Thursday 10 April 2014

Volatility break through

With the equity market getting trashed, the VIX built gains across the day, and made an important break into the 16s, settling +15% @ 15.89. Near term outlook offers the high teens. If sp' <1800, then VIX looks viable to spike into the low 20s, if briefly.




*I remain long VIX, from the 13.90s..from Wednesday afternoon. Frankly..that now looks a near perfect entry, and I am indeed very pleased.

Seeking an exit in the 17/18s Friday/Monday....the 20s would be a real bonus.

If sp'1770s...then how high VIX?

I suppose the mid/upper 20s are possible, but guessing how high the VIX might spike is always difficult. It really depends on just how consistent and powerful the equity down wave is.

As it is, the 20s do look likely next week..if only briefly.

more later...on the indexes

Closing Brief

It was a fiercely bearish day for the US indexes. The two day bounce was indeed...a bounce. Sp' settled -39pts @ 1833. The Trans/R2K, settled lower by -2.1% and -2.8% respectively. Near term risk of 1810/00, with a primary zone of 1780/60, which would equate to VIX in the low 20s.



*I added a secondary VIX-long block in the closing minutes, from VIX 15.70s. With the break of sp'1837, and VIX 16s.. I am more comfortable with getting more involved.

Fun day huh?

To all those shorting the 'stupid fed bounce' yesterday..congrats.

To those who are still looking for the sp' is now white flag waving time..right?

more later...on the VIX

3pm update - daily charts look absolutely dire

US equities are really struggling, the damage has been done, and the daily index charts are looking real ugly into next week. Any break <1837 will open up an easy drop to 1810/00, along with VIX in the high teens.



It doesn't look like the bulls can bounce this after all.

So, I'm a mere VIX holder, but that will suffice.

Besides, what matters is the bigger picture, and ALL doomer bears should be seeking the sp'1770s.. a hit of the lower weekly give clarity about the next few months.

VIX will fly..if it can break >16


3.04pm... BREAK THROUGH..for the bears....

next level.. 1810/00....if not 1780/60 zone..within a day or two.

Enjoy the ride....

3.10pm... Isn't this a fine Thursday in market land? Such....beautiful colours....all around.

;)   I just love it !

What a fantastic Thursday...and much lower levels now VERY likely.

3.13pm... watching the maniacs on clown TV, they are getting real worried now.

I'd agree with Santelli 'I never seen a 25% decline that didn't start with a 2% decline'

3.18pm.. minor chop...and there is a real chance of a close in the 1820s..which would really make sub 1800 viable tomorrow...

That would make for one hell of a bearish weekly close, and easily bring within reach the 1770s.

VIX battling to hold the 16s.

3.30pm... yeah...its a good day. Bulls utterly unable to bounce.. KEY levels busted...

Tomorrow could be fun. I'll consider adding new short positions, but really, if we just keep falling, I'll just sit back and enjoy the ride.

VIX +18%....a close in the 16s now looks likely.

3.40pm.. micro 5min cycle offering a bounce.. but really...the levels ARE busted....this is one of the few times when it Is easy to just 'short at will'.

I'm considering picking up another VIX block...VIX 16s is still low...

3.44pm.. micro bounce...and it does NOT matter.

3.48pm.. strongly considering picking up a second VIX call block into the close.

This market is broken...

3.53pm LONG VIX (block 2)... from 15.73.... seeking 17/18s Fri/Monday.

3.55pm.. holding TWO VIX blocks...overnight.  

Great day...regardless of overnight/the open...the Friday close should be 'weakness into the weekend'...and next week..bears should rule.

2pm update - bull maniacs rattled

US indexes are seeing an especially strong down wave, with the sp' so far hitting 1840.. a mere 3pts away from breaking the key low. VIX is higher by a rather significant 11% in the mid 15s. Equity bulls are getting a real scare today.




*focusing on the bigger daily charts this hour....

So..we're lower..there remains threat of small bounce, but the damage has been done.

The daily candles are VERY decisive, not least the indexes.

I remain short the market via .. VIX-long, seeking the 17/18s within next few days.

*will probably pick up a SPY put block on ANY bounce.

2.13pm... high risk of a minor snap  higher in 10/20mins...upside to 1855 or so.....bears beware!

2.24pm.. Bulls just need to break snap it to 1855 or so.

I do expect weakness after 3.30pm...

VIX cooling down a little, but the break into the upper 15s is a good sign.

2.36pm.. bulls can't break >1848..and we're seeing renewed weakness...

Could be a real train wreck..if < the closing hour.

I continue to sit back..holding VIX... and right now...hopes of a bounce..fading..but thats okay.

1pm update - market really struggling

US equities are having a real problem. We've slipped from 1872 to 1847, and the key low of 1837 is a mere 0.6% away. If that fails...the door opens to a swift first target of 1810...and then the hugely important 1780/60 zone. Metals are higher, but well below their opening levels.




*VIX is starting to catch a bid, and my VIX block is starting to look rather good. I'd prefer an exit in the 17/18s though...and that doesn't look likely until tomorrow or Monday.

I would like to pick up that SPY block again...but only on a bounce. If we don't...I can live with that.

I'd like to ask Oscar right now....'how about that green OMNI!'   lol

1.25pm... RATS are bailing....any break <1837...and the real entertainment begins.

1.37pm... the damage HAS been done...regardless of any bounce...we look set to break <1837..and head for 1810..within a few days.

...should equate to VIX 17/18s...minimum.

12pm update - underlying weakness

US equities have rolled lower, and even the VIX is starting to climb. Yet, there is some QE money sloshing around out there today (and tomorrow), and there remains the usual threat of an intraday bounce. A red daily close does seem very likely though.



*I EXITED a spy PUT block @ 1857, will look to pick up again..around 2-3pm. Am holding VIX-long..regardless.

So..we've rolled over, and the move to the 1855s was an interesting start.

All those touting 'gap higher' are probably on radio-silent after this mornings decline..and they should be damn worried now.

ANY break <1837..will open up a fast move to 1810 (min)..if not the 1780/60 zone..along with VIX in the 20s.

VIX update from Mr T.

Ohh lordie..another new VIX derivative.
time for tea :)

12.07pm.. R2K getting the smack down.. -2.4%, and its only lunch time!

VIX making a break for the 15s.

12.09pm.. starting to look pretty decisive now, isn't it?

yours...VIX-long....will pick up an index short on ANY 2-3 hr bounce.

12.33pm.. sp'1847 looks to be a short term floor...and the 1865/70 zone is looking a fair way up.

Lets see what the bull maniacs can manage into the typical turn time of 2.30pm.

11am update - R2K and Nasdaq whacked already

The R2K and Nasdaq are already seeing significant declines of around -1.1%. The rest of the market is starting to follow, although the VIX remains notably mute..barely able to break the 14s. Metals are holding gains, Gold +$9




For me, the tell will be the VIX, where bears should be seeking the 15s, if not a daily close in the 16s..tomorrow..or Monday. That will open up a washout equity down wave..with VIX high teens/low 20s.

Despite the morning weakness, the hourly cycles will not likely see a provisional turn until late today.

For those on the short side....patience.

11.10am... fun huh?

11.16am... At current rate..we'll see the first clear turn on the hourly charts around 2-3pm. 

This is morning is somewhat entertaining, but I'm looking much lower than this.

11.34am... EXITED SPY sp'1857...

will re-short in a few hours..on any 5-10pt 'stupid bounce'

11.36am... will hold VIX-long..regardless.

There is 'moderate chance' of a stupid bounce.. as high as 1867/70...making more of a choppy top, with much stronger downside Fri/Monday.

I am pleased with how things are looking...

yours..waiting to pick up that SPY put block again, ;)

10am update - opening minor weakness

US equities open a little lower. Hourly equity/VIX cycles are due to turn, and the rest of this week should offer at least some 'weakness into the weekend'. First downside target are the low sp'1850s, with VIX in the 14.50/15.00 zone. Metals are slipping from opening gains, Gold +$7



I have my eyes on the VIX, I'd like to see a daily close in the mid/upper 14s. Certainly, from a pure cyclical perspective, the bears should push this market lower today, if only moderately.

My only concern is the QE.. as ever.
*time for an early lunch...

10.28am.. hourly MACD is rolling over, but at current rate, won't likely see any sig' downside until the very end of today/early tomorrow. Certainly, if the recent wave was a bounce..then Monday would be prime for a major washout drop.

Notable the momo stocks. 

10.43am.. weak weak weak.... rolling over... VIX still struggling though. 

Pre-Market Brief

Good morning. Futures are moderately lower, sp -4pts , we're set to open around 1868. Metals are showing some strength, Gold +$13, whilst the USD is flat. Equity bears should be seeking a weekly close no higher than the 1860s, whilst bulls should be very content with anything in the 1870s.



*with sig' QE-pomo later this morning, bulls have some help to at least forestall the next down wave.

Weekly thresholds

On the rainbow chart..the thresholds are roughly...

Green, 1870s
Blue 1860-1840
Red <1838


Certainly, I do not want to see a closing weekly green candle. Indeed, I would only feel confident for next week, if we get back under the 10MA again..currently @ 1851.

Video update from Mr Carboni

Obviously, the sand line is 1897, any move above that, and I will start to take those Green omni's seriously. Until then, we remain in chop zone of 1890-1830s.

My question to Oscar though - whilst he is super bullish, 'what about recent unraveling of the R2K and Nasdaq'?

Long day ahead....good wishes for Thursday trading!

9.34am.. first upside target for the VIX are 14.50s..any daily close above there..would be a start.

The remainder of the week

It has already been a pretty dynamic week, with the sp'500 failing to hold the 50 day MA, hitting a low of 1837, and rallying to 1872. The bull maniacs have had a natural.. and expected up wave. However, the weekly cycles remain weak, and many agree, the door is still open to lower lows.



No doubt there will be a great deal of bullish hysteria across the many chart/finance sites this evening. Yet, with the floor spike yesterday morning, a bounce was clearly underway, and we have reached my target zone of sp'1865/75.

I should note, I would be surprised if we are trading in the 1880s tomorrow morning, but even if we are, I can't conceive that the market will be able to close at such a level. VIX is extremely low in the 13.80s, and the hourly/daily cycles are both relatively low.

Looking ahead

There is the usual jobs data, but other than that..nothing of significance.

*there is sig'QE-pomo of around $3bn.

On the short side... again

Yours truly is 'moderately short', from sp'1866, and a VIX in the 13.90s. Frankly, I'd consider a provisional exit in the 1850/45 zone tomorrow..if we do trade there. As it is, I find it difficult to accept the Tuesday low as a key low. The price action wasn't in the style of a key low, at least, that is how I perceive it.

Right now, I still have a small hope of the sp'1780/60 zone within a week or two. Not because it would be highly profitable for my latest trades, but because it would clarify the bigger picture for the next few months.

With the Fed out of the way, price action should be more dynamic, tomorrow won't likely be dull!

Goodnight from London

Daily Index Cycle update

US indexes closed significantly higher, sp +20pts @ 1872. The two leaders - Trans/R2K, settled higher by 1.6% and 1.4% respectively. Near term outlook is very bearish if the market can take out the recent low of sp'1837, with a multi-week downside target of the 1780/60 zone.



So, the market rallied for a second day, but really, this was expected, with the market having seen a 60pt fall from 1897 to the Tuesday morning low of 1837. Typically, it is often the case of 2 steps forward and 1 step back (whichever way the primary trend happens to be).

Barring a break into the 1880s, this is surely just a bounce, although an especially annoying one for those who have been holding short since early Tuesday.

Despite today's second day of gains, the MACD (blue bar histogram) cycle remains negative, with a more intense downside wave viable within 2-3 trading days.

Closing update from Riley

I certainly agree with just about everything he says, not least in terms of price action. Although I would argue we have seen some aspects that we didn't see in 2013. 
a little more later...