Thursday 20 March 2014

Volatility moderately lower

Whilst equities built broad gains after a weak open, the VIX naturally failed to hold minor opening gains (intraday high 15.62), settling -4% @ 14.52. Near term outlook is for VIX to battle upward into the 17s. Whether VIX can break the key 20s..that remains the big question.




*Once again, we've another instance of 'whacking the VIX lower in the closing minutes...


The pre-FOMC low of 13.95 remains a reasonable spike-floor, and I don't expect that level to be broken for some long as we don't break >sp'1875.

If the market does rollover from here, then we'll no doubt see VIX 17/18s, but as ever, it remains a struggle to hit the big 20, and holding above that level - especially on a weekly basis, appears almost impossible.

more later...on the indexes

Closing Brief

US equities closed broadly higher, sp +11pts @ 1872. The two leaders - Trans/R2K, settled -0.1%  and +0.3% respectively. Near term outlook is for some 'choppy' selling into the weekend. Equity bears should be seeking a weekly close <sp'1858 to backup last weeks provisional bearish warning.



*an annoying bullish hammer candle to close the day.

I for one am glad today is over, it became pretty tiresome with yet another attempt to break >1875.

For the equity bears out there, at least we didn't break >1875, although the daily close is way too close for comfort. It won't take much of a gap higher tomorrow to trigger a truck load of short-stops.

How we close the week will be even more important, but more on that later...

the usual bits and pieces across the evening...

3pm update - an important daily close

US equities have built borderline significant gains, with the sp' holding the 1870s. Any daily close >1875 will no doubt trigger new buying interest, whilst a failure will open up a swift reversal, breaking the Wednesday low of 1850.




*most bearish aspect right now? That'd be the transports, -0.2% on the day.

Well, the closing hour...lets see how it goes....

Based on the previous few days, the 1875 line should still hold, but it remains so borderline, I can barely look!

I suppose if Mr Market wanted to cause maximum damage, it'd break into the 1876/83 zone, only to then reverse.

Anyway, I will hold overnight short.

*Quad-opex tomorrow, will likely be pretty choppy, and for the bears...there is at least no sig' QE-pomo to be concerned about.

Right now, best case for the bears..a daily close of 1866/64, with VIX 15s. That'd still be a net daily gain for most indexes, but hell, at least it'd still keep the broader scenario intact.

3.07pm. VIX wants the 15s....bulls..beware!

3.15pm... bulls lose the 1870s...and VIX back to 15s....

Holding to best case target...

3.30pm... bull rats are getting a little twitchy...VIX 15.05...  15.30 would be..useful.

3.45pm... urghh..back to the 1870s again...tiresome!

Again, the one notable aspect of today...Transports.. -0.2%, but aside from that, today was much like Tue/Wed, in testing the 1870/75 zone.

back at the close

2pm update - rollover into the close?

It remains a borderline situation for both sides, with the market getting stuck again in the sp'1870s. VIX remains low, but has possibly floored at 14.67, a daily close in the 15s is easily within range.



Still holding the line, but this sure is close to breaking back to the bulls.

A red close for the broader market...not impossible, but right now, bears should arguably settle for anything <1870!

I have my eyes on the VIX, I want to see a daily close in the 15s.

2.16pm.  Equity bears just need to break back <1870...

15min cycle

Any close <1870 should be a relief to anyone on the short side, with VIX 15s

2.30pm.  Well, its that time of day, late afternoon 'turn time'.

A daily swing from 1854 to 1873...19pts...and this remains a borderline situation.

VIX remains stuck in the 14.70/60s.

2.47pm.. VIX still trying to form a floor....if this IS a floor, then this was one nasty day for the bears, really spooking them.

1pm update - bears in trouble

The market continues to build moderate gains, with the sp' a mere 2pts from breaking the recent 1874 high. Equity bears are clearly in trouble again, and unless we reverse from this level, there is empty air to 1883..and then the low 1900s. This afternoon is going to be real important.



Well, so much for the bounce completing at 1867..with a break into the 1870s..we're right back to yesterday's level.

For those that wanted to 'short a bounce', this is obviously a straight forward trade, with a short-stop..somewhere in the 1875/85 zone.

*I remain short, but I'm going to get kicked out of my core position, if we break >1875.

1.11pm.. Small consolation, but the old leader - Transports, is still marginally red, -0.1%.

If Mr Market is just trying to wash out all the weak bears, before a new wave lower, its doing one hell of a good job.

12pm update - bounce complete?

US indexes are mixed, with the sp' holding the mid 1860s. A natural bounce from 1854 to 1867 may have already completed, in which case, the bears are going to seize control before the close. VIX is holding broadly flat, in the low 15s.




I'm kinda tired, suffice to say...unless the bull maniacs somehow break >1875, the bounces are to be treated as that....bounces.

I'm content to hold a core SDS block, and a SPY put block into Friday.

VIX update from Mr T.

time for tea :)

12.30pm.. sp'1871...and a mere 4/5pts from breaking the line...

This is certainly borderline...

12.35pm..based on simple trends, bears really need to hold this <1872.

11am update - morning bounce

Equity bears only managed to push the market to sp'1854, before a somewhat natural (QE fuelled) bounce to the upper 1860s. Metals are back to flat, whilst the USD is holding gains of 0.3%. VIX is lower, but a daily close in the 15s looks more likely than the 14s.




*having dropped a SPY put block at 1855... I've picked them back up at 1866. Will hold into Friday, still seeking the low 1840s as an initial target.

Call it whatever you want, but a bounce was kinda likely this morning. I had hoped we'd see the 1840s, but no...that will have to wait until tomorrow/Monday.

Regardless, nothing has changed, barring a break >1875, I'll hold to original outlook.

11.17am... Just thinking, a daily close, VIX just about viable...but more likely tomorrow.

VIX 17 should at least equate to sp'1845/40. 

10am update - opening weak chop

Equities open with some minor weak chop. Bears look to be struggling to break <sp'1850, but neither do the bulls look able to break >1875. Metals are weak, Gold -$5, the climbing USD is not going to help. VIX opens in the mid 15s, with 17s viable today.



*awaiting a trio of econ-data at 10am.

So.. a somewhat quiet open, but barring some bizarre ramp >1875, bears should be comfortable to sit back and wait.

Notable weakness: coal miners, BTU -2.3%

9.53am.. I've a tight stop on my SPY puts...lets see if I get the kick for a rather good initial gain.

I fear a 'stupid bounce'...with QE this morning.

9.54am... KICKED from spy puts.... a nice gain to start the day. :)

If we keep falling..fine.... if we bounce...I'll just re-short the puts in the afternoon.

10am... typically, we'll keep falling until around low 1840s are still very viable this hour.

Regardless, things look pretty good.

After all.. just how are we going to break >1875 now?

10.05am.. checking the econ-data, which seems to have come in a little better...hence the market wanting to bounce...and the QE will help.

Seeking a re-short..via SPY a few hours.

(I'm holding a huge SDS block though....regardless of the intraday nonsense).

10.09am.. twitchy bears..understandably covering....but hey...a bounce is to be expected...

The ultimate resistance remains 1875/77 (slightly higher, since it is slanted up!)

10.13am.. best guess..we get stuck around 1868/70....and roll over in late afternoon.

10.30am I'm looking at this...

15min cycle

Seeking an hour or two..stuck around 1868/70..and then rolling over....right now..could be as early as 12-1pm

The puts I sold earlier... -20%...and I'm hungry to pick em right back up today.

10.40am.. VIX looks floored...
Re-shorted...secondary block.. spy puts..from sp'1866....will hold into Friday.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -5pts, we're set to open at 1855. Metals are weak, Gold -$8, Silver -1.9%. Equity bears need to break the FOMC low of 1850, and at least push to 1845/40 today - where there is H/S neckline support.



*awaiting an array of econ-data this morning.

So...yesterday was kinda good for those in bear land, and it will be pretty important that that the bears break yesterdays low.

Prime opportunity for the low 1840s is arguably no later than which point I fear a bounce, not least, since there is QE-pomo of $2-3bn this morning.

Video update from Oscar, who is not spooked...yet.

What I would add is that bears need a monthly close <1750 to break the primary trend, and I find that hard to envision in the very near term.

My trading plan?

I hold a core SDS (2x short sp'500) block, and will hold that barring a break >1875).
I will look to drop a secondary short block - SPY option puts, if we are in the low 1840s this morning, and intend to re-purchase, late today/early Friday.

As ever.updates across the day :)

8.31am.. jobless 320k, marginally above expect' 315k.

Bears just need to break < offer some more confidence for next week.

9.00am.. futures sp -7pts, we're set to open @ 1853.   Just another 4pts to break the low...and open the door to another 7-10pts.

I will look to bail on an index PUT block..before 11am..if possible.

9.36am.. minor weak chop..lets see where we are around 11am.

VIX daily chart is offering 17s today..if market starts to slip.

9.51am.. stop on SPY puts...tight at 1855.... I'm content if i get the boot, otherwise..holding until 11am.

Riding the bear train

US equities have put in a rather important marginally lower high, around key resistance of sp'1875. Equity bears now need to at least target a weekly close <sp'1858, which will provide a second warning of 'provisional trouble'.



*the above scenario remains the most bearish outlook, but it requires the market to fall to 1750/30 in the current cycle - which of course assumes 1883 is a key top.

The threshold for green/blue candle remains sp'1858, and it was indeed pretty exciting to see the market slip (if briefly) to 1850 today.

Equity bears should certainly seek a weekly close <1858, for a second blue candle, which will confirm last weeks provisional 'warning of trouble'.

The Dow is weak

A bonus chart, especially for those who have more interest in trading the Dow

Dow, weekly

Perhaps most notable about today, the Dow briefly broke the weekly 10MA.  First key downside is 15700/, that is a good 500pts lower. However, the more exciting secondary target is a move back to the Feb' low, in the 15300s.

Looking ahead

We have the usual jobs data, phil fed, home sales, and leading indicators. That should give Mr Market some good reason to move.

*there is sig' QE-pomo of $2-3bn, bears should be somewhat cautious.

On the short side

Well, I stuck to the original plan, and with no break >1875 after the FOMC announcement, the price action looked okay, and I went short the indexes from 1867.

If equity bears can just break <1834 in the days ahead (not necessarily this week), then the door is open to much lower levels. I realise some are similarly seeking a break to 1810/1790, and maybe that is all we'll get in this down wave.

Regardless, today was pretty good, and I'm quite looking forward to seeing where we close the month/quarter, a mere 8 trading days away.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately lower, after the market failed to clear resistance of sp'1875. The sp'500 closed -11pts @ 1860. The two leaders - Trans/R2K, settled lower by -0.4% and -0.8% respectively. Near term outlook is for downside into the weekend, sp'1834 is the key level for equity bears to break.





So..the FOMC is now out of the way, and the market looks tired. This is especially the case for the two leaders - Trans/R2K, which look primed for a significant rollover in the days ahead.

For the equity bears out there, the H/S formation will need a break <1834 to be confirmed, and that will offer a target zone of 1800/1790 by end of next week.

a little more later...