Friday 25 July 2014

Volatility gains into the weekend

With equities seeing borderline significant declines, the VIX spiked, settling +7.2% @ 12.69. If equities can push back into the sp'1990s next week, then VIX will no doubt slip back into the 10s, perhaps the 9s - if sp'2010/20s in early August.





Across the week, the VIX gained a moderate 5.2%

Despite Thurs/Friday seeing net remains the case that VIX is generally weak, and most spikes are failing to even break back into the low teens.

I don't expect VIX above the key 20 threshold for some months, and have zero interest in going long the VIX.

more later... on the indexes

Closing Brief

US indexes all closed weak, sp -9pts @ 1978 (intra low 1974). The two leaders - Trans/R2K, settled -0.4% and -1.0% respectively. Near term outlook is for renewed upside (and new highs) next week.




*price structure on the 15min could be a bear flag, if so, we'll be in the 1960s early next week.. before the next up wave.

...and another week comes to a close.

Certainly, today was a bit of a mess, I'd expected maybe -0.5%, but the Dow/R2K were lower by around 1%, not exactly minor.

I still think the new historic highs in the sp/Trans are more important than today's weakness, and the broader up trends remain intact.

*I hold moderately long across the weekend

Have a good weekend everyone

*the weekend update will be on the US weekly indexes

3pm update - bears closing out into the weekend?

US equities have seen a somewhat surprisingly weak end to the week, but it remains highly notable that the sp'500 remains a mere 0.6% from the historic high of 1991. VIX remains relatively crushed..and could even close fractionally red, if sp'1984/86 zone.



... its felt a bit of a battle this week....

I'm tired.... I think the chocolates and tea are starting to wear off...


Hourly cycles look floored, but hey...I said that around 11am.

Regardless, I hold moderately long (the R2K) into next week.

3.18pm.. minor chop... and so far...equity bulls are just not appearing. Has everyone gone home?

Pretty tiresome end to the week.... 

3.43pm.. can the bulls at least hold 1976 ?


2pm update - afternoon battle

US equities remain weak, with borderline significant declines for the Dow/R2K, -0.9%. The smaller 15/60min cycles offer fair chance of a daily close in the mid sp'1980s. Metals continue to build gains, Gold +$10.

sp'15min cycle


*best daily close for the bull maniacs..looks to be sp'1984/85

Suffice to say... it now comes down to the issue of whether we put in the first micro higher low...or see further weakness..closing at the lows of the day.

Considering the VIX.. whose spikes are STILL embarrassingly low... I'd have to side with minor upside into the close.

Clearly, net daily gains...are off the menu. However, net weekly least for the sp' are still possible

2.24pm.. Seems I was about 2 hours early on the 'cement the floor' stage. Looks like we have it now.

AMZN -9.9%.... 2% off the lows...but still..not exactly the big reversal I was expecting.

Sp'1978.... that is FLAT on the week.... not exactly bearish....not least with a new high of 1991.

1pm update - battling for the 1980s

US equities remain moderately weak, with a possible spike floor (seen best on the Dow, hourly cycle).. at sp'1974. VIX remains relatively weak, with a max spike of just 6% to the 12.50s. Metals have bounced relative to the weak market, Gold +$6.



3 hrs left of the trading week...equity bulls should be content with any close in the 1980s..which seems very probable.

R2K remains especially weak (much like the Dow)

*I will hold moderately long - via the R2K (yeah...the weakest index), into next week.

Notable weakness: AMZN -10%, but still looks to set to recover.. a little

Update from Riley

stay tuned

1.35pm.. chop chop... another minor wave lower... first higher low?

12pm update - still no decisive turn

US equities remain weak, with borderline significant declines of around 0.9% for the R2K and Dow. Price action though remains nothing particularly bearish, with a VIX that has only managed to spike +6% to the 12.50s.



*not a bad spike floor candle.. but still not net positive on the hour.

Clearly, I've under estimated this mornings weakness, and with the Dow -160pts earlier, I'm somewhat surprised.

Regardless of this morning though, none of the bigger trends are damaged, and today is merely offering anyone to re-position.. whether to exit shorts...and/or go long.

smaller 15min cycle... is more clear...

Equity bulls need the 1980s to break the short term down trend.
time for tea

12.11pm.. Dow is offering the first real sign of a turn.  VIX cooling, +3%... still set to close red.

11am update - time to cement a floor

US equities remain moderately weak, but there is high opportunity for the market to rebound from here.. and turn positive in the late afternoon. VIX is not particularly supportive of the equity weakness.. and has already slipped into the 11s.




Quite a few things going on...

Suffice to say... a very real chance of green indexes at the close...and even more likely... red VIX.

Notable strength: UAL +6.6%

AMZN still struggling, -11% in the $318s

11.03am.. so much for a floor.. new lows... with VIX jumping back.. +4%.

Dow 16927.... hmm....

11.09am.. Just consider this...  we're just 0.6% below the all time historic high..which was yesterday... with a VIX that remains sub-teens.

11.23am... still market wash out to end the week.  VIX +6%.. but still only in the 12s.

11.30am.. possible spike floor candle on the 15min cycle,  but still.....nothing definitive yet.

Frustrating day...I'm still calling it a tease though.

11.38am... spike floors appearing on the hourly charts....finally..we might have a floor.

10am update - minor weakness

US indexes open moderately lower, and indeed.. it is surely just another little tease to the equity bears. Metals are battling to hold minor gains, Gold +$2. There is notable weakness in Oil, -0.9%, and that is probably helping the airline stocks.




*I'm keeping some attention on AMZN. Across the last few years, many times I have seen that crazy nonsense manage a net daily gain... even when it opens -10%. I'll never trade it, but it is one to watch, as a fine example of the lunacy in this market.

So..we're moderately lower...and indeed.. I see this as merely another 'tease to the bears'.

Price action is NOT bearish, and the VIX is not supportive of anything significant to the downside into the weekly close.

10.14am.. 5/15min cycles offering a provisional turn to the upside....bears in trouble now.

45mins in.. AMZN still -11%... hmm

UAL....flying high..+6%  DAL..following....+1.6%

10.37am..  VIX +1%.... completely NOT supporting the current equity weakness.

Pre-Market Brief

Good morning. Futures are a little lower, sp -3pts, we're set to open around 1984. Precious metals are seeing a minor bounce, Gold +$3. Across the week, most indexes look set for net weekly gains, with the SP/Trans, having broken new historic highs.



*awaiting Durable goods orders at 8.30am

actual:  +0.7%... marginally better than expected.

So.. we're set to open a little lower, but would any bears dare call the mid sp'1980s as an achievement to end the week?

Despite no sig' QE today (or for rest of July), price action remains the same. Minor down waves.. within a broader up trend.

Update from Mr C.


Notable post earnings weakness: AMZN -10% @ $323. However, very often is the case, that AMZN will see a powerful reversal. Hell, it'd not surprise me if it even managed to close marginally positive.

Strength: BIDU +7%... great earnings.

Good wishes for Friday.. its almost the weekend :)

9.33am... Dow was 'weird' at the open... -11pts.. whilst the DIA ETF was -70pts....

Anyway... minor down wave....

Chance for the bears to exit.... and for the bulls to buy.

Long day ahead........

9.40am.. low for the day is perhaps already in.

sp'500 test the daily 10MA... 1978

9.44am.. VIX is NOT supportive of this opening decline. Will likely close red.

AMZN -10%... battling from -12%.... green close?  One to watch.

9.50am.. sp -0.5%... not exactly anything to get excited about, right? We know how this usually ends...yes?

Notable strength: UAL +4%

9.56am.. VIX in danger of seeing a black-fail candle within next few minutes! Bears...beware!

Looking ahead to the sp'2130s

It was a day of minor chop for US equities - although with a notable new high of sp'1991. The multi-month up wave continues of course, and with price action as it is, there can be increasing confidence that the key Fib' target in the sp'2130s will be hit.

sp'monthly5 - fib levels


*I do like to keep in mind the Fibonacci levels, more so on the bigger time scales. The above chart is an old one, and the 2130s were always a 'crazy upside target' far back as 2011.

I read around a great deal of course.. last evening I noticed the following chart...

ES, weekly, by Carboni, O. July'23 2014

*Republished with permission.
see:  Oscars latest charts.

If you count the candles, the 'choppy top' would be around next February.

Further, I'd certainly agree that we should expect the VIX, and equity price action to get more choppy as a grand multi-month top is formed.

An important point is that this Carboni chart is NOT suggesting any particular downside target. The downside candles in spring 2015 should be seen as merely 'illustrative'.

Now.. consider this...

sp'weekly8d - the 'Eddy' count

It is pretty interesting in that - by my estimate, if you agree we're headed to the 2100s.. then at the current rate of monthly increase (along with minor pull backs).. it'll likely take until early 2015... February is currently the 'best guess'.

So.. we have a monthly fib' target in the 2130s. Oscar has been touting the mid 2100s since the spring, and the 'Eddy' count would also be looking for a grand top in the 2130s.

Right now, February 2015 feels a very long way out. In terms of equity upside, the 2130s are only another 6/7% higher...which frankly.. isn't very much, is it?

Looking ahead

Friday has Durable Goods Orders... and that is kinda important. So long as it comes in reasonable, market has fair opportunity to melt higher into the weekend.

*next sig' QE is not until early August.. .at which point monthly QE will be a mere $25bn, of which $15bn will be the more market 'motivating' QE-pomo.

Goodnight from London

Daily Index Cycle update

US indexes saw minor price chop across the day, sp +0.9pts @ 1987 - but with a notable new historic high of 1991. The two leaders - Trans/R2K, settled u/c and -0.2% respectively. Near term outlook is bullish into next week.





The broader trend remains very much to the upside.

Only the R2K is still lagging below the March high (1212), but the R2K could easily be trading in the 1200s within the next few weeks.

The Transports had a notable black-fail candle yesterday, and was today stuck at 8513. Equity bulls should be seeking to break that level next week.

..a little more later...