Wednesday 2 April 2014

Volatility fractionally lower

With equities remaining strong into the close, the VIX turned back lower, and settling -0.1% @ 13.09. Near term outlook is offering a minor spike into the 14s, before melting back lower. VIX now looks unlikely to break 20 for at least a month or two.




*It was notable to see the VIX in the 12s, with an intraday low of 12.92, the lowest level since Jan'22.

VIX remains low, and at best, equity bears might see a spike to the 14s..maybe 15s. Certainly, the 16s look out of range, in what is a market that is consistently breaking new index highs.

more later..on the indexes

Closing Brief

US indexes closed with some noticeable strength, sp +5pts @ 1890, having broken a new historic high of 1893.17. The two leaders - Trans/R2K, settled +0.7% and +0.3% respectively. Near term outlook is for a minor retrace, before pushing higher across much of April.



*a somewhat strong closing hour - despite a weak 1pm hour.

So, the sp'1900s are now within easy range, and those recent hopes (a mere 4 days ago) of the 1800/1790 zone, look a long way down.

I remain on the sidelines, but am open to going long the indexes, but if the market keeps rising, finding an acceptable entry will be overly difficult, not least for a permabear!

At worse, I'll just sit the next month or so out. What I won't do is attempt to short this nonsense, not least with the weekly/monthly charts now offering the sp'1960/70s in May.

more later..on the VIX

3pm update - weakness into the close

New historic highs for a number of equity indexes, but US markets are set to close on a moderately weak note - not that it negates the importance of the new highs. A retrace to the sp'1875/65 zone looks viable tomorrow/early Friday, which would likely equate to VIX 14s.



Even if all indexes close moderately red today, in no way can the bears start getting remotely excited.

The bears FAILED last week to break <1840/30, and indeed, we have broken new historic highs.

For me, the only issue is whether the market can retrace lower enough to entice me aboard the bull train. A disturbing be sure.

updates into the close..although I'm not expecting any dramatic downside, at best..perhaps 1880.

3.07pm.. momo stocks are weak, esp' TWTR.  The notable exception is TSLA, +4%, Transports are leading today.

3.28pm.. Well, sp'1890...and the weakness..., it sure ain't there.

..and that is the problem the bears face. The breakout to new highs...could just keep going..and going.
I guess you could say...'won't short, might go long, but only if minor retrace'.

At least I'm not losing money today...

Notable strength: GDX +3.1%...traders are chasing the mining stocks, but the broader trend remains weak.

3.37pm...and new index the bears who were shorting earlier get kicked out.

3.43pm.. getting ugly for those in bear land.. sp'1892...and the 1900s are fast approaching.

VIX turns red..back in the 12s

3.50pm.. Dow on the edge of breaking a new high...16588.25  (from Dec'31 2013)

3.56pm.. A day for the bulls...and most certainly..that was NOT a weak close!

2pm update - rolling over

Having broken new historic highs for some of the indexes, it looks like we'll see some moderate weakness into the close..and early tomorrow. The hourly index cycles look set for a bearish MACD cross before the close. Retrace target is somewhere in the 1875/65 zone.


Summary see how the remaining two hours pan out.

Right now, best case for the equity bears is a close around 1880. That will easily bring within range a brief minor washout tomorrow.

I suppose it could drag out until Friday, but really, the weekly charts are pushing higher each day, and we all know many are looking to jump onboard. Regardless of how tomorrow goes, I'd still look for a week close, somewhere in the 1885/95 zone.

Notable weakness: TWTR, -2.6% in the $45s, and with the recent break of $50..this sure looks ugly..

stay tuned!

1pm update - afternoon chop

US indexes are holding moderate gains, with the sp' battling to hold the 1890s. Metals are showing some significant gains, Gold +$10, with Silver +1.1%. The miners are naturally doing well, GDX +2.7%. Oil continues to see minor chop, and remains somewhat weak.



A retrace? Ohh yeah, its gonna happen, but it might be from the low 1900s, rather than here, and I'm not going to play guessing games on the short side of this.

At best, we might pull back to the 1870s...but hey, if we just keep rising to 1900/10..the retrace might itself only be to back test the old micro double top of 1883.

Regardless, I'm content to watch this nonsense today..from the sidelines.

Besides, I've plenty else to do.

1.32pm... rolling over...with the hourly cycles set to turn somewhat bearish near the close/early tomorrow.

1.45pm.. sure looks like we're rolling over...and hourly charts look okay into tomorrow.

Even the VIX is green, +1% at the glorious height of 13.20s

12pm update - awaiting a retrace

US equities are holding moderate gains, with particular strength in the Transports, +0.7% in the 7700s - an almost unthinkable level, one year ago. Metals are holding gains, Gold +$12. Oil has swung from early weakness of -0.5%, to now +0.2%.


Trans, daily


With a break to new historic highs, a retrace might simply not occur for some days..yet there is a small chance.

Regardless, if we don't slip back to 1870/65, I'll simply sit back and watch this nonsense push into the 1900s. I won't chase it higher in the 1890s.

VIX update from Mr T.

time for tea...

11am update - minor gains

US indexes continue to push higher, with new historic highs for the sp'500, Transports, and NYSE Comp'. Metals are holding gains, Gold +$10, which is really helping the gold miners, +2.3%. Oil remains a particular weak spot, -0.3%



I'm still looking for a retrace, but hey..this nonsense could just keep on going, if so..I'll let it run.

Right now, the best place to jump aboard the long train would seem to be 1870/65, but we just might not pull back.

time for an early lunch

11.34am... sp'1888....are we done yet?  Right now, best downside looks to be 1870..some time tomorrow/early Friday, before renewed upside.

*Oil...back to flat...from -0.5%.

10am update - opening chop

US indexes open a touch higher, but are somewhat choppy. There is significant probability of a retrace of the recent 1842/87 wave, perhaps slipping to sp'1870/65. Metals are showing some opening strength, Gold +$11, whilst Oil is weak, -0.1%



*awaiting factory orders data at 10am

Transports especially strong..+0.5%

So...barring a move above the opening high of 1887, I'll be looking for a two day minor retrace, back to 1870/65..somewhere around there.

I'll consider going that point, but not today!

What I won't do...since new index highs, I won't attempt any re-short...pointless.

10.01am.. Factory orders, +1.6%...reasonable.

Indexes look as though they want to sell least a little.

10.13am.. market is stuck at 1887....looks like we will see that retrace.

10.30am... 1888...hmm...well, I ain't chasing it higher.

Notable strength: GDX +2.9%, helped by Gold +$11

Pre-Market Brief

Good morning. Futures are a touch higher, sp +1pt, we're set to open at 1886. Precious metals are higher, Gold +$11, with Silver +1.1%. Oil remains weak, -0.2%. With two new index highs (sp', Trans), equity bulls look set for much higher levels across April.



*awaiting the ADP jobs report (8.15am), and Factory orders (10am).

With some minor QE this morning, so long as the data comes in at least 'reasonable', equity bulls have just about everything in their favour.

Fibonacci extrapolation upwards?

As I noted in last nights closing post, the monthly charts are already offering the 1960/70s. If you do a simple 1.6x extrap' of the wave from 1737/1883...that gives the 1970s.


In the scheme of things, a move to the 1970s isn't that much, we're only talking about 80pts or so, which is not even 5%. So...right now, the 1970s would be my upside target, and that seems viable in May.

*I am on the sidelines, but will be looking to go long something in the next few days. With new index highs, I have ZERO interest in being short the indexes in the near term.

If I do go long, a fair long-stop would be the recent weekly close of sp'1857, or the rising weekly 10MA of 1844.

Good wishes for Wednesday trading.

8.16am.. ADP jobs: 191k, a touch under the market consensus, but really, its an 'okay' number. 

9.37am.. I'm looking for a possible retrace here,  from the 1842/86 wave, as a long entry..but not today...

A new high for a new month

The bull maniacs have started the month with new historic highs for the sp'500 and the Transports. The sp' monthly chart is offering the 1960/70s this April/May, although weekly charts will be somewhat restrictive to the 1920/40s.




*I have removed an old count from chart weekly'8. With today's break >1883, the only decent thing seems to be just follow the price action.

Indeed, regardless of how you might want to count/label this nonsense, the bulls achieved two important new highs today, in the sp'500, and the Transports. The recent minor bearish hopes are now scrubbed, and its back to 'normal service'.

It remains embarrassingly lame for the equity bears, that the declines are so minor..and take so long, whilst the gains are now fast...and relentless.

Looking ahead

We have the ADP jobs report and Factory orders. If those come in at least 'reasonable', the market will easily be able to consolidate, or more likely, build upon the recent 3 days of gains.

*there is moderate QE-pomo of $2-2.5bn.

Another disappointment

Yours truly was stopped out early this morning on a core short block. A minor loss, negligible in the scheme of things, annoying, but more so...disappointing. With the sp' breaking >1884 in the closing hour, I was further kicked out of a small secondary short-block, and am now entirely on the sidelines.

The question is..what now? Do I go long in the 1880/90s? Where would a stop be? I guess, around the recent weekly close of 1857.

As things are, I'm content to do nothing for a few days. Certainly, I'm resigned to further equity upside, I won't be shorting the equity market for some time again.

My bigger concern now is that rather than see a spring/summer multi-month rollover..we'll just go straight the style of 2013, all the way to the many - not least Carboni, are seeking. he is..with a video from earlier today...

Video update from Mr Permabull


Here for the long run

I realise for many out there, not least the few remaining 'doomer bears', today was rough, but it was just another lost battle, in a war for which some do understand the eventual outcome. The economic 'reality' is indeed very different from what the cheer leaders on clown finance TV would have us believe.

The 'new world economy' of the early 21st century is not going to be able to subsist on the productivity of Twitter, Facebook, or least of all..Candy Crush. No, there remain huge systemic issues out there, but right now, Mr Market has ZERO concern for any of it.

Today was difficult, but I'll be here tomorrow..and the day after that....and......

Goodnight from London

Daily Index Cycle update

US indexes closed with important gains for the third consecutive day, sp +13pts @ 1885. The two leaders - Trans/R2K, settled higher by 0.9% and 1.3% respectively. Near term outlook is broadly bullish - not least with the sp' and Trans' making new historic highs.





Equity bulls achieved a new high in the sp'500 and the Transports, and the other main indexes will very likely follow.

Underlying MACD (blue bar histogram) is due to go positive cycle tomorrow, and there is indeed high likelihood of much higher levels across April/early May.

The mainstream talk will now likely shift to 'when will the sp' hit 2000?, which is now a very valid question.

a little more later...