Monday 7 April 2014

Volatility breaking higher

With equities weak for a second day, the VIX pushed higher, peaking at 16.01, but settling +11.3% @ 15.57. Near term outlook is for a higher VIX, and if sp<1840, we should see the VIX break above the key threshold of 20 in a matter of days.




So..VIX 16s..if only briefly..but we do have a very clear conclusion to the decline/melt lower from mid March.

The only issue now in my view is whether the VIX can break the 2013 high of 21.90s in the current cycle. If sp'1780/70s - which IS viable in the near term (if the 50 MA of sp'1839 fails), then VIX 23/25, on a spike.

more later..on the indexes

Closing Brief

US indexes closed lower for the second consecutive day, sp -20pts @ 1845.  The two leaders - Trans/R2K, settled lower by -1.4% and -1.5% respectively. With the break of the weekly 10MA, outlook is bearish, and if <1840, then the door opens to the sp'1770s.



Interesting day, even though I didn't hit any buttons.

For me, what matters most is the bigger picture...and with the break under the weekly 10MA of sp'1848, the bears have a real chance here.

All that the bears need now is a break <1840..which will open up the 1770s, and that has huge implications for the subsequent few months.

I will look to pick up a short position tomorrow, probably no earlier than 11am. If we don't bounce...I won't likely chase.

more later...on the VIX

3pm update - a test of the 50 day MA

Equities remain weak, in one of the most consistent down trends we've seen since at least late January. VIX is +10% in the 15.30s - having briefly broken the 16 threshold. Metals are starting another week...weak...Gold -$6. Oil is similarly on the slide, -0.7%




The bigger daily charts tell the story. A failure on 'jobs Friday'..and we just keep on falling.

Once the 50 day MA is broken - as I'm guessing it will...then the door is wide open to the sp'1770s....which seem viable 'within days'.

With the break of the weekly 10MA... I'm looking to launch an index short..on the next bounce. Right now, 1855/60 looks to be the best the bulls could hope for.

3.11pm.. we have a BREAK of down trend...bounce appears underway..will likely last into early tomorrow.


So..I'll be on standby to launch an index short early tomorrow. Hell, I might even pick up a VIX call block.

3.15pm.. ohh lookie..we're 'off the lows of the day'.

Bounce target 1860/65...early tomorrow.

3.30pm.. bounce..most certainly...bears on the run !   VIX about to lose the 15s.

3.46pm.. some minor weak chop, but the down trend from Friday has concluded..for a minor bounce.

Target remains the 1860s..before next down wave. VIX holding gains of around 9%, which is twice the Friday gain.

VIX did make some progress today.

3.51pm.. chop chop... a second good day for the its a case of whether the rebound can be contained.

back at the close.

2pm update - at least I'm not long

It seems like forever since we've seen this kinda of relentless fall. So far...sp -53pts, across 11 trading hours, which is pretty impressive. With the weekly 10MA decisively busted, the only thing left is the 50 dma of sp'1839. If that fails, another 40/



Naturally, I'm on the sidelines. I suppose it could be worse...I could have been going long last Friday in the 1890s.

I remain awaiting a bounce...but then, I said that a few hours ago in the sp'1850s.

Regardless, price action favours the bears..and there is now moderately opportunity for a decline to the sp'1770s within the very near in 'this week'.

VIX....trying to break the FOMC high of 15.95..when sp' hit a brief low of 1850.

A daily close in the 16s sure would be a victory for the bears.

2.18pm.. VIX 15.93... almost there...and will likely trigger some more late day VIX call buy orders.

How are those bulls feeling who bought the 'good jobs news' Friday morning?

2.24pm..Well, here come a test of the 50 day MA.. at 1839.

Considering the micro cycles..a bounce still seems...likely..but bounce upside seems limited to the 1855/60 zone.

Momo stocks all on the slide, notable weakness: TSLA, -3.9%

2.34pm... very obvious VIX resistance at 16, with sp' in the low 1840s.

Bears will 'fly' once those two thresholds are broken..whether today, tomorrow, or later in the week.

Price action remains strongly bearish.

1pm update - a bounce remains due

Most equity indexes are now seeing borderline significant declines of around -1%, lead lower, once again by the R2K and Nasdaq. VIX is holding 'interesting' gains of 11%, but is still under the FOMC spike high of 15.95. Metals remain weak, and are sliding, Gold -$6



With a key break of the weekly 10MA @ 1848, I have one of my 'okay to short' triggers hit.

The only one left is the 50 1839.

A bounce..if we get one..right maybe 1865/70.

Certainly, price action looks very weak, and I sure won't go long.

As we close will be important.

1.07pm.. What remains bizarre...amusing..if utterly lame..seeing the cheer leaders on clown finance TV get rattled by a two day decline.

We're not even 3% below the historic high (from a mere 9 trading hours ago)..and its almost as if they are ready to pick up the red phone to Yellen.

Weak minded fools..every one of them!

1.15pm.. back to 1845...and this sure is the most consistent downside action since late Jan'.

A break of 1840 today..would really spook the bull maniacs...  VIX +12%...finally showing the kick it lacked on Friday.

1.25pm.. another attempt to floor..this time at 1844.

Bulls need to break >1850 to begin a bounce cycle.

12pm update - awaiting a minor bounce

The smaller 15/60min cycles will be offering a bounce this afternoon. Equity bears have seen some moderate follow through from the Friday decline, but the headline indexes (sp, dow), are still comfortably above the major support of the 50 day MA..sp'1840.



Hmm...we're still on the slide...this market sure is weak!

Weekly 10MA is in imminent danger of being taken out..first time since early Feb.

VIX update from Mr T

time for...tea.

12.11pm.. Market breaks the weekly 10MA....@ 1848.

Just another 8pts will really clarify things.

12.21pm.. 1846.... next soft target..the 1842 low..and then the 50 dma...1839.

11am update - bulls not wanting to buy

US equities are lower, its nothing significant yet, but what is clear, the bulls just aren't particularly interested in buying at these levels. The 50 day MA remains the key first major support - around sp'1840.  Metals remain a touch weak, Gold -$2



Most of the daily charts look pretty ugly for this week, and there is a very viable break <1840.

I remain..watching. Hourly MACD cycle is deeply negative, and we're surely going to get some degree of bounce...

For the moment, I sure ain't going long....and I ain't going short.

Notable weakness: DRYS, -3%, I guess the BDI is lower again.

11.06am.. triple candle top on the VIX....

Hmmm  The big down trend from March..looks to be over.

11.18am.. looking at the 15min cycle.. indexes look VERY prone to a snap higher within 15/30mins.


Right now, bounce upside looks to be around 1870.

11.27am.. still weak, but...a turn looks very probable.

VIX holding gains of 9%, but the 15s sure aren't anything to get excited about .

11.30am.. Price action still weak.....but I sure hope those on the short-side are tightening stops right now. Real risk of 1865/70 this afternoon.

15min cycle

Eyes on the MACD cycle..we're due to break higher.

11.35am.. turn...underway.. ..and I'm pretty sure about this.

VIX cooling...15.22...the 14s look due again.

10am update - opening weakness

US equities open moderately lower, with the sp in the mid 1850s. VIX is showing a little upside kick, +10%, but still, VIX 15s only rank as 'very low', rather than 'bizarrely low'. A latter day bounce looks very likely. Metals are moderately weak, Gold -$4




For me, what really matters is to see a breach of the weekly 10MA - currently 1849...and then the 50 day MA of 1840.

If those two are busted..then its game over bulls.

Note the lower weekly bol'...still in the 1770s...that would be 'best bear' case, and offer a larger H/S formation.

VIX looks unable to clear the 15s in this cycle....bears..beware.

10.08am... opening black candle on the I feared.

So..lets see how  high the bull maniacs can bounce this today.

10.12am.. 1875...very viable....the issue is....what then?

I fear the QE this Thurs/Friday!

10.39am...bulls just not showing up....tricky morning.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -7pts, we're set to open at 1858. Precious metals are a touch lower, Gold -$2. Equity bulls are in some real trouble today, although until Mr Market puts in a daily close <1840, this is still the same nonsense that we've seen since early March.



So, we're going to break the rising trend, along with the 61% fib of 1863 at the open.

Equity bears should push hard to a key break under the 50 dma - which will be around 1840 at the open - also where the lower daily bol' is.

*As noted at the weekend, there really isn't any econ-data of note this week. Further, equity bulls don't have any sig' QE-fuel until Thursday.

For those trading the Dow...

Bears need 16350 for a break of trend, which will open the door to 16100/000. the grand scheme of things though, all these moves are pretty small, aren't they?

Special note...
I am due to lose power this morning, and will likely be offline for an hour, so if I know why!

As a result, I won't be hitting any buttons until the afternoon. Considering the Friday price action, I will consider a small short position...but really, I'd feel a hell of a lot more comfortable being short the market <1840.

9.15am.. power already off...and back...
I should be normal for the day :)

9.17am.. sp -4pts, so..that is 1861...not quite a break of trend, and still.. a good 1.2% from breaking the 50 dma.

Bears can sustain a bounce, but arguably no higher than the recent cluster price level of 1875.

9.33am.. minor opening weakness, and bears just don't have the power to kick this significantly lower.

Despite no QE today, 1870/75 seems very viable...which will no doubt annoy all those seeking a major red start to the week.

9.41am Well...bulls not showing up yet. Should see a turn by 11am

VIX +8%...showing a little power...but..we're only in the 15s..this remains a bizarrely low level.

Game of... Markets

Good evening. Futures are broadly flat, but how Monday opens does not particularly matter (at least to yours 'on the sidelines' truly). What does matter though is whether any of the key supports are busted this week. If bulls can't hold the sp'1850s, things could get rather interesting indeed.



For the doomer bears out there..

First target... rising trend... 1860...that looks easy..whether Mon/Tuesday.
Second...the recent low of 1842.

However.. the only target that really matters is the 50 day MA, currently 1839..and slowly rising. On ANY break of the 50 dma, we would surely see a major daily drop, much in the style of Jan'24th, when the sp' closed -38pts.

Even then, this is all minor noise, I'm far more interested in the bigger picture. The following remains the most bearish outlook I can come up with...


One problem right now though is that a few of the indexes are somewhat out of sync, namely the R2K/Nasdaq. Regardless though, for me, a break under the weekly 10MA - which will be in the 1850s at the Monday key.

So.. how do I think this will all play out?

I think many are starting to agree that this market is exhausted. Whether the top was this past Friday at sp'1897, or not for another 2-4 weeks @ 1925/50, does it really matter?

I am most certainly seeking a summer sell down to sp'1625/1575. From there, I'm planning to go all out long, although that sure won't be easy to stomach.

The following is by Mario at SMF, I've followed him for a fair few years, and even though I don't subscribe to SMF, the weekend updates - especially the bigger outlooks are well worth hearing...


If you're not in the mood for chart chat video, how about some dollar doom?

Doom chatter from Hunter, with the JW

Make of that....what you will. Personally, I think the 'dollar doom' talk is utter nonsense, but I do find it entertaining to listen to.

Ohh, and here is a super short update from Mr Permabull, who is seeking ES in the 1830/20 zone within a few days.

Problem for the bulls, if that occurs, the bull maniacs lose the 50 day MA, and the weekly 10MA... in my view, that would bode for much lower levels.

Goodnight from London

back at the Monday open :)

ps. the Permabears send their regards.