Wednesday 12 March 2014

Volatility remains low

Despite equity weakness in the morning, the VIX only managed a peak gain of around 5% to 15.64, but as usual, there was a latter day equity recovery, with the VIX settling -2.2% @ 14.47. Near term outlook is for the VIX to remain in the 15/12 zone.




Little to add...

However, it was notable that we saw another classic instance where the opening black-fail candle was a warning to the equity bears that the market was flooring in the early morning.

more later...on the indexes

Closing Brief

US equities closed somewhat mixed, sp +0.5pts @ 1868 (intraday low 1854). The two leaders - Trans/R2K, settled slightly higher by 0.3% and 0.4% respectively. Near term offers further upside, with opportunity for new highs into the next FOMC of March'19.



*naturally, a closing 30min mini ramp...just enough to hit many of the day trader short-stops.

An interesting break into the sp'1850s, but really, the downside pressure is very 'light', and the VIX also reflects this.

I remain focused on the FOMC announcement of next Wednesday. I'm guessing QE-taper'3 of $10bn..down to $55bn....but regardless of what is said, I'm looking for a major multi-week (possibly multi-month) cycle peak - in the sp'1895/1905 zone.

more later...on the VIX

3pm update - chop into the close

US equities remain moderately weak - although the two leaders - Trans/R2K, are both higher by around 0.2%. VIX is similarly reflecting a market that has little concern of anything. Oil remains weak, -1.7%, whilst Gold is +$17.



An interesting day, moderate chance of a close in the sp'1870s, but clearly..not the big down day that some were hoping for.

Two big supports are obviously..1850..and stronger still...1834.

With sig' QE-pomo tomorrow, and considering the MACD (blue bar histogram) cycle...bears face bigger problems tomorrow.

Notable weakness: DRYS, -3.2%..and the recent failure to hold the 50day MA - as I feared, was a reason to leave it alone (although I still like idea of picking up in the summer..possibly in the $2s)

updates into the close...

3.27pm... chop chop...there really isn't much to add.

VIX remains a touch red, and the indexes are just seeing minor weakness.

Bulls should seek a close >1865...the hourly 10MA.

back at the close

2pm update - seeking the 1870s

Equity bulls should be somewhat desperate to attain a daily close in the sp'1870s, that would at least help to stall the recent weakness. Oil remains weak, -1.8%, whilst metals are strong, Gold +$19, Silver +2.1%.


VIX, daily3


Most notable right now, despite some of the indexes still red..the VIX is red.

Indeed, VIX is NOT supportive of those who are seeking much lower levels in the immediate term. I realise many are looking to the Crimea vote this weekend, but really, I don't expect any giant Monday gap lower.

I remain counting the days until the next FOMC. Only then, - perhaps in the 1895/1905 zone, would a major re-short seem 'reasonable'.

Special note...
   Daily..VIX, bollinger bands...they are getting super tight again, and that IS why I am bearish the market next week.. AFTER the FOMC.

The only issue is whether the VIX can re-take the 20s before end month..or not until mid April.

1pm update - probable... latter day recovery

If there is one thing we've seen over the past few years, it is the typical 'latter day recovery'. With a typical floor in late morning, the market often will rally all the way into the the dismay of the bears. Today, the equity bulls should be fighting for a close in the sp'1870s.



*notable weakness in Oil, -2.0%, whilst Metals are holding gains, Gold +$21

Interesting afternoon ahead

A story that caught my eye...

Missing Malaysia Airline 

see video...from Mr Still

Certainly..if it did not crash, then it is a hijack, in the style of the Ethiopian one a few weeks ago.

1.02pm.. PLUG has lost most of the bounce....from 17% to just +4%...a red close...why not?

1.20pm.. chop chop...bulls just need to clear the hourly 10MA @ 1867..still plenty of time, and the MACD cycle sure looks floored after 4 days of slight weakness.

12pm update - VIX telling the story

Despite some interesting early morning equity weakness, the VIX only had a minor kick to the upside of 5%. With an opening black-fail spike-top candle, the VIX is again reflecting the underlying issue that this market just doesn't have much concern about anything.




*notable weakness in Oil, -1.8%, as the US releases 5 million barrels from the strategic reserve. I guess another war must have started?

So..a rather significant late morning bounce, but the earlier break into the 1850s has caused some minor 'technical damage' to the bigger upward trend.

But hey...if next week is going to be a key multi-week top at the FOMC, then these 'little tremors' are exactly the sort of thing we should be seeing.

VIX update from Mr T.

time for tea.

11am update - what can the bull maniacs manage?

US equities are continuing to attempt to floor, with an early low of sp'1854. Equity bulls really ought to seek a daily close back in the 1870s, but that won't be easy, as the mainstream increasingly start to wonder if a short term peak has already been hit. Metals are holding gains, Gold +$17.



More than anything, with sig' QE-pomo tomorrow, the issue now is whether the bulls can push back into the 1870s...and hold that into the weekend.

As it is, the VIX just doesn't inspire me to hope for 'bigger bearish things' least not this week.

Hourly MACD cycle, bears have been in control for just over four days...but they've only managed to knock the market 29pts lower. hysteria land...

PLUG, 5min

A huge 17% bounce...but still a long way down from the $11s. No doubt a lot of knife catchers/bargain buyers this morning.   That won't end well.

11.06am... VIX turns red, and something I didn't mention, the opening candle was a black-fail..with a top spike. Bodes badly for equity bears.

11.19am.. Notable weakness: DRYS, -2%, having failed to hold the 50 day MA yesterday.

back at 12pm...or so.

10am update - weekly charts flashing an initial warning

US equities open moderately lower, and the January high of sp'1850 looks set to be tested today. Precious metals are probably catching a 'fear trade' bid, with Gold +$19, Silver +1.5%. Oil continues to be weak, -1.1%. VIX is showing a little kick, the 15.60s


GLD, daily


*a clear break above the Oct' high for Gold, certainly bodes for more upside

Let me be clear...

I will be reluctant to get involved until the next FOMC is out of the way, however, it is starting to get kinda interesting.

We have the first blue candle on the weekly 'rainbow' index charts, and if we close the week 'blue'...then that will indeed offer a simple short-side trade, with a loose stop at the recent high in the 1880s.

Lets see how the bull maniacs do today...but probably far more how tomorrow proceeds.

10.16am.. LIVE stream of NYC explosion

Meanwhile, market is trying to rally, but so far...looks weak.

10.28am... Bulls could do with a daily close in the get things back on track.

Anyway...without getting lost in bearish hysteria, it is interesting to see the weekly cycles flash an initial warning.

VIX +1%....and that should be a concern to the bears.  

Pre-Market Brief

Good morning. Futures are moderately lower, sp -6pts, we're set to open around 1861. Precious metals are higher, Gold +$12 , with Silver +0.7%. Next support for the market is 1850. However, only a break <1834 would merit any 'minor victory' on the bearish side.



So..we're likely going to open lower, and we have a fair chance of trading in the 1850s by the typical turn of 11am.

I sure see a lot of bearish chatter out there, which is ironic, considering we're only 0.9% from the historic highs of last Friday.

For those who are in a doomy mood...

Hunter and Roberts.. as ever...proclaiming the imminent end of everything

Now, don't misunderstand, I'm not saying I disagree with their stated facts, but you know the Fed can keep kicking this can for some years to come..if they so wish.

Notable early weakness: Oil, -1.3%...which is not surprising, considering the recent break in Copper - the two generally trade kinda closely. 

PLUG +5%, in the $6.30s, which is a fair swing higher from the Tuesday AH move of -5%. Regardless, any 'stupid bounce' is an opportunity for the bears to re-short the hysteria.

8.39am.. is 1859.

8.59am.. Metals building market weakens...  Gold +$17. .   sp -9pts.

Dr Copper is a major warning

Copper saw its first daily close under the important $3 threshold since summer 2010, settling -9 cents @ $2.95. Commodity bears should now be seeking a monthly close <$3, and if that occurs, the door will be wide open to a severe drop to the 2.25/00 zone.

Copper, monthly


Suffice to say, the decline in copper is getting increasing attention, and I most certainly believe it is a major warning of trouble for the broader US/world capital markets. Yes, it is just one commodity, but as an economic indicator, it is second only to Oil.

Deflationary bears should continue to pay close attention to how Copper closes the month. As it is, further declines seem very likely, and any monthly close <$3 should clarify the trend for the next few months.

The weakness in copper should especially be seen as a severe warning to the Gold/Silver bugs. If Copper falls to the low $2s, then I'd be looking for Silver $15, and Gold $1000.

Looking ahead

Again, there really isn't anything major due tomorrow. Just the EIA Oil report and the US treasury budget, but Mr Market usually has little interest in those.

*next sig' QE-pomo is not until Thursday.

Goodnight from London

Daily Index Cycle update

US equities closed somewhat lower, sp -9pts @ 1867. There were more significant declines in the two leaders - Trans/R2K, which settled -0.3% and -1.1% respectively. Near term outlook remains broadly bullish, into the next FOMC of March'19.





Despite today's declines, the broader upward trend is holding.

All things considered, market should be able to stabilise in the sp'1860s..before a renewed push to new highs.

Video update from Carboni

I would agree that the R2K is bearish (somewhat), but not the rest of the market. Broad trend remains higher - as better seen on the weekly/monthly charts. It remains bemusing how people are STILL getting overly upset at tiny market falls of just 0.5% or so.

With sig' QE this Thursday, I'd be looking for a rebound in the market.

 a little more later...