Monday 17 March 2014

Volatility smashed lower

With a relatively quiet weekend in the Crimea, US markets started the week in a positive mood, and the VIX was duly knocked sharply lower, settling -12% @ 15.68. Near term outlook is for the VIX to slip into the 14/13s..before the next major wave begins after the FOMC of March'19.




*VIX opex is at the Tuesday open

Suffice to say...VIX is naturally seeing some dynamic the market reacts to news..or even a lack of news! After all 'no news is good news'...yes? Well, that is the way we have started the week.

VIX 20s look viable as early as next week, but far more likely in the first half of April.

A break >22, will open up the 2012 high of VIX 27s.

more later..on the indexes

Closing Brief

US equities closed with broad gains, sp +17pts @ 1858. The two leaders - Trans/R2K, settled higher by 0.9% and 0.6% respectively. Near term outlook is for continued minor upside, into the sp'1870s, before a sharp wave lower into end month.



So..the bulls start the week pretty strongly, but by the end of this week, I'd not be surprised if we are testing the key low of sp'1834.

As I noted at the weekend, after a provisional turn last week, the bears now just need a weekly close <1830. That doesn't have to be this week, next week would be just fine too. So long as we don't break a new high >1883, bears have little to be concerned about.

Everyone is getting increasingly twitchy..this week should be a good one ;)

more later..on the VIX.

3pm update - battling into the FOMC

Equities are holding significant gains, and the sp'500 looks set for a close in the 1855/65 zone, which sets up a pretty easy break into the 1870s by Wednesday afternoon. VIX remains smashed, -12% in the 15.60s. Metals are weak, Gold -$13



The smaller 5/15min cycles are suggestive of further strength..rather than downside in the closing hour.

Regardless of the exact close...bulls clearly start the week pretty strong, although I'd agree there really isn't any real buying going on.

..and if it is just a is a pretty good one to be shorting, although I'll still waiting until the FOMC announcement is out the way.

3.12pm... sp'1860...and it will be interesting to see how many bears capitulate across the next few days.

GDX -2.7%..more on that one after the close..on my 'fair value' page.

3.25pm... so.. a possible close in the 1860s..with VIX 15s. Frankly, the bulls are getting a real opportunity to exit here, before market carnage.

Despite not currently hysterical about the Ukraine, I do consider it a VERY serious issue, and there remains high risk of the situation spiraling.

VIX opex is at the Tue' open...14s look very likely.

2pm update - a close in the 1860s?

Equities are back to significant gains, with the sp' now threatening a daily close in the 1860s. VIX reflects a market will no concern about anything in this part of the galaxy, -11% in the 15.70s. Metals are cooling down from recent multi-week gains, Gold -$9.



For this hour...a reminder on the bigger weekly cycle.

Barring a break to new highs, I'm holding to 1883 as a key to be shorted on the bounces.

As it is, I remain very content to wait until Wednesday, 2pm...and will see what style of price action we have then.

Lower weekly bol' would be the primary target..and right now..that is flat lining in the 1760s. pretty close to the Feb' low of 1737.

Viable within 2-4 weeks?

Those interested in hysteria..

PLUG, daily

Whats the worse that could happen? Oh yeah...0.00   Daily MACD looks pretty ugly, and first support is arguably $4..if not $1.  

2.25pm.. it'd seem the threshold for a blue/green candle (weekly chart) is sp'1858.  That will be a level I'll be focused on for rest of the week.

VIX fear.   Gold -$13.

1pm update - chop chop

The minor down cycle appears complete at sp'1853, and bulls look set to close the day at least moderately higher in the 1850s. VIX remains sharply lower, -11% in the upper 15s. Metals are still sliding, Gold -$7.




Little to add... things remain on track.

First support in the VIX is the daily 10MA..currently in the upper 14s.

12pm update - minor down cycle

US indexes have naturally slipped from the opening gains. This should be no surprise, considering the continuing Ukraine concerns. VIX though is not suggesting a negative equity close. Metals are slowly sliding, Gold -$2.



I realise some will be getting moderately excited at the late morning pull back, but really..we didn't open lower..we saw sig' gains to start the week, and the bears remain...weak.

Things look on track for a move into the 1870s by Wednesday afternoon.

VIX update from Mr P. 

*VIX opex is at the Tuesday open, and its no surprise to see them slam the VIX lower today.

time for lunch!

11am update - minor chop

US indexes are holding moderate gains of around 0.7%. With sig' QE-pomo of $2-3bn this morning, bears face the usual problems. Metals have recovered early minor declines..back to flat. VIX remains sharply lower, -8% in the low 16s.



To be clear...I'm seeking further gains into the FOMC of Wednesday afternoon...and considering this mornings gains..the 1870s do look likely.

From there..I'm seeking a break of the key low of 1834..which should (at least in theory) offer a free ride to 1800/1790 or so.

Whether we go much lower than that...difficult to say..although weekly charts suggest..yes.

11.37am... minor down cycle..nothing for the bears be excited about.  VIX -10% 

10am update - upside into the FOMC

As expected, US equities start the week on a positive note. Equity bulls look set for the sp'1865/75 zone by Wednesday afternoon. Metals are somewhat weak, Gold -$6. VIX is getting crushed, after a conflict-free weekend in the Crimea.




*awaiting econ-data: indust' prod..housing

I realise for those short over the weekend, this is turning out to be a lousy start to the have my sympathies.

As it is..last weeks closing candle was significant for the bears, and this mornings open does NOT negate it.

So...a bounce to 1865/75....and then sub'1800s by end of next week.

Yours ready and waiting to hit some buttons this Wednesday ;)

Pre-Market Brief

Good morning. Futures are moderately higher, sp +9pts, we're set to open at 1850. Metals are weak, with Gold -$5, Silver -1.1%. Despite the gains, equity bulls face a concrete resistance zone of 1865/75. A busy week is ahead for those in market land!



*awaiting econ data - empire state, indust' prod', housing.

**equity bears should be concerned with sig' QE this morning of $2-3bn.
-- I feared last Friday afternoon.. despite a fair few people getting overly excited about 'omg, big gap lower on Monday'..the market is set to open higher.

However, I would agree that the Ukrainian situation is far from over.

Video update from Mr C.

I'd guess Oscar might be shorting the open, although I'd argue against that. Never mind the issue that the 'Aunt Janet' is due this Wednesday. The last comments he makes are more notable though, as Mr retail clients are indeed finally going 'all in'. after largely sitting on the sidelines since 2008/09.
Good wishes for the trading week ahead.

8.47am.  Empire state comes in a bit weak, but market doesn't care.

Notable early movers: UGAZ +6%,   GRMN +2.5%

9.02am... market holding gains, sp +7pts, 1848.

UGAZ +8%, GRMN +4.5%.   Kinda interesting.

*Look to the VIX this morning, 15s look Wednesday afternoon...

9.24am.. well, sp+10pts...1851...  hourly MACD cycle offers upside all the way into the FOMC announcement.

Until then..I'm content to watch and wait.  A short in the sp'1865/75 the target.