Tuesday 15 April 2014

Volatility fails to hold the gains

It was a day of swings for the VIX as well as equities. With a late morning sell down to sp'1816, the VIX spiked to an intraday peak of 17.50, but with a latter day equity recovery, the VIX naturally slipped back, settling -3.1% @ 15.61. Near term outlook offers minor chop to the low VIX 15s by late Thursday.




The bigger daily charts are presenting the third consecutive spiky candle. This is most certainly not inspiring for the equity bears, but then, we're still holding the mid teens - a level that is significantly above the trading zone of the past few months.

VIX will probably see minor chop for the remainder of this shortened week (Friday is closed), and a weekly close in the 15/16s looks likely.

So long as the sp' remains under the 50 day MA, I'd expect a further VIX surge next week. Considering we've reached the upper VIX 17s with sp'1814, if sp'1770/60s, then VIX should be trading in the low 20s..at least 'briefly'.

more later...on the indexes

Closing Brief

US indexes saw some pretty dynamic intraday swings, an opening rally to sp'1843, a late morning sell down to 1816, before a rather typical latter day recovery, sp' settling +12pts @ 1842. The two leaders - Trans/R2K, settled +0.8% and 0.4% respectively.



*minor closing hour chop, after what was a day of swings, which will no doubt have confused the mainstream sheep.

So...we closed just a touch below the morning of 1844, and for many...today will have been real annoying.

*I failed to re-short in the morning - computer problems, and am somewhat resigned to sitting it out until early next week, but thats okay.

more later..on the VIX

3pm update - swings across the day

US equities are comfortably above the short term floor of sp'1814, and with Yellen due to speak tomorrow, there is the likelihood of another foray into the 1840s. However, downside pressure is very strong, and a break above the 50day MA looks very unlikely.



Well, an interesting day of swings all over the place.

Best guess remains, we hold under the 50 day MA (certainly for any daily close), and see renewed downside next week, after the 3 day Easter weekend.

3.11pm..as expected..we're seeing some minor chop....a daily close in the 1830s..with VIX a touch lower.

Metals and miners set to close significantly lower, more on those after the close..on my other pages!

Meanwhile..in Disneyland....


The lunacy ....continues! No doubt, a lot of the longer term TWTR shorts..are covering, with a clear break back above the daily 10MA.

3.32pm.. Mr Market spooking the weaker bears out of their positions.

Barring a daily close >50 day MA....this REMAINS a bear flag.

3.50pm... well. sp'1842...and we're set to close just a little below the big 50 day MA.  VIX -2%...set to melt into late Thursday...probably.

2pm update - bear flag.. daily cycle

Most in the mainstream could almost be forgiven for being confused at the recent price action. Daily charts are offering a very viable bear flag, that could easily last into next Monday. So long as no daily closes >1850..equity bears still look set for the 1770/60s next week.



Minor chop in the 1820s, and with Yellen tomorrow, there remains another opportunity for the 1840s.


Best guess right now, rest of this week...minor chop in the 1825/45 zone..just below the 50day MA.

Considering the 3 day weekend, I'm starting to think I'll sit the rest of the week out, and launch a major short next Monday.

2.07pm.. and we're back in the 1830s...  minor swings...this is really a mess.....

So...bulls need >1846..and that sure does not look possible..whilst bears <1815....whether this week..or next.

Momo stocks mostly trashed today, although TWTR remains particularly strong, but then...-40% from the late Dec' high.

2.27pm... VIX look set to close red, with sp' somewhere in the mid 1830s.

For the day traders out there (not that I'm usually one of those), today sure offered some good price cycles.

Easter bunny is coming....we'll likely close the week..within what I believe is a large bear flag. Next week looks set to offer another chance at Dow 15800/700s, with sp'1770/60s.

*notable strength/reversal... TWTR+ 4.9%..I guess the momo chasers are back.

2.43pm.. and the VIX turns red.   No surprise there.

The ONLY surprise would be a Wed/Thursday close >sp'1850.

Look at TWTR, crazy +6.6%..

1pm update - weak weak weak

US equities are weak, and the bull maniacs are starting to get spooked. A daily close in the sp'1805/1800 zone looks viable. The only thing the bears are missing right now is a VIX in the 18s. Metals remain weak, Gold -$23.



So...the second yellow box was hit..precisely..a full reversal..and we're headed lower.

Lower trend/channel is somewhere around 1805/00, but hey....weekly charts are offering 1770/60s in the immediate term.

As things are..I have ZERO interest in getting involved today, having stupid computer issues, oh well.

1.19pm.. minor chop...hourly charts remain weak, but threat of another move into the 1840s.

I am certainly NOT chasing this lower. I'd consider a re-short, but with the holidays due...I'd wait until next Monday.

Daily charts..bear flag.....that seems best outlook right now for next week.

12pm update - the ugly R2K

Whilst the main headline indexes see moderate swings, there is a clear break of core support in the R2K - losing the 200 day MA in the low 1100s. The bigger monthly chart looks... dire for May/June. Mainstream will no doubt start to shift to talk of 'R2K to test the 1000 threshold'.

R2K, monthly


Look at that MACD (blue bar histogram) cycle rolling over on the big monthly R2K chart. Most other indexes are also starting to roll. As ever, how we close the month, is what really matters.

Certainly...R2K 1000/900s...if the broader market gets trashed this summer.. to sp'1625/1575.


Ugly.......city. Hourly cycle offers downside into the close, and much of tomorrow.

VIX update from Mr P.

time for lunch....all I need is a cooker, urghhhh

12.26pm.. hourly MACD cycle set to go negative within an hour... a daily close around 1805/00..viable.

Interesting day....but more so...hopes of the bigger bearish picture for the early summer.

12.30pm... R2K in the upper 1000s.    10/15% downside to come.

11am update - market swings

US equities battle to sp'1843..only to swiftly drop to 1827, before yet another reversal to the upside. A test of the 50 day MA of 1846 still seems viable later today, but price action remains...weak. Metals remain sharply lower, Gold -$25, with Silver -2.2%.



*my computer is having some issues in the past few days, maybe its just getting too hot from too many applications being used.. urghhh

Tuesday...swings....are having fun yet today?

VIX is choppy...


I'd only feel comfortably long VIX in the 15.25/00 zone

What a messy morning..now VIX wants to break higher..and indexes are rolling over again.

11.01am.. ANY break <1825...and we'll likely go to 1800/1790 'fast'.

I remain on the sidelines, not least since my gods damn computer is liable to crash, and I do not want to be in a trade. (yes, I've only one active desktop).

11.03am... BREAK...and bulls are in real trouble now.

So..target zone HIT, full reversal...and bears now on the rampage to 1800/1790.

11.05am.. R2K breaks the 200 day MA..and its looking ugly city again.

11.16pm...considering my computer probs..and missing my 'yellow box' to short area...I am not in the best of moods.

I ain't chasing this nonsense lower today.

Well done to those shorting from the 1840s...it did seem kinda obvious..even to me.

Primary target zone remains 1770/60s, although the notion of that being hit before the Thursday close...seems...difficult.

Maybe if more Russian jets are shot down...bearish?

11.23am... the one problem in bear land.. VIX...despite the Ukrainian news (Russian jet shot down..I believe), VIX hasn't broken the 18s yet.

11.28am... KING, -5% to $16....roughly -30% since the IPO 15 days ago.  Bullish huh?

11.32am... another micro rally....but overall..this is really starting to look ugly. Monthly R2K chart....bodes for major downside in May/June.

10am update - morning gains

US indexes look set to build gains into the late morning. The real action is in the precious metals, with Gold -$32, and Silver -2.7%. Equity bulls will be making a play for a daily close above the 50 day MA - currently sp'1846 (and rising).



Opening gains, and underlying short term momentum could have us stuck in the 1815/45 zone for a few days.

See the following...


I'm starting to wonder if market won't hold up..within a bear flag - much like late January. A few days stuck under the 50 day MA..and I'd be VERY comfortable in shorting this..for another wave..to the 200 day MA - to be  hit next week.

I remain on the sidelines, but will consider picking up a short-index block today, if we get stuck in the low sp'1840s. It really depends on the style of price action.


Having computer issues..if I disappear today..thats why!

10.16am.. 15min cycle in the target zone..and we're already seeing a reaction lower.

10.20am.. well, thats a 9pt reversal already, in just 20mins...

No one wants to buy >1840.

10.37am...minor down wave complete...now another move into the 1840s this afternoon (I'd guess). By then, the hourly chart will likely be maxed out.

*computer issues are almost as annoying as the Fed.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +7pts, we're set to open at 1837. Precious metals are sharply lower, Gold -$33, with Silver -3.3%. Equity bulls have reasonable opportunity to attempt to test the 50 day MA @ sp'1844, but will very likely fail to break/hold it.



*interesting early weakness in the metals. As a fair few others are noting, if commodities remain weak, then it does not bode well for the equity market.

So, we're set for further gains. To me, the setup feels like last Tue/Wed. However, unlike then, the bears had yet to prove themselves capable of breaking below the 50 day MA. Today is day'4 trading under the 50 day, and with the weekly index cycles bearish, it is the bulls who have to break the current trend.

Best guess.....a further minor rally to 1840/45...where we will likely get stuck.

I will strongly consider picking up an index put block, possibly even a VIX call block later today, if the price action looks okay.

15min cycle is suggestive this could all be maxed out by 11am.

Good wishes for Tuesday trading!

9.03am GDX -3%, naturally, as a result of the metals.

Oil is -0.4%, in sympathy with the metals?

9.40am... on track for the low 1840s.....I've an idea for the daily cycle....see 10am post.

Metals are smashed, VIX is only a little lower - still holding up 'relatively' well.

9.46am... am in no hurry to short...this should at least battle higher into 11am..if not much of the afternoon.

VIX is starting to break lower. 13/12s look completely out of range though, in the near term.

Weekly trend remains bearish

Despite some daily gains for all the main indexes, the underlying price pressure remains somewhat bearish, as seen clearly on the bigger weekly cycles. Primary downside target remains sp'1770/60s, so long as the bulls don't break/hold above key resistance of 1840/45.



Despite today's index gains, the week has started with a second red candle on the weekly 'rainbow' (Elder Impulse) chart. That is not surprising, since underlying momentum remains broadly negative..and is in fact continuing to swing to the downside.

Underlying MACD (green bar histogram) is now deeply negative, and is arguably getting kinda close to what would be a natural low. The lower weekly bollinger of 1774 remains the primary target.

Looking ahead

We have the CPI, Empire Manu' survey, and housing data. That is a fair bit for the market to churn on across the morning.

*there is minor QE-pomo of around $2.5bn, and that is the only QE of any note this week.

On the sidelines..overnight

With some late afternoon weakness, I bailed on a day-trade short-index block, but also (somewhat fortuitously) decided to bail on my two core short blocks. Within just 20/30mins, the three blocks I had sold, all declined by 15/20%. As ever, options sure are volatile, and it never fails to surprise me.


I will consider picking up an index short, and VIX long block tomorrow, if we get stuck in the 1840/45 zone, but only if the style of price action remains weak.

Goodnight from London

A few videos updates...

Gordon T Long, covering a number of macro issues, but esp' China


Chart update from Walker


Daily Index Cycle update

US indexes all closed somewhat higher, with the sp +14pts @ 1830, having slipped from an earlier high of 1834 to 1815. The two leaders - Trans/R2K, settled higher by 0.3% and 0.5% respectively. Near term outlook remains broadly weak, with viable downside to 1770/60.





The closing hour was a real mess for most, swinging from 1823 to 1815..but closing at 1830. No doubt, it really annoyed many traders.

*I am on the sidelines overnight..and will see how the market trades early tomorrow. I will consider an index re-short in the 1840/45 zone..if we get that high. Similarly. long VIX in the 15s, would seem an 'interesting' level, if only for another day-trade.

a little more later..