012.

VIX 12/ month look briefly viable..if sp'1900s.

However, on no basis will I be meddling long VIX in the next cycle. I'd consider the subsequent wave..if price action looks swings back to the bears.

Notable strength: UGAZ +11.1%, but still net declines on the week.

2.15pm.. minor down cycle. First support is 1860/58....and I'd guess we do manage to get a monthly close around 1860. 

1pm update - afternoon churn

US indexes continue to hold moderate gains, with the sp +0.6% in the 1860s. The early February low of 1737 now looks a very long way down. Even breaking <1800 in the next multi-week down cycle will be difficult. Metals are slipping, Gold -$7



*Whether we close in the 1860s, 70s..or even 50s...doesn't matter. The monthly close is a powerfully bullish one. It bodes for a further 2-4% higher in the next few weeks

The above outlook remains my best guess...

I am literally counting the days until the next FOMC of March'19.

T-13 days

stay tuned!

12pm update - holding the gains

US indexes are holding moderate gains, with the sp'500, NYSE Comp, and R2K at historic highs. Metals are a touch weak, with Gold -$5. VIX is merely melting lower into the weekend, -2% or so, in the upper 13s.



There is little to add, on what is just another day for the bull maniacs.

Simply put..bears have ZERO downside power, whilst there remains a pretty strong underlying bid. It'd look like the current wave (sub' 3, or whatever you want to call it), will last for much of next week.

For the moment, everyone is now bullish for March.  Where we close March though..that is another matter entirely. 

VIX update from Mr T.

time for tea.

11am update - how much upside for March?

US indexes are wrapping up the month with breaks to new historic highs in the sp'500, R2K, and the NYSE Comp' - other indexes look set to follow. The primary issue now is how high might the follow through be next month? Best case for the bull maniacs looks to be the low 1900s...before a reversal.



*yes yes, I realise a fair few would disagree with what I've done on the above chart. However crude it might at least offers a clue as to where we might get stuck next month.

Daily charts are offering the 1880s in the near term...and that will no doubt rise to the low 1900s by mid March.

*I have found it rather bizarre in the past few days, seeing a fair amount of 'doom' talk. With people trying to capture minor retracements on the short-side, I mean...why bother? Overly risky.

VIX -2.3% in the 13.70s....reflecting what remains a fearless market.

Nat gas rising...with UGAZ +8.5%.. but still a major net weekly drop of -23%

10am update - new highs... naturally

US equities open largely flat, but with equity bears still powerless, the underlying upside pressure might be enough to get a monthly close in the sp'1860s. That will bring within range the lower end of the 1880/1920 target zone by mid March. VIX looks set to melt lower into the weekend.



*Chicago PMI: 59...much better than many had feared.

So..we've already broken into the 1860s...and with the daily cycle now offering 1885 in the immediate term...equity bears look utterly broken.

Regardless of any chop today...bulls are closing the month with very powerful gains.

Notable weakness...

UAL daily

Will it hold the trend, before a lurch into the low $50s?   Regardless, that is one hell of a ramp since last summer.

10.01am.. consumer sent' comes in okay, in the 80s

Bonus chart this hour...


Monthly candle finally turns back to green @ sp'1860....we're back to outright bullish on the giant cycle.

Special note: notice the upper bol'...offering 1905...that will jump to 1940/50 at the Monday (March'3rd) open. That is prime zone for an giant inter'3 top.

10.07am... bears on the run...they are really panic-covering now!  sp'1864

10.23am... I should add. next initial resistance is around 1870....on the weekly cycle...'ll be tough to close in the 1870s today!

Notable gainer UGAZ +7%, but still -20/25% on the week

Pre-Market Brief

Good morning. Futures are a touch lower, sp -2pts, we're set to open around 1852. Metals and Oil are broadly flat. Equity bulls should be content with any weekly/monthly close in the 1850s, with a fearless VIX in the 14/13s.



*awaiting key econ-data, GDP, PMI, Cons' sent, and housing

Well..its the end of the month, and was a month for the equity bulls. With new historic highs on the sp'500, Nasdaq, and R2K, the bulls are in full control.

re: weekly'8. I am holding to this outlook. Seeking a key top around the time of the next FOMC. (March'19), somewhere in the sp'1880/1920 zone. As ever though, price action is everything. If I have to wait another month..until late April/early May to launch an initial big be it.

GDP Q4 (second reading): 2.4% vs , market expect' 2.5%,  prev' 3.2% (first estimate)

8.30am  Indexes are mostly flat...after a marginal miss on GDP.

Certainly, many will now wonder about a final Q4 GDP sub 2.0%..due late March. Considering the Fed were throwing $250bn at the US capital markets in Q4 - equv' to 2% of could justifiably argue the US was flat lining in Q4.

9.17am...we look set to open fractionally higher..a move into the 1860s looks likely today.

Whether we can close in the not important. The monthly gains are already very clear.

Notable weakness: UAL, -2.8%

Another month to wrap up

February has been a lousy month for the equity doomer bears. Not only did the bulls manage to halt the decline before hitting the lower weekly bollinger, but the bulls pushed back higher..and just kept going. Most indexes look set to close February with net gains of 4-5%...incredible!


Nasdaq, monthly

Dow, monthly2, rainbow


Month'29 of the giant wave from Oct'2011 looks set to close on a high.

Even the Dow, which continues to lag the general market, looks set to close the month with gains of over 500pts. How could anyone dare be bearish about that?

Looking ahead

The week concludes with an array of econ-data. We have GDP (second reading), market is looking for a reduced estimate of 2.5% vs 3.2%. There is also PMI, consumer sent', and homes data.

That will be plenty enough to give the market an excuse to rally on 'better than expected' data.

*next sig' QE-pomo is not until next week (the March schedule is released at 3pm, Friday)

Goodnight from London

Daily Index Cycle update

The US equity market saw moderate gains, sp +9pts @ 1854. The two leaders - Trans/R2K, settled higher by 0.6% and 0.5% respectively. Market looks set to continue broadly higher into the weekend..and probably also much of March.





There is little to add. Most notable aspect, the upper bollinger on the sp'500 daily cycle is now offering the 1880s in the immediate term, and that certainly appears viable as early as the latter part of next week.

a little more later...