Thursday 22 May 2014

Volatility pops at the close

Whilst equities built gains across the day, the VIX naturally melted lower, falling into the 11s for the second consecutive day. With a micro pop into the close, VIX settled +1.0% @ 12.03. Near term outlook is for VIX to remain within the 14/11 zone, although 10s now seem viable.


VIX, weekly


So..another day of VIX 11s, and now the issue is 'just how crazy low can the VIX go?'

The 10s seem very possible, if sp'1910/20s into early June.

However, how about single digit VIX before the current multi-month wave (from Oct'2011) is complete?

more later...on the indexes

Closing Brief

It was the second consecutive daily gain for US equities, sp +4pts @ 1892. The two leaders - Trans/R2K, settled higher by 0.5% and 0.9% respectively. Near term outlook is broadly bullish into mid June, at least to the sp'1910/20s, which will likely equate to VIX in the 10s...even 9s.



There really isn't much to note.

Market opened with minor chop, and with no sell side volume, the market slipped into algo-bot melt - as also reflected in the VIX. No doubt, the fact we have a 3 day weekend ahead, is helping this situation.

Tomorrow, looks to be even quieter, and on balance, that will favour the bulls.

*I remain content to be on the sidelines, will consider a new long position next Tue/Wed, but most certainly, I have zero inclination to attempt any market shorts.

more later..on the VIX

3pm update - a second day for the bull maniacs

US equities look set to close higher for the second consecutive day, with a daily close somewhere in the sp'1890s. Further upside looks viable tomorrow, and with a new historic high on the Transports today, the equity bulls can start to look forward to June.



*again, it is notable that the Transports is trading in new historic territory.

There really isn't much to add. With a 3 day weekend ahead, market is relatively quiet, and as we're seeing, it is a case of low volume algo-bot melt.

Meanwhile, in more important news...

Bears sure need to be rescued from today's gains.

Notable weakness remains in the coal miners, BTU -2.7%

Recommended reading...latest from Armstrong

Aside from that..there really isn't anything else to note.   Back at the close.

3.42pm.. HPQ results...out early...

Market not happy....

Secretary/PR to be fired?

2pm update - Mr Market in melt mode

Despite no sig' QE fuel today, the market has slipped into melt mode, and the indexes look set to continue pushing higher into the close. A daily close in the sp'1900s is just about viable, but regardless..we aren't headed lower.



*meanwhile. Transports keeps on breaking new in the 7930s. The 8000s look very likely by end month.

VIX is pretty amazing to watch..just slowly melting lower...maybe a close in the 11.40/30s ?

Certainly, if sp'1910/20s..then VIX 10s now look due.

1pm update - pushing upward

Without getting lost in the minor noise, the bigger weekly cycles are still bullish for many indexes. Sp'1910/20 looks viable within a week or two, and perhaps that might equate to VIX in the 10s. For now, equity bears look set to get ground into dust into mid summer.



There is little to add.

We have the sixth green candle, and unquestionably..this is not currently a market that is viable to trade on the short side.

The weakness of Tuesday is now fully faded, and the primary trend has resumed. This is not least reflected with a new historic high on the Transports.

I am content to remain on the sidelines until after the long weekend. Personally, I can't consider any short side trades until mid June.

Notable weakness: coal miners, BTU -2%.

12pm update - Transports breaks another new high

With the broader market on the rise, it is not entirely surprising to see the 'old leader' break a new historic high of 7925. The 8000s are now seemingly a given within the near term. Metals are failing, with earlier gains melting away, the miners are naturally turning red.

Trans, daily


Little to add.

Market is in melt mode...along with the VIX in the 11s.

VIX update from Mr T

time for lunch

11am update - equity bears getting ground down

US equities have seen a fair bit of chop, but the underlying upside is still there. Daily/weekly MACD cycles bode for continued moderate upside into the 3 day weekend. VIX is in melt mode, -2% in the 11.60s. Metals are holding minor gains, Gold +$6



Well, at least I ain't short.

Market has slipped into algo-bot mode, and bears are merely getting ground down to dust. urghhh.

Holding to original outlook...upside into the next FOMC of June'18....sp'1920s..or a little higher.

10am update - morning gains

US indexes opening with minor chop..but have already battled into the sp'1890s...within 0.6% of breaking a new historic high. For the equity bears..this is a lousy start to the day. Metals are trying to hold gains, Gold +$6, with Silver +0.9%



*pretty fierce storm continues here in London far..power is good..but the lightning bolts are starting to rain that bullish?

Most notable on the daily chart..the MACD Cycle is due to go positive cycle today..or tomorrow....bodes badly for anyone short into the 3 day weekend.

Certainly, I've no interest in getting involved in this.

Nasdaq daily....

The second day higher..and we've conclusively broken the down wave.

10.10am..minor chop...and it is a bit of a mess.

I could kinda understand day-traders trying to play a 5/10pt down wave..but really. the daily/weekly cycles are still bullish.

Pre-Market Brief

Good morning. Futures are essentially flat, we're set to open around sp'1888. Precious metals are higher, Gold +$5, with Silver +0.9%. Equity bulls merely need to hold the 1880s into the Friday close, which will be enough to keep the weekly cycle on a bullish track into June.



As for today, there is a fair amount of econ-data for Mr Market to churn through. We should certainly see some price movement this morning.

Best guess..the 'general' upside continues....and we move into the 1890s..whether today or tomorrow.

With a 3 day weekend ahead, I have next to zero inclination to take on any new positions. I will reassess across the weekend.


Video update from Oscar

Good wishes for Thursday trading

8.32am.. Jobless claims up somewhat..327k...

sp +1pt....the one notable movement is in Gold, now +$10

9.38am.. opening minor chop...

3 pieces of econ-data due across the next 20 minutes...

Hourly MACD cycle looks prone to rolling lower...1880/75 viable today...not that I would get excited about that.

Strong storm about to hit here in London city....I am braced for impact!

9.49am...whilst I endure a fierce storm.....

sp'1891....urghhh....bears all getting washed away.

Awaiting the right setup

The weakness in the R2K/Nasdaq remains one of the clearest warnings of trouble we've seen since the intermediate low in Oct'2011..when the sp' was a lowly 1074. Whether the market can rally a little further would seem largely irrelevant..the weekly/monthly cycles remain primed to snap lower this summer.

sp'weekly9 - the next fib retrace

Dow, monthly


*I will adjust the fib' chart as necessary, if we have one further wave higher into the next FOMC of June'18. Certainly, even if we rally to 1920..or a little higher, it will make little difference to the primary downside target.

The Dow monthly chart should really concern the equity bulls. Yes, the trend is STILL to the upside, but we have the fifth consecutive blue candle, and a red candle looks due in either June..or July. Equity bears will merely need to break <16000 in June to break the primary rising trend.

Best case downside for the bears this summer is 14000/13500, which is a long way down indeed. I do not see the 12000s as viable at all this year..under almost any scenario.

Looking ahead

There is an array of econ-data tomorrow, jobless claims, PMI manu', home sales, and leading indicators.

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

Back on the sidelines

I have valiantly tried to play the long side..and it did not work out this time. Frankly, I would be more than content to sit this out until early/mid June..and just wait for the next decent bearish setup. Whether the market has already peaked at 1902..or yet to claw to 1920..30..or even the 40/60 zone, I don't much mind.

I will be ready when this nonsense breaks lower..and break lower it surely will.

Goodnight from a...resolutely bearish London

Daily Index Cycle update

US indexes all closed with somewhat significant gains, sp +15pts @ 1888. The two leaders - Trans/R2K, settled higher by 0.6% and 0.5% respectively. Near term outlook is moderately bullish, with 'best bull case' being sp'1920/50 zone by mid June.





*I bailed on R2K index longs this morning, around the 1100 level. Recent price action has been particularly weak, and there remains a real risk of a break <1080 in the near term.

So...we still have a split between the Dow/Trans/SP, and the R2K/Nasdaq, but even the tech' was breaking higher today..outside of the descending trend. The R2K still looks a weak mess, and it'd not surprise me if it just sporadically broke <1080..setting off all sorts of trouble for the broader market.

As it is, the broader market is indeed still very close to historic highs, and there is a viable 3-4 weeks of moderate upside into the next FOMC of June'18.

The equity bears might have to be patient for another month.

Closing update from Riley

a little more later...