Thursday 8 May 2014

VIX still lacking any upside power

Despite the indexes seeing some weakness in the latter half of the day, the VIX only managed fractional gains, settling +0.2% @ 13.43. It is notable that the VIX broke into the 12s, with an intraday low of 12.92. Near term outlook is for the VIX to remain in the 14/11 zone.




Suffice to say, even when the market does turn red..the VIX simply is still not displaying any real concern/fear.

The R2K/Nasdaq have regularly seen daily net declines of 1%, but still...the VIX remains very subdued..and is struggling just to hold the low teens.

Right now, the notion of VIX in the 20s seems fanciful, at best, the mid teens are viable on a very brief spike.

more later..on the indexes

Closing Brief

Equities built gains across the morning, but slipped lower across the afternoon, sp -2pts @ 1875. The two leaders - Trans/R2K, settled u/c and -1.0% respectively - although it is notable that the Trans broke a new historic high of 7775. Near term outlook remains moderately bullish.



*for yours truly, it was an interesting day...bailed on RIG and SDRL at the open for sig' gains... but still holding a mixed trio of other stocks.

Despite the afternoon weakness, I still can't take seriously the near term bearish case.

Yes, we still have very distinct weakness in the R2K/Nasdaq, but the other indexes  - Dow/SP/Trans are still generally battling higher. The fact the the trans broke a new historic high today should certainly be seen for what it is.... bullish.

As ever, how we close with the week will be important, equity bulls should be content with anything in the 1880s, along with Dow 16500s.

more later...on the VIX

3pm update - messy afternoon

US equities are seeing some increasing weakness into the late afternoon, with the R2K remaining an especially weak spot, lower by around 1%. Despite the chop/weakness, the VIX is only marginally higher, +2% in the mid 13s.


R2K, daily


So...a bit of a choppy afternoon, but still...the broader upward trend is most certainly intact.

*I remain long via CHK, DO, and STX, and will be seeking to drop at least one of the first two by the Friday close.

Regardless, today has been okay............updates into the close....

3.06pm.. RIG approaching next support of $41.50.... an intraday swing of far....

3.08pm.. CNBC wheel on the ultimate contrarian... Gartman....who is turning bearish again, lol

Now the equity floor is in around 1871 ?  ;)

3.16pm... Market starting to level out...and what is most notable.. the VIX which continues to lack any sig' upside kick. Equity bears just aren't seeing anything significant in the main indexes.

Sure the R2K is -1%..from earlier +0.8%, but overall ...the broader market is holding together.

3.22pm.. RIG -4.1%..a full $3 below my opening exit.....a test of the 50 day MA in the $41.30s looks imminent..or at the Friday open.

I will strongly consider picking up a small RIG-long the Friday long as it can hold the 50 day !

3.28pm.. market again trying to stabilise..although notable weakness still in many stocks...RIG, TSLA

RIG sure is a tempting target right now..but I will refrain...and see how it opens tomorrow.

2pm update - increasing chop

A minor down wave in the broader market, but especially so in the weaker R2K/Nasdaq, with the R2K sporting a major reversal of earlier gains. VIX remains fractionally red.

R2K, daily


Suffice to say, the weakness in the R2K is interesting, but the broader market is still holding together.

Notable weakness: TSLA

Considering earnings...those on the long side have a right to be bemused at the markets response. Looks like we are seeing a test of the 200 day MA.

2.12pm.. sp'1878..and we should be finding some support here.

The R2K/Nasdaq daily charts sure look pretty ugly, but with the VIX +0.5%...I can't take any bearish case in the near term seriously. trying to floor at 1876....with a VIX that is barely green.

2.30pm.. Looks like we a pretty strong floor...1876...even the R2K is trying to turn upward.

Notable strength: Ford, +2.6%

2.46pm.. so much for the floor...continuing weakness, and the R2K is due to lose 1100 again..hmm

1pm update - something to stare at

US equities continue to build gains, with a new historic high for the Transports. Dow looks set to follow this afternoon...with the sp' tomorrow/next Monday. It remains a market where there aren't too many buyers, but where the equity bears look exhausted..even for the R2K/Nasdaq.

Trans, weekly

Dow, weekly


...all equity bears should spend the next hour staring at the above two charts..not least the Transports...they don't call it 'old leader' for nothing.

So..a new high for the tranny, with the Dow seemingly due to break a new high this afternoon. If that isn't enough to clarify the broader trend, I'm not sure what else is necessary.

1.14pm.. RIG still support.. 41.50 or so.. but that is another 1.5% lower....bizarre day for that one, despite good numbers.

1.25pm.. minor down should level out around evens... 1878/76 zone.

12pm update - new historic highs.. imminent

US equities are continuing to build gains, with the Transports due to break a new historic high (>7774). The Dow/SP look set to follow with new highs, although the R2k/Nasdaq are way...way behind. VIX is crushed...slipping into the 12s.



With the 'old leader'...leading...I have to hold to my original bullish outlook, at least for a few more weeks.

*I bailed on RIG/SDRL at the open...seeking to drop CHK and DO within a few days.

VIX update from Mr T.

time for more tea..on what is a somewhat good day :)

12.40pm.. NEW historic high on the Trans..7775..... Dow set to follow..probably this afternoon. 

11am update - morning gains

Whilst Yellen continues to send the US senators into a late morning sleep, US equities are comfortably higher, although it is getting a little choppy in the mid sp'1880s. Transports is very close to breaking a new historic high (>7774).


Trans, daily


*I remain long CHK, DO, and STX, seeking to drop at least one more position before the weekend!

So..we're in the sp'1880s...and even the R2K/Nasdaq are offering further upside tomorrow..I'll highlight those later.

What is clear...a lack of downside power...and the bulls are merely able to melt this higher. The fact there is sig' QE-pomo tomorrow..AND Monday should really spook the bears.

RIG, is now selling lower on good earnings...truly stupid.

I was stopped out at 44.70..if you can believe. A perfect exit.

I'd almost be tempted to buy it back..but I'm trying to lighten up before the weekend, so I'm leaving it alone!

11.21am.. a bit of chop..but we're melting higher... Dow just 45pts or so from breaking a new historic high. No doubt, clown finance TV is getting ready to start running the 'new high' ident.

Notable weakness in RIG, -1.2%, after opening sig' gains.  

11.32am... pushing higher....the 1890s look due today...

A weekly close in the low 1900s would make for a real bad end to the week for the bears...but then..they have ZERO downside reflected in the VIX.

10am update - here comes Yellen... again

Equities are building gains, with the sp' back in the 1880s. New historic highs remain very viable for the Dow/SP/Trans, within the next 2-3 trading days. Metals are flat, whilst Oil is moderately lower, -0.4%.



*I EXITED 2 longs... RIG and SDRL at the open...   still holding, CHK, DO, and STX.

Personally, I'd just rather clear the deck of all positions into the weekend, I'm kinda tired.

Well...sp'1880s...and its time for more Yellen...

live coverage from 10am... C-span

Ohh, go figure..the Senate starts at 9.30am.....

10.00am...price action is pretty bullish..the sp'1890s are viable today...along with VIX 12s.

I'd really like to drop DO and CHK later today....

Notable weakness, TSLA -9%..

10.16am.. my gods, the Yellen/Senate hearing sure is dull...  there is nothing for the bears to latch onto.

CHK and DO on the rise.....  with sp' 1886.... a mere 11pts from the high.

TSLA viable .... not that I'd ever want to get involved in that nonsense!

10.25am.. Transports within 0.2% of breaking a new historic high.... that is pretty important..with the Dow/SP closely following.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +1pt, we're set to open at 1879/80. Metals are mixed, Gold +$5, whilst Silver is flat. Equity bulls should push for a second daily gain on the Dow/SP/Trans, with new historic highs within reach.



So...this morning is set for a near repeat, with Yellen likely to spout the same comments to the US senate, as she did to the US congress. I'd have to guess the Senators will be more softer on her than the Congress, but hey, maybe I'm wrong on that?

Equity bulls could do with a weekly close in the 1890s, which should bring the 1900s within range for next week. In terms of the Dow...bulls should be looking for 16600s for the Friday close...

No shorts until June?

As I noted in last nights closing post, the problem the bears face, weekly MACD cycle is due to go positive cycle..but probably not for another 2-3 weeks (for sp'500). The current rally - from sp'1814, looks likely to be drawn out for at least another month.

I'm already a little itchy to pick up a super long dated VIX call block..Sept/Oct 20/25 strike, but there doesn't seem much point in that. If I wait another month, the calls will likely be 10/20% cheaper. There seems no reason to be in a hurry to re-short this market.

Long day ahead.... with Yellen due to start around 10am.

9.36am... EXITED SDRL.... very nice gain ...

seeking to drop RIG....and some others..

9.37am  EXITED RIG

9.41am... Well, I feel a bit lighter with those monster positions dropped...

Still holding... CHK, DO, and STX..although the latter is a really busted up a long.

Market still set to battle downside there?

Another morning of Yellen awaits

Mr Market saw a somewhat choppy day, and there remains a significant disparity between the Dow/SP/Trans, and the R2K/Nasdaq indexes. The sp'500 weekly chart is back to outright bullish, and new index highs look viable within the near term.



Yesterday closed with a blue candle...and with today's closing gain..we're back to a weekly green candle. Considering the price action..and the lack of upside kick/power in the VIX, I remain broadly bullish.

Underlying MACD (green bar histogram) is set to go positive cycle in late May, and this nonsense could indeed rally into June.

To be clear though, I am STILL seeking a multi-month rollover this summer. I am just trying to be patient, and not get nailed on the short side until this market really does rollover..and break down hard.

Looking ahead

Aside from the usual jobless claims data, Thursday will be largely about the Yellen, who is going to be giving testimony to the US senate across the morning.

*next sig' QE-pomo is not until Friday

Goodnight from London

Daily Index Cycle update

US equities closed somewhat mixed, sp +10pts @ 1878. The two leaders - Trans/R2K, settled +0.6% and +0.1% respectively. Near term outlook remains broadly bullish, with new historic highs likely for the Dow/SP/Trans, although clearly, the R2K/Nasdaq are lagging well behind.





Certainly, we continue to see a strong disparity between two sets of indexes. The Dow/SP/Trans are very close to breaking new highs, whilst the R2K/Nasdaq are very weak.

Taken collectively though, the broader market is still somewhat bullish, and considering the past few days of price action, new index highs look least for the leading trio.

a little more later...