Tuesday 22 July 2014

Volatility continues to slide

With US indexes climbing across much of the day, the VIX was naturally lower, settling -4.4% @ 12.24. Near term outlook is bearish, with the VIX likely to melt into the 10s by the Friday close. Single digit VIX looks due... the only issue is when.



Little to add.

VIX reflects a market that is only moderately spooked, for very brief periods.

VIX looks set to remain generally constrained in the sub-teens for a few more months.

more later.. on the indexes

Closing Brief

US indexes all closed higher, sp +9pts @ 1983, with notable new highs on the Trans/SP'500. The two leaders - Trans/R2K, settled higher by 1.1% and 0.8% respectively. Near term outlook is bullish, the QE-pomo for Wed/Thursday will no doubt help.



*aapl earnings due at 4.30pm...

So...a day of gains, and with new highs on the Trans/SP, price action remains particularly bullish.

*I hold moderately long overnight, I'm long the R2K from 1154... seeking the 1170s by the Friday close.

more later.. on the VIX.

3pm update - baby bull flag... probably

US equities see a micro snap lower, but most indexes are still moderately higher on the day. Price structure on the sp'500 is a very viable baby bull flag, although it is negated if a break much below 1980.



Hmm...what do you think?

*AAPL earnings at the close....


3.11pm... LONG the R2k from 1154.

Yeah..I executed a trade... is the bull case cursed now?

3.20pm.... so... I'm moderately long...seeking the R2K 1170s by end of the week...1180s would be a bonus.

2pm update - afternoon chop

US equities are holding almost all of the gains, although the indexes are clearly somewhat stuck around sp'1985. There is fair probability of a minor down wave, but barring some 'spooky' news report, even the 1960s now look out of range.



It doesn't look great for the bears. Price action remains broadly bullish, and with new historic highs in the Trans/SP, there is little real hope of even the 1960s.

Those recently touting the 1930/20s... should have been waving the white flag this morning.

back in a bit........

2.30pm.. the chop continues. Considering the broader market... we're probably churning out a bull flag/pennant.. might take another day to complete...

regardless..with the two leaders - Trans/R2K pushing higher as they are..... can't be short this.

Similarly, VIX showing no reversal... -7% in the 11s. 

1pm update - hourly spiky tops

US indexes are still holding the gains, but on a micro scale, there are some signs that we're stuck..at least for a little. Metals remain a little weak, Gold -$5. Oil is similarly weak, -0.2%.



Well, with two key new highs today, it sure isn't bear weather.

At best...equity bears should hope for a daily close back in the 1970s, but even that looks difficult, not least if the algo-bots want to front run the Wed/Thursday QE.

Notable weakness: NFLX, -5.5%, despite earnings that were more than reasonable.

*again, for those looking for downside, eyes to the VIX..but that is still a good 6.7% lower.

yours.. a mere watcher

1.29pm.. toppy chop...continues.

Worse case for the bears... price chop in the 1986/75 zone continues across Wed' morning...and then up again.

Certainly, the R2K/Trans would support that outlook.

12pm update - who wants to go long here?

US indexes are holding gains, with the Transports and Sp'500 both breaking new historic highs. Hourly cycles are a little toppy, with a VIX that looks floored in the 11.70s. Metals remain weak, Gold -$6.




So...we have two important new highs to recognise, and again it is a reminder of the broader trend.

There is viable chance of a rollover this afternoon, but really, the R2K and Trans would strongly argue against it.

To be clear... I can't stomach going long here...but I sure won't be short. Overly risky.

VIX update from Mr P.

time for some iced water

11am update - time for a turn

US equities are somewhat higher, with sig' gains of 1.1% in the R2K. Most notable, the Transports has broken a new historic high, whilst the sp'500 is within a point. Metals are starting to slide, Gold -$7. Oil is similarly starting to weaken, -0.3%


R2K, daily


The R2K looks especially floored on the daily MACD cycle. The 1130s look a pretty strong floor, which was the 61% retrace level.


Its 11am, a typical turn time. Problem for the bears...

1. New high in the trans...with sp'500 close behind
2. There is no real downside pressure
3. Primary trend remains to the upside

Equity bears should be in prayer mode about now...seeking a red daily close. It is possible, but I sure as hell won't be shorting it.

Even worse...there is sig' QE tomorrow..and Thursday.

11.07am... New historic high for the sp'500.

R2K +1.3%.... and that is a real problem for those on the short side, hoping for a reversal.

11.16am.. I can imagine some shorting this. I guess its viable, with a stop at 1986..but really, I ain't meddling at these levels.

Bears need an hourly close back <1982...not exactly asking a lot.

11.26am. VIX, hourly....

Possible floor...need a break above  12.50

11.35am  Hourly candle on the sp'500 is spiky... makes for a bad place to be going long.

Equity bears should remain on prayer mode... need a news story to spook the market this afternoon.

10am update - Transports breaks a new high

US indexes are moderately higher, with the sp'500 making a play for the mid 1980s. Most notable... the Transports, breaking a new historic high in the 8400s. VIX is being crushed, -7% in the 11.80s.

Trans, daily



*a new high is very important to recognise, and it negates any bearish hopes.

It would seem the R2K has also put in a key floor...at the 61% fib retrace level.

This is starting to get annoying... I really am not in the mood to chase this market higher.

10.08am.. short stops getting hit.. and sp'500 looks set to break a new high.

R2K +1.1%...breaking away...

10.30am... no downside pressure... market in melt mode..with the bears getting short-stopped out.

R2K +1.2%.... first big target is a daily close in the 1170s...that confirm that new highs are due in the 1220s...and eventually 1300s - with sp'2100s.

10.37am.. again, hourly candle is a bit spiky on the sp'500....but..I'd sure as hell not be shorting this.

Bears need a red close to offer some hope.... its easily possible, but....other indexes argue against it.

so........can't short.....but neither will I chase.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +5pts, we're set to open at 1978. Precious metals and Oil are both flat. Mr Market has a lot of earnings to churn on today, which are arguably coming in 'reasonable'.



So, we're set to open higher.

The market mood sure doesn't feel bearish this morning. Bears arguably have less of a chance to knock the market lower today, than they had  yesterday.

What am I planning?

Well, I don't much favour going long here, but hey, the R2K daily cycle looks stabilised now... and if the R2K is going to climb back into the 1200s, then sp' will be 2025/50 zone within a month or two.

I suppose at least I'm not short. In theory, I'd be somewhat content just to wait for the 2100s.

No videos to highlight yet today... not even from the Permabull, Mr Carboni.

9.36am. New historic high... Transports

9.44am... Opening index candles... a little spiky.. morning reversal?

Notable weakness, NFLX, -5% on 'reasonable' earnings, hmm

Strength: CMG +11%.. on superb margins.

Equity bears have nothing to tout

Despite a little weakness to begin the week, the equity bears have nothing of any significance to tout. Indexes remain very close to historic highs, and the VIX reflects a market that is able to shrug off any geo-political concerns.



We have started the week with a third consecutive blue candle on the weekly 'rainbow' chart. Certainly, if we close this week with another blue candle, it'd offer a small hope of more sig' downside, but price action sure doesn't support it.

Looking ahead

Tuesday will see CPI, some housing data, and the Richmond Fed. That should be more than enough to give the market a nudge (probably to the downside).

*next sig' QE is Wednesday

Goodnight from London

Daily Index Cycle update

US indexes closed moderately lower, sp -4pts @ 1973. The two leaders - Trans/R2K, settled lower by -0.3% and -0.4% respectively. Near term outlook offers the 1960/50 zone, before new historic highs, to the sp'1990/2000s.





It remains a bit choppy. One day up.... one day down.

In the grand picture... all the bears are managing is sideways chop, whilst the daily/weekly cycles partly reset.

The broader upward trend...remains fully intact.

a little more later...