Thursday, 13 March 2014

Volatility breaks into the 16s

With equities swinging to the downside, the VIX saw an opening reversal, and battled into the 16s, settling +12.1% @ 16.22. With viable downside to sp'1835/30, there looks to be brief upside to VIX 17/18s this Friday. The 20s still look unlikely until after the FOMC, if not April.




The opening reversal candle (hollow red) is something I wasn't paying much attention to in the early morning.

Indeed, as much as I place emphasis on 'black-fail' candles for equities, it is equally important to note opening reversal the upside.

There looks to be a fairly high likelihood of VIX 17/18s (briefly) tomorrow, with sp'1835/30..before a bounce into the FOMC.

more later..on the indexes

Closing Brief

US indexes opened a little higher, but quickly swung to the downside, falling from sp'1874, and settling -21pts at 1846. The two leaders - Trans/R2K, saw significant declines of -1.4% and -1.2% respectively. There is near term downside to 1835/30, before a bounce into the FOMC.



Certainly, the declines surprised me today, and with the break <1850, it'd seem tomorrow will see further downside at some point.

However, I still expect the 50 day MA to hold as strong support tomorrow/early next week. For the bears out there, the weekly close will be important. More on that later though.

more later...on the VIX

3pm update - a day for the bears

US indexes remain significantly lower, sp -22pts in the mid 1840s. Metals are moderately higher, Gold +$5. With the break <sp'1850, there is near term downside to the 1835/30 zone - where the 50 day MA is lurking. VIX is holding gains of 11% in the low 16s.




*the gains in the VIX are reasonable, but we're in the 16s..and fairly strong resistance zone..will be VERY tough to break/hold the 17s tomorrow.

Well, after some opening gains, we've certainly seen some notable weakness today.

Regardless of the close, it'd seem we'll slip lower tomorrow into the low 1830s..before the next opportunity of a bounce.

The Russia/Ukraine situation is quietly simmering...but it won't remain that way for that much longer. It only takes one soldier with an itcy trigger finger to turns thing hot.

updates.........into the close.

3.11pm... weak weak weak... sp' one wants to buy into early tomorrow.

It sure looks like we are going to get close to the low 1830s tomorrow, where the 50 day MA will be lurking.

VIX +13% in the 16.30s....kinda interesting...but still...a long way from 20.

3.20pm.. rats are selling into the close...and VIX continues to creep higher.. +15% @ 16.66

3.43pm.. watching the Taco Bell CEO on clown finance TV, reminds me how clowney some people can be. Incredibly bizarre.

Market remains weak...and we're going to close with the first significant declines since Feb'3rd

3.52pm.. 5min cycle maxed out....should roll lower into the close....

2pm update - market tremors

With the break under soft support of sp'1850, we're seeing some increasingly important weakness. For those looking, there are little tremors all over the US/world capital markets, a simmering cauldron of economic and geo-political concerns. It'll likely come to a boil...soon enough.



With the break < support is the recent 1834 low.

Despite today, I'd expect the 1835/25 zone to hold, before a bounce in FOMC week.

As I will continue to keep saying...with each day we get closer to spring...the bulls get closer to a concrete wall of resistance.

At best...they'll hit the wall by early it is...maybe 1883 was already the high?

Notable strength: GDX, +2%, primarily due to the continued gains in Gold


 looking forward to next week!

1pm update - marginally interesting

Equities are surprisingly somewhat weak, and we've seen a significant swing from sp'1874 to 1852 - breaking the Wednesday low. Next key supports are 1850 and 1834. VIX is 8% higher, but still..we're only talking about the mid teens.



Okay..I am indeed somewhat surprised at the continued declines.

As it is, I still don't see the 'downside power'..this is more a case of 'no one wants to buy >1870'.

Regardless, I remain focused on the FOMC of next Wednesday.

Notable weakness: RIG -3.8%, UAL -2.5%, BTU -2.1%

Metals are starting to climb, Gold +$6, and that is helping the miners, GDX +2%.

1.01pm.. bullish engulfing candle on the VIX....suggestive that 1834 is viable tomorrow...

Hmmmm ..starting to get interesting. VIX 17s tomorrow?

1.04pm.. 1850 up......... 1834...which really is a big level. 

1.23pm.. market trying to re-take and hold 1850...but the damage has been done.

The 1835/30 zone seems viable tomorrow...which is pretty close to the 50 day MA.

12pm update - still no significant downside power

US equities are moderately lower, with the sp'500 still holding above the Wednesday low of 1854. What remains clear more than anything, equity bears still lack any significant downside power, and further upside into the FOMC seems likely.



*I'm tired of seeing many get wrapped up in the minor nonsense. Seriously, why are so many getting overly excited at index moves of +0.25%, and then -0.25% ?

So..for this hour, I'll merely highlight the bigger weekly chart, which continues to hold an outright bullish trend - but clearly, we're close to the viable ceiling, upper bol' @ 1880.

*threshold for green/blue candle on the weekly is currently 1862/63.

There are quite a lot of dynamic moves in individual stocks today...not least the PLUG, which continues to attract many hysteria chasing 'bargain hunters'.

Other notable movers..

AMZN +2.5%, despite the 'prime' concerns.
DRYS, back to flat, after early gains of 2.5%, the third day below the 50 day MA.
RIG -3.5%, and continuing to slide week over week.

VIX update from Mr T.

Indeed...there is some interest in building VIX upside positions for April/May.
time for tea :)

12.25pm.. sp'1856... A test of the old support @ 1850...viable...but still...this ain't sig' downside.

In many ways..for bears on the sidelines - waiting to launch a re-short this spring, this is EXACTLY the sort of price action we should be looking for.

12.30pm... were we to hit 1834..and then that would offer a real interesting scenario..but regardless....I ain't excited about any of this. 

12.38pm.. ..there goes the Wed' low of up..1850...and best bear case.. 1834.

For those who did short the opening gains...congrats...thats a pretty reasonable 20pt swing.

11am update - minor gains turn to minor declines

US equities have reverted to some weak chop, and no doubt, what selling there is, is being largely negated by another $3-4bn of Yellen Bux. Broad upside into next week is still expected, but we are indeed getting close to the viable ceiling.



Well, what can I say..except 'don't get lost in the minor chop'.

There isn't really any downside pressure, and I sure can't take this seriously until we break <1834, and that sure doesn't look viable for another few weeks.

Notable weakness: RIG, back <$40...

Sure looks ugly on the bigger weekly chart, having fallen from the mid 50s. More on RIG later..on the fair value page.

 stay tuned!

11.30am... So...minor declines continue...but thats just it...its MINOR. There is simply NO significant downside pressure.

10am update - morning gains

US equities open with minor gains, but look set to build upon them...probably all the way into the middle of next week. Metals are seeing minor chop, Gold -$1. VIX is in melt mode, -1% in the low 14s.




So..we're a little higher, nothing significant, but hey..we're barely 0.5% from breaking new historic highs

Hourly MACD cycle is offering upside into the weekend..if not also next week.

With earnings out of the way, the maniacs are again buying PLUG, +18% in the low $8s, but still. the 11s are a further 40% higher. Oh well....if nothing offers free entertainment.

10.29am..minor weak chop..but still..with the QE..bears face the same old problem.

Notable weakness: RIG, -1.7% in the $39s..the lowest level since summer 2012 - when the sp' was 1266. 

Pre-Market Brief

Good morning. Futures are slightly higher, sp +3pts, we're set to open around 1871. Precious metals are fractionally higher, Gold +$1.With sig' QE-pomo of $3-4bn, equity bulls have their best opportunity this week to again push higher.



*awaiting retail sales, jobs data

So...having hit a new short term low of sp'1854 yesterday morning, we're now around 1% higher, and with the QE today, I can't imagine the bears having any control until after the FOMC next Wednesday.

Notable early mover: DRYS +2.2%, but that is still below yesterdays level.

Video update from Mr Permabull


8.32am.. retail sales..mixed..when considering the previous month revisions. Jobs data..slightly better.

Market rallies a few pts.. sp +5pts...takes us to 1873. - a mere 10pts shy of a new historic high.

With the QE today, little reason why we won't break back into the 1880s.

On track for an FOMC peak

Despite the recent few days of moderate weakness, the US equity market remains on track for a key peak next week, most likely, just after the FOMC announcement of March'19. Near term outlook is for upside to sp'1890/1910, with subsequent primary downside to 1750/30 by late April.


sp'daily3b - sub'1 extrap.


This morning, with the break into the sp'1850s, the 'rainbow' weekly chart flipped from a green to blue candle...the first initial sign of real trouble.

re: daily3b. It remains a simplistic thing to do, but just reverse extrapolating the sub'1 wave to a 1890/1910...with a time frame of none other than March'19. Interesting huh?

Looking ahead

Thursday has retail sales data, import/export prices, business inventories, and the usual jobs data.

*there is sig' QE-pomo of $3-4bn...bears beware!

Goodnight from London

Daily Index Cycle update

US indexes closed somewhat mixed, with the sp'500 +0.5pts @ 1868. The two leaders - Trans/R2K, settled moderately higher, by 0.3% and 0.4% respectively.  Near term outlook remains slightly bullish, with new highs viable into the next FOMC of March'19.





The morning declines were marginally interesting, but we are still holding the primary up trend.

I've left the R2K chart unchanged, with a break of trend, and maybe the R2K will fail to break a new high next week, even if the other indexes do.

Regardless, I'm seeking a key peak next Wednesday, before the first opportunity of a more dynamic decline.

a little more later...