Thursday, 27 March 2014

Volatility remains very low

Despite the US indexes breaking into the low sp'1840s, the VIX never really showed much kick, and failed to surpass the FOMC peak of 15.95 - when sp' was 1850. The VIX settled -2.1% @ 14.62. Near term outlook is for a VIX climb to the 17/18 zone, with sp'1800/1790s.




It remains bizarre how the market remains so utterly fearless. I could list dozens of reasons why the VIX should be in the 20s (if not the 30s)..but as ever..the market is..what it is.

For now...the market is not likely to be spooked, unless it breaks the sp'1834 low. However, my guess is that it will fail to hold that low..and will then proceed swiftly lower to the 1800/1790s.

Whether that is enough to cause the VIX to hit the big 20 threshold..difficult to say.

more later...on the indexes

Closing Brief

US indexes saw moderate weakness across the day, sp -3pts @ 1849 (intraday range 1842/55). The two leaders - Trans/R2K, settled -0.2% and -0.3% respectively. Near term outlook is for a dynamic drop to the 1800/1790 zone within the next few days.



*a choppy closing hour, but the weakness was still there.

All things considered, today was useful for the bears. We saw a hit of the lower bollinger on the daily, and that itself is now starting to roll lower.

I am seeking a major one day fall of sp' -30/40pts, whether tomorrow..or next week...I will be here for it.

more later..on the VIX

3pm update - chop into the close?

US indexes remain weak, and despite a few attempted rallies, the sp' is close to taking out the morning low of 1842. It won't take much to close in the 1830s..and that opens up the target zone of 1800/1790s within a day..or two. Metals remain weak, Gold -$11.



*I remain VERY closely watching the smaller 5/15min index/VIX cycles.

I'd certainly consider waiting until early tomorrow, but I'm getting real...twitchy to hit some buttons.

Am watching the VIX..which is holding around 15....which of a relatively low level.

3.07pm... RE-SHORT, secondary block.. from sp'1845..

Price action looks weak...seeking a key break <1830...which opens up 1800/1790.

3.20pm... sp'1847..and the 1860s now look well out of range. Bulls had a chance...and failed.

There is certainly minor risk of a gap higher tomorrow...but the daily and weekly charts are both warning of trouble for tomorrow.

So...I hold short overnight... via SDS..and an index put block.

A VIX close in the 15s would be...useful..but feels like I've been saying that for weeks.

3.32pm  minor chop..and we remain..<1850...which used to be support.

All things considered..tomorrow looks...very much in favour to the bears. 

3.47pm... chop chop chop....I'd settle for ANY close <1850.

back at the close.

2pm update - its shopping time again

US indexes are battling hard to claw upward from the micro double floor in the low sp'1840s. Market looks highly vulnerable to getting stuck..somewhere around 1858/62, which should equate to VIX 14.75/50. Metals remain weak, Gold -$8



I remain standing by to pick up (yet again) a secondary short block, SPY puts.

The typical turn time remains lets see how this hour goes!

Notable strength: UGAZ +7.5%...well, it sure feels chilly in London today, but..maybe its just me?

2.06pm.. sp'1845..and market struggling still....a break into the 1830s would confirm the general trend.

Not particularly in the mood for chasing it lower from here...hmm, still fear another minor wave up.

5min cycle should be flooring within 5-10mins....certainly...this would be a lousy place to chase lower...I'm waiting...perhaps into tomorrow.

2.14pm.. 5min cycle floored... up we least for a bit


2.23pm  t-7mins until the usual turn..but it now looks unlikely that is a key top...

I'm still concerned of a brief spike into the low 1860s..for whatever 'dumb reason' you can think for. trying to break upward...1849....

I remain content to least for rest of this hour.

2.42pm.. standing by...this market looks weak... 

1pm update - patiently waiting

US indexes have given an intraday micro double floor in the low sp'1840s. A further wave higher seems likely this afternoon. Right now. best case upside for the bull maniacs appears to be the 1860/65 zone.. but that won't be easy. VIX remains low...and that makes those index puts that bit cheaper.



Well, lets see how high we can push into the typical turn time of 2.30pm.

Right now, a break above the earlier bounce peak of 1855..looks viable..which should open up another 5-10pts...

From there though...I think that is a valid re-short zone..with initial downside back to 1840/35....

ANY break <1835..and in should be 'free money' for the bears to 1800/1790.


1.09pm.. no one fib retrace was upside down..

The correct version...

Seeking 1858/62....t-80mins

1.22pm...on track....cycle peak in 70mins...

1.36pm... market struggling again...1849...hmm 

1.42pm.. this patience thing..this can be...difficult.

Come on you bull maniacs..keep on buying...until 1858/62 please!

12pm update - market struggling

The market managed a fast bounce from sp'1842 to 1855, but it has already failed.. with imminent threat of this unraveling today. VIX is holding moderate gains of 3% in the mid 15s..clearly..still a low VIX. Metals are weak, Gold -$5



*looks like an intraday double low...1860s now look difficult..but maybe 1856/58 ?

So long as we don't break the early low, this could merely be a B wave..with C into 1-2pm.


VIX update from Mr T.

time for tea!

12.12pm... market still just holding the floor...still viable wave higher into afternoon....

12.23pm.. double floor..confirmed....lets see how high we can get by 2.30pm !

11am update - QE inspired bounce

A very early sp' floor of 1842 - just around the daily lower bol, and we're now seeing a natural..and expected QE fuelled bounce. It would seem the sp'1860s will be hit today, the only issue is how many will use the bounce to sell into.



*I remain interested in picking up another SPY put block...later today..having exited just after the open.

Best guess for this afternoon.... 1863/65...with VIX 14.25 or so...

Holding to broader downside target zone of 1800/1790.

11.05am.. How about this........


A bounce to 1860s....filling in the RS..and then..down we go...?

11.11am.. minor chop around 1850..but still, given 2-3 hours..1860/65 looks very viable.

As many is on a break <1840/35...that is what would offer a very significant daily decline of 30/40pts.

....viable tomorrow...or Monday. I don't mind either way ;)

11.30am.. continuing minor chop....still looks VERY probable..for the 1860s....

Patience....yes.   back at 12pm 

10am update - opening weakness

US indexes open moderately lower, into the low sp' expected. VIX has broken to the 15s, whilst metals are weak, Gold -$3. Equity bulls have some QE this morning to postpone much deeper equity declines... if only for a day.




*I exited (somewhat overly early) my secondary short block..but hey..a gain is a gain, so I should try to refrain from any whining. Besides, I remain heavy short..via SDS.

I will look to re-short a secondary block on ANY bounce..preferably in the 1850s...later today.

So...with sig QE this morning...lets see how high the bull maniacs can bounce this nonsense.

Bigger target remains 1800/1790..and that does look pretty likely.

10.07am.. QE money should be kicking in soon...and we're already around 1850.

I'm looking for 1855/60 by 2.30pm..which looks well within range.

10.09am...they got the bears running for cover now ! 1852 already.

10.23am... considering the current rebound..looks like 1863/65 is viable today.

10.29am... unless we break into the 1870s today..I just can't see this as anything other than a QE fueled 'stupid bounce'.

Regardless...lets see where we are trading into 12-2pm. 

Pre-Market Brief

Good morning. Futures are largely flat, sp'500 is set to open around 1852. Precious metals are starting weak, Gold -$8. Equity bulls have some QE to help today, but yesterdays price action bodes for at least a test of the 50 day MA of sp'1833, with the R2K already having closed under that.



*awaiting jobs, GDP Q4 data, with homes data at 10am

Again, bears have to endure a sig' QE today, of $3-4bn, that will be a problem, but once we're past today, its a clear run into next Tuesday at least.

I see many touting a bounce, yet we're only 31pts from the high. The declines in the Trans/R2K were very significant yesterday, and it'd surprising if we don't see some follow through - at least during part of today.

I remain short, but will look to drop a secondary short block, if sp'1845/35 today/tomorrow.

8.32am.. GDP Q4 final reading. ..2.6%... make of that..what you will.

Market remains flat...very vulnerable to falling to the low 1840s by 11am.

8.59am.. indexes slipping, sp -3pts.. we're set to open at 1849...

The low 1840s look pretty easy target by 11am.

9.35am.. minor weak opening chop.. awaiting a down wave to the low 1840s.

9.37am.. EXITED secondary short block.  

Holding core SDS block....

*will seek to re-short a secondary short block on any 'stupid bounce' today.

Best bearish case

With the two market leaders - Trans/R2K, leading the way lower, we have some clear breaks of trend on the daily cycles. The bigger weekly cycle is offering sp'1770/50s, but that really is 'pushing it' for the best bearish case. First things first...a break of 1830, and then 1800/1790.



The above scenario really is a bold one, and frankly, I'd be surprised if we do break much below 1800 within the next week or two.

Of course, if 1883 was a key intermediate top, then we should (at least in theory) come down to around the early Feb' low of sp'1737.

With the lower weekly bollinger band rising each week, breaking much below 1770 (as of next week) looks to be damn difficult. I would keep open the H/S long as we at least briefly hit 1765...but would be much more comfortable if we saw the 1750s.

Looking ahead

We have the usual weekly jobs data, homes data (10am), and GDP Q4 (final reading).

*there is sig' QE-pomo of $3-4bn...bears need to be cautious, however there is then an 'open window' of no-QE until at least next Tuesday.

Still hoping for 1800/1790

This week sure has been a battle. We've seen four consecutive daily reversals, but today's was far more powerful - especially for the Trans/R2K. The following chart outlines what might be a somewhat complex H/S formation.


Regardless of how you might want to count/label the formation, if we do break <1830 - taking out multiple key supports, then bears should see a further 2% downside. The fib' 61% retrace in the 1790s would make for a natural floor - and that lines up with rising trend support on the bigger daily charts.

I remain heavy short, with 'line in the sand' short-stops at 1884/85. Right now, I don't expect that to get hit. Instead, I hope to get an exit in the low 1800s next week.

I should note, if we do gap lower Thursday, I will look to drop a secondary short block (SPY puts)..and re-short on any intraday bounce.

Goodnight from London

Daily Index Cycle update

US indexes closed weak, with the sp' -13pts @ 1852. The two leaders - Trans/R2K, settled lower by a very significant -1.6% and -1.9% respectively. Near term outlook offers the sp'1840/35 zone, with strong support in the 1830s. If that fails..bears get an easy ride down to the 1800/1790s.





We had the two leaders - Trans/R2K, weak across the morning, and with the break early in the afternoon, it only took the rest of the market a few hours, to similarly break lower.

Indeed, we now have clear breaks of trend on most indexes, and near term outlook is most certainly bearish for the remainder of this week.

The only thing the bears have to be concerned about is the Thursday QE, which might negate any opening gap lower.

Big short trade.

A poster highlighted the following to me this evening...

see: massive trade that spooked the market

Certainly, that probably had some effect, although from what I gather, the bond sale today was probably more important.

a little more later...