Wednesday 7 May 2014

VIX lacks any upside kick

Despite the sp'500 slipping to 1859 - breaking the Monday low of 1866, the VIX again failed to show any significant power this morning, and quickly turned lower, settling -2.9% @ 13.40. Near term outlook is for the VIX to melt into the weekend, to the 12/11s.




More than anything, the VIX is still indicating - at least to me, the underlying pressure in equities remains to the upside.

We have seen a few occasions lately where the Dow is -100/125pts, and yet the VIX is only higher by 3-5%.

Frankly, unless I start seeing the VIX +10, 15, or even 20% in a day, into the mid/upper teens, I simply can not take any of the bearish outlooks seriously.

more later...on the indexes

Closing Brief

US indexes saw some interesting swings, sp +10pts @ 1878 (intraday low 1859). The two leaders - Trans/R2K, settled +0.6% and +0.1% respectively. Near term outlook is moderately bullish, with new historic highs in the Dow/SP/Trans, viable within the next 2-4 trading days.



Well, that is day'1 of Yellen out of the way, just another one to get through tomorrow, and soon it will be the weekend again!

For me, the price action is simply not particularly bearish in style. The fact the VIX is lacking any sig' upside kick, just reaffirms my view that the underlying pressure remains... UP.

it would seem we are merely seeing the big institutions selling the R2K/Nasdaq, and buying the SP/Dow/Trans.

more later..on the VIX

3pm update - upside into the close

The market has seen some interesting swings, from opening gains to sp'1876...down to 1859..and now back to the 1870s. A daily close in the 1880s is very viable, primarily supported by the hourly index/VIX cycles. Metals remain weak, Gold -$17.



*hourly MACD cycle set to turn bullish in the closing not be surprised at a daily close in the 1880s, which would be pretty impressive considering the earlier 1850s.
-- is a bit of a mixed day. The R2K/Nasdaq remain weak, but are starkly contrasted by the Dow/SP/Trans.

Overall, I can't be short this market, and the VIX sure as hell does not support being bearish right now.

*I hold heavy long overnight.. awaiting earnings from RIG.

3.03pm.. Equity bulls should be pushing for sp'1877/ breaking the hourly cycle to positive..but it is not necessary today.

What is clear...bears facing real problems into tomorrow.

3.25pm.. minor chop...with bulls holding the sp'1870s, with a VIX that shouldn't inspire any of the doomer bears out there.

3.35pm..Bulls should be seeking 1877/78.....looks on track for the close, almost 20pts above the morning low.

3.44pm...Bulls pushing... 1876....almost there.....

3.46pm....and there we zone hit....arguably clarifies where we're headed tomorrow...

Those going long in the long 1860s this morning...congrats.

3.49pm...Certainly.. today offered opportunities for both sides. Bears had a bonus chance to exit..and bulls had a chance to go long in the low 1860s.

Everyone wins prizes..yes?

Back at the close!

2pm update - battling it out

Some minor chop in the sp'1870s, but the underlying pressure is still to the upside. Equity bulls have the hourly index/VIX cycles on their side into the close, if not most of Thursday. Metals remain very weak, Gold -$18


GLD, daily


*metals are certainly having a difficult day, and Monday's black-fail candle was again another good example of a warning.

Suffice to say, I am not taking the recent equity weakness seriously, not least since price action simply doesn't support the notion of any significant declines.

VIX lacks any upside kick...what more needs to be said?

2.20pm.. minor chop..but you can see the underlying upside..again.

Market just needs to get through another Yellen morning (will the Senate be softer on her?), and then new highs look due.

1pm update - cherry pick your indexes

Whilst the broader market is moderately higher, today is a classic instance where many are back to cherry picking their indexes as representative of the overall market. Equity bulls are looking to the Dow, whilst bears are looking to the R2K. Take your pick.

Dow, daily

R2K, daily


To be clear, considering the broader array of indexes and indicators that I follow, near term pressure looks to be UP.

I sure will not be attempting any shorts for some time yet.

The VIX is not showing any significant upside power, and thus I can't take any of the index weakness - including the R2K, seriously.

12pm update - choppy morning

US indexes broke the Monday low of sp'1866..but have put in a very clear spike-floor of 1859. A similar spiky-top is apparent on the VIX of 14.49. The underlying upside pressure is still in this market, and a daily close in the 1880s..whether today or tomorrow..looks probable.




*hourly MACD cycle is set to go positive into this afternoon, and a break into the 1880s looks very likely.

Watching Yellen..she sure is an interesting little character. I do believe she is sincere in what she says, although I certainly disagree with most of her policies.

A notable questioner this morning was Bernie Sanders, who highlighted a BBC posting on how the USA is now a political Oligarchy. 

VIX update from Mr T.

As for the 'crash protection' trade, I find it hard to imagine VIX in the upper 20s..never mind 30+.
time for tea

12.19pm.. Dow +113pts..and looking especially strong...bull flag on the daily..with support at the 50dma.

Dow 16700/800s viable within which point another tranche of bears will be waving white flags.

10am update - settle back for Yellen

Equities open moderately higher, but the gains are somewhat shaky, as the market awaits a few hours of Yellen. Equity bulls just need to break back into the sp'1880s, which will be enough to open the door to new index highs within the next 2-4 trading days.



Little to add...

I think it is really just a case of sit back..and lets see how the market is by lunch time.

Live coverage... @  C-span

back at 12pm.

11.39am... ..and the indexes are back to green..well, at least some of them. Surprised?

Pre-Market Brief

Good morning. Futures are a touch higher, sp +3pts, we're set to open at 1870. Precious metals are similarly higher, Gold +$2. Today, Yellen will talk to the US congress, and that will likely be a significant market moving event.



Well, we have an interesting morning ahead. It is of course very difficult to fathom how Mr Market will react, even if I knew exactly what she was going to say.

Hourly index charts have already seen a moderate down cycle, and there is ample opportunity for an equity rally across today...and tomorrow.

Hunter with Mr Gold

Yeah, this interview is almost an hour long, maybe watch on fast forward?

Mr Carboni....

So, Oscar is on the short he starting to fall in love with the downside?

Good wishes for Wednesday trading.

Two days of the Yellen

The CEO of Print Central - Yellen, is due to spend Wednesday and Thursday morning, speaking to the US congress and senate respectively. Mr Market is primed and ready, and is no doubt just looking for an excuse to break new historic highs on the Dow/SP/Trans.



*most notable today, we have flipped back to a blue candle..a provisional warning of trouble.

Yes, we saw some weakness across much of the trading day, but really, the price action is still a style that favour the bulls. This is especially reflected in the VIX, which only gained 4% or so.

USD breaks support

The USD has unquestionably broken support. The implications - at least so long as the USD remains <79.50, are for extra upward bias in all US asset classes. That sure doesn't mean equities - or any other given asset can't see net declines, but a falling dollar will certainly help take the edge off.

Looking ahead

We have productivity/costs, the EIA oil report, and consumer credit..yet far more important...

Yellen is due to give testimony to the US congress across much of Wednesday morning. It will likely get blanket coverage on the financial TV networks. It should be noted that Yellen is also due to address the US senate on Thursday.

*next sig' QE-pomo is not until Friday.

Goodnight from London

Daily Index Cycle update

US indexes closed somewhat weak, sp -16pts @ 1867. The two leaders - Trans/R2K, settled lower by -0.2% and -1.6% respectively. It remains a mixed picture, but Yellen might well be able to 'inspire' the market tomorrow for a renewed push higher.





The discrepancy between the two market leaders - Trans/R2K, is unusually large. By default, I'd have to side with the Trans 'old leader', but the R2K is close to taking out the recent lows.

Underlying MACD (blue bar histogram) cycle for all indexes is rolling over, and bodes badly for the equity bulls this Wednesday.

In many is now a case of whether Yellen can inspire the market to rally, otherwise...last Monday's spike floor of sp'1850 is going to fail..and that would really change the bigger trends.

Closing update from Riley


a little more later...