Thursday 10 July 2014

VIX fails to hold the opening gains

With equities opening sharply lower, the VIX jumped at the open to 13.23, but immediately started to slip as the sell side was exhausted. VIX settled higher by 8.1% @ 12.59. Near term outlook is for the VIX to melt back down to the 11/10s...with 9s likely at some point this summer.




Today was a classic instance where equity bears should have been almost solely focused on how the VIX was trading.

The VIX opened significantly higher..into the 13s.. but by was already sporting a black-fail candle on the hourly cycle. This was indeed a major warning to the bears, and there was ample opportunity to exit in the sp'1950s.

VIX looks set to melt lower into the weekend..and across much of next week.

I'd not be surprised to see VIX 9s before the end of this month.

more later... on the indexes

Closing Brief

US equities closed well above the early morning low of sp'1952, settling -8pts @ 1964. The two leaders - Trans/R2K, settled lower by -0.2% and -1.0% respectively. Near term outlook is for renewed upside, with the sp'1990/2000s viable next week.



*price structure is a baby bull flag - seen more clearly on the 15min cycle. Bodes well for the bulls early tomorrow.

The day started with a somewhat surprising sharp gap lower, but the daily close was certainly one that should concern those still on the short side.

There are a truck load of reversal candles on many individual stocks, and we have a clear black-fail candle on the VIX daily chart.

Possibility of further declines?

Sure, but... I'm guessing no. The broader weekly/monthly trends remain outright bullish, and I can't take any 'bearish chatter' seriously unless we were to break below sp'1900.

With no football today (oh how I will miss the world cup), I will do the usual full set of post trading day updates....

more later.. on the VIX

3pm update - upward pressure into the close

US equities are moderately lower, with the micro 5/15min cycles offering a further minor wave higher into the close. A net positive daily close won't be easy, but regardless, today was a major fail for the bears. Oil has turned higher, +0.7%




So... the closing hour.... lets see how many bears decide to close out...which will no doubt add to what buying there is.

All things considered, the opening black-fail VIX candle was a great example of how it can be a very useful indicator at the open each day.

There are clear reversal candles on many many individual stocks, and it does not bode well for the bears tomorrow..or any of next week.

3.09pm.. market levelling out around sp'1962.... headed higher into the close

3.18pm  ....another up wave IS still due....a daily close in the 1968/70 zone is target.

3.27pm... and up we go.

3.36pm.. clear baby bull flag on the micro 5/15 min cycle....

The only issue is whether we close the week in the 1970s... or 80s.

3.44pm.. up up up.....on track for 1968/70....

UAL +12.1%.... hmm

2pm update - underlying market strength

US indexes continue to recover from the early morning falls, with many (perhaps even the R2K) set for a net daily gain. VIX looks set to lose the 12s this afternoon, and a red close would make for a very strong confirmation that sp'2000s will be hit next week.


Dow, daily


The Dow daily chart is very bullish... if it can close green (not that its necessary).. it'd make for a VERY powerful spike floor candle.. and bode for Dow 17500/18k - as early as September - a mere 7 weeks away.

For those still holding short from the open... today is turning out to be a bit of a disaster.

...for those watching the VIX at the's recovery is not surprising.

Notable hyper strength: UAL +11.3%.

2.35pm. I'm just updating my other pages..with new template colours... hope some of you find it an improvement.

...meanwhile... minor chop, but the sp' is now comfortably holding the 1960s... a further minor up wave into the close... very viable.

Frankly, any daily close in the 1970s would be a major head slam to those daring to short the open. 

1pm update - net daily gains?

US equities are significantly above their opening lows, and there is even a chance some indexes will see a net daily gain. VIX continues to cool, and could close fractionally red. Metals are holding moderate gains, Gold +$9.



Little to add.... I'm tired.

Intraday update from Riley


Airlines remain strong, UAL +10.7%.

Meanwhile, WFM is naturally red. Utter... fail.

back later

12pm update - building a floor

US equities are well above the early morning low of sp'1952, which would make for yet another higher low (from May'26, sp'1944). VIX is significantly cooling down from 13.23 to the 12.40s. Metals are similarly cooling, Gold +$8.



So.. a rather busy morning, a down open sure does wake up the usually sleepy bears. we are, and it would seem this down wave is now complete. Having fallen from 1985 to 1952 - a mere 1.6% decline, spanning 4 trading days.

VIX update from Mr T

time to see what stocks the cheer leaders on clown finance TV are trying to pump.

stay tuned :)

UAL , daily

Wow....simply.... wow.. what a flyer!    Delta will likely catchup next week.. but even that is positive today.

11am update - market stabilising

After the sharp opening declines, the market appears to be in the process of stabilising before the broader upward trend resumes. The early signs are already there, not least in the VIX, which is well below the open of 13.23.. now.. 12.52.




We have a pretty clear morning reversal so far.

Underlying hourly MACD cycle on the indexes and the VIX are suggestive the bears have had their 'fun for the week'... and now its just a case of how long it takes for the market to build a secure floor.

Notable strength: UAL +6.8%

11.10am.. a net positive daily close (which is viable) would no doubt really get many of the bears all pissy.

As noted at the open though...the VIX black-fail candles are not to be dismissed lightly.

11.17am.. classic reversal candle... R2K, daily

Doesn't get much clearer. No turn yet on the MACD cycle, but the current daily candle could even turn positive by the close.

11.42am.. market just battling it out, key signal remains the VIX, which is well below its opening level.

10am update - VIX warning for the equity bears

Equities open sharply lower, but the opening VIX hourly candle - a black-fail (as I like to call them), is warning that VIX is already maxed which case.. equities are also close to flooring. Metals are holding sig' gains, Gold +$12.




However you want to label the hourly chart.. an 'ABC' - with C, this mornings opening drop - along with yesterdays bear flag.... I don't think we go much lower.

Certainly, there are multiple aspects of support in the 1950/35 zone.

What is absolutely clear, ALL opening black-fail candles on the VIX are to be treated with a lot of respect.


10.01am... we close the opening 30mins indeed with a black-fail candle....and MACD cycle will be levelling out within 1-3 hours.

There can be no excuse for ANY whining tomorrow/early next week, when the market is on the rise.

The VIX is very probably giving a 'get outta there' signal.

Similarly.. for the dip is prime time.

Notable strength: Airlines, UAL +6.6%.... woah

10.10am... VIX continues to cool... and indexes are levelling out.

Airlines have turned on the nuclear engines... UAL +7.1%

10.25am...  VIX really getting the smack down now... back in the 12.50s.... and equities well off the low.

Equity bears likely had their chance to exit.

A few hours more to stabilise the market.. and then up.. into the weekend.. and across next week.

Pre-Market Brief

Good morning. Futures are set to open rather sharply lower, sp -17pts, we're due to open around 1955. Precious metals are significantly higher, Gold +$15, with Silver +2.0%. First support on the daily cycle is the sp'1950/45 zone.



So...err, we're set to open lower, by the biggest amount in a few months (I think), and frankly..... I can't figure out why.

Price structure on the hourly charts was a bear flag yesterday, but really, I am surprised.

Regardless, first support is pretty clear.... sp'1950/45 zone. Semi-critically, we have the weekly 10MA... in the mid 1930s.



Video update from Carboni...

One thing is for sure..this morning won't be dull.

Notable early strength: UAL, +4.8%... with a clear break of the multi-week down trend. UAL is $42, and looks set for $50

8.54am.. sp -19pts. we're set to open at 1953.

R2K is a rather huge -2.0% lower in pre-market....which will make for the low 1150s.

9.20am.. Looks like we'll be in the 1940s today.... for a break of trend.. bears need <1945.

VIX 13s seem a given.

9.28am.. biggest opening drop in 3 months..... have a good day everyone!

9.32am.. VIX opens in the low 13s...which is first resistance... next level 15

9.37am... BLACK candle on the VIX...... equity bears gotta be real careful here.

There is high potential for a reversal today.

*I realise some out there will be looking for much lower levels, but really, probably vital to keep this in perspective.

The black candle is a real issue here....... bears...beware!

9.42am .. High for the day - in VIX, is probably in... and equities will likely be flooring real soon.

For those on the short side..the early signs are there to make a run for the exit.

Daily Wrap

US equities broke the two day run of declines, and saw moderate gains, sp +9pts @ 1972. The broader trend remains to the upside on all indexes, with a VIX that continues to reflect a market that has no concern of anything.


R2K, daily



So..a day of minor chop, with the usual underlying upside.

It would seem highly probable that the market just wanted to wash out a few of the weaker bulls ahead of next weeks opex, which the market would typically rally into.

Price structure on the hourly cycle (see earlier earlier post) is a bear flag, but considering the bigger daily/weekly cycles, bulls will surely resume the up trend.

Closing update from Riley


Looking ahead

Thursday will see weekly jobless claims and wholesale trade data. Frankly, neither of those are particularly seen as important these days.. and Mr Market will have a fair chance of just trundling higher as the bears start to close out ahead of the weekend.

*next sig' QE is not until next Thursday.

Weakness into end July.. or more upside to smite the bears?

I read around of course, and again today, I was seeing more chatter of weakness into end July, to the low sp'1900s. I suppose in theory it is possible, but price action does not support any such outlook.

Sure, we have a blue candle on the weekly 'rainbow' chart right now, but hey, look back to Nov/Dec 2013. That didn't work out so well for the bears did it?

Right now, I'm resigned to seeing the sp'2100s, and based on the current rate of increase, that will take (at least) until next February to occur.

There is a VERY small possibility that the market will ramp to the 2100s by late August/early Sept... which would offer a crash scenario (as Dr Doom, aka, Marc Faber is seeking) in the notorious month of October. First things first though.... lets see if we can claw into the 2000s next week.

Goodnight from London