Friday 6 June 2014

Volatility settles in the 10s

With equities ending the week at historic highs, the VIX was naturally lower, settling -8.1% @ 10.73. Near term outlook is for the VIX to remain in the 13/10 zone, but if sp'1960/70s in July, then VIX 9s will likely be hit. Across the week, the VIX declined -5.9%





So..VIX has slipped into the 10s for the first time since Feb'2007.

Even the mid teens are out of range in the near term.

Of course, at some point the VIX is going to spike...and I'd guess (at some point again this year), break into the 20s...but that could indeed be some months away.

For now, I have ZERO interest in picking up any VIX call positions.

more later..on the indexes

Closing Brief

US indexes closed the week with the third consecutive daily gain, sp +8pts @ 1949. The two leaders - Trans/R2K, settled +0.9% and +1.0% respectively. Near term outlook offers minor chance of a retrace, with the bigger weekly/monthly charts powerfully bullish.

The Longest Day, 6/6/44


... and another week at the worlds most twisted and pumped up casino comes to a close.

Effectively, the bulls continue the ramp from the April'11 low of sp' over 130pts lower. For those still seeking a major multi-month down wave - which still includes me, this remains a difficult... and exasperating wait.

..but least I'm not short. I will be there...when the turn eventually occurs.

Have a good weekend everyone.

*the weekend update will be on the US monthly indexes

3pm update - melting into the weekend

US equities look set for some micro upward melt into the weekend. The sp'500 is on track for a net weekly gain of around 1.25%, which is respectable on any basis, - not least, considering the gains already built across May. VIX looks set for a weekly close in the 10s.



8 consecutive weekly green candles, and unquestionably..the equity bulls remain in full control.

Perhaps we'll see a turn at the next FOMC (June'18), but even then, bears need a catalyst to kick the market below the primary monthly 10MA support (sp'1830s).

Right now, the only real hope for the bears is a flat/negative GDP Q2 data point, but that won't be until late July.

yours.... at least not short.

2pm update - R2K headed for the 1200s

US equities are very comfortably holding the gains, with the smaller 5/15min cycles offering upside into the close. The R2K is at the border of the R/S target zone, but considering the recent price action - notably in the Nasdaq, I expect the R2K to push back into the 1200s..and beyond.

R2K, daily

Summary things are.. I just can't see the R2K holding below the 1200 threshold..whether this month..or next, it doesn't really matter.

Certainly, the daily cycles are getting close to overbought - with an RSI in the mid 60s.

*the sun is shining strong over London city, on what is a rather good summers day, I'm glad to have no positions.....will reassess on Monday - esp' for WFM

Certainly, even zone'1 looks tough to hit on Monday

1pm update - VIX 10s

With equities holding the morning gains, the VIX has finally slipped into the 10s, a level unthinkable to many.. even just a few months ago. A weekly close with sp'1950s, and VIX 10s would be one hell of a way to start June.



Suffice to say...VIX 10s...that is a pretty bizarre thing to see.

..but then..since the economy and financial system is back health, and 'everything' is great, why not VIX 9s..or even 0 by late 2015?

*I continue to have my eyes on WFM, but I won't be taking any new positions ahead of the weekend.

12pm update - powerless bears

US equities continue to push higher, with sp' almost in the 1950s. VIX remains on the edge of breaking into the 10s, whilst the metals remain weak, Gold -$1. Notable significant strength in the R2K +1.0% @ 1165.



*I've little interest in the smaller cycles, will try to keep the weekly charts in mind for most of rest of today.

More than anything, yes..the volume remains low, but it does not matter. What does matter is that the equity bears are entirely reflected in the VIX, which has a high chance of getting knocked lower into close...for a weekly close in the 10s.

VIX update from Mr T.


Eyes on WFM


I'd consider a LONG, next Mon/Tuesday, pref' in zone'2, but I'd settle for 1', if main market remains strong.

back later...

11am update - who dares short this lunacy?

With new historic highs in the Trans, Dow, and Sp'500, the equity bulls can laugh themselves into the weekend. VIX is -4% in the 11.10s..and is highly vulnerable to the 10s. Metals are weak (naturally), Gold -$3.



From a pure cyclical perspective, we sure are looking toppy, but as I often say...

Bears have ZERO downside power.

The setup is there, but with no power, just how the hell are we going to drop 1-2%, even given a few days?

*I am content on the sidelines, but have my eyes on WFM (whole foods), as a possible short term LONG - the stock broke higher yesterday. I won't chase here...I'd rather wait for a minor pull back..which seems viable into Monday... more on that stock later..maybe.

Yours...frozen on the sidelines (but least I'm not short)

10am update - opening gains

US indexes open moderately higher, with another set of new historic highs. Underlying price momentum remains strongly positive, although we are clearly over stretched on the weekly cycle. Precious metals are on the slide, Gold -$5.



*VIX slips -3%, but is still not yet in the 10s..not that it is necessary.

On any basis, we're now getting toppy, trading above the upper bol' on the weekly.

Notable weakness, BTU -2.3%

*all things considered, I've no interest in getting involved. From a pure price perspective, this morning is a valid short, but the equity bears have no downside power, and at best...1920..maybe 1900.

10.18am..I'd call a top least on a micro-cycle basis.

Dow 16909.....could fall a bit from here.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pts, we're set to open around 1942. Precious metals are similarly higher, Gold +$2. Equity bulls look set to end the week in full control of the market.      



*monthly jobs: 217k net gains, headline rate, 6.3%

Arguably, it is a Goldilocks number.

8.35am.. sp +4pts... 1944/'re in the zone I was noting yesterday, as a valid day-trade short...hmmm seems likely to open with moderate gains..somewhere in the 1945/50 zone.

As things are, I still suspect a reversal, but I  have little interest in trading it. The setup is good - from a cyclical perspective, momentum is so bullish.

*notable early weakness,  BTU, -1.8%.

Mr Market awaiting the jobs data

With the ECB announcement out of the way, the market is now turning its attention to the monthly jobs data. Barring a number <150k, the market has a fair chance to push into the sp'1950s, but from there, it will be getting over-stretched. An intra-day reversal will be a real threat.



*please don't get overly fixated on the wave-count, but I thought I'd post up this count/scenario. It would bode for a key top in either mid June...or mid July.

The weekly charts are looking powerfully bullish, and we look set to close the week with yet another green candle. Underlying MACD (green bar histogram) is now positive cycle for a second week, and we look set to push broadly higher for another week or two.

Looking ahead

Tomorrow is the 70th anniversary of D-Day, and without question, that will be on the minds of many.

Aside from that aspect of remembrance, the market is expecting net monthly job gains of 213k, with a fractionally higher headline jobless rate of 6.4%.

Certainly, the market should be able to rally on any number >180/200k.

Goodnight from London

Daily Index Cycle update

US equity indexes closed higher, sp +12pts @ 1940 (new historic high - 1941). The two leaders - Trans/R2K, settled higher by 0.8% and 2.0% respectively. There is near term upside to the 1945/55 zone, but a minor retrace seems likely from there.





So..a touch of minor chop in the morning, but with gains building across much of the day.  Certainly, equity bears continue to be ground into dust.

The fact we had $2-3bn of QE fuel no doubt helped 'inspire' the rally to a large extent.

*I remain on the sidelines, and considering the broader weekly/monthly cycles, I can't get overly bearish until at least the next FOMC of June'18. Perhaps we'll see a wave lower from there, but that itself might only be a few percent, which in my view is hardly worth attempting to trade.

a little more later...