Tuesday 29 July 2014

Volatility settles in the low teens

With US equities seeing some moderate swings across the day, the VIX managed some moderate gains, settling +5.7% @ 13.28. Near term outlook is for VIX to melt back into the 10s.




So.. moderate gains in the VIX, and a notable daily close in the low teens - something we don't often see lately.

Unless Q2 GDP comes in negative tomorrow - seemingly unlikely (based on other econ data points), the VIX looks set to melt lower into the 10s within the next few days.

I would be VERY surprised if we break above the geo-pol' spike high in the 15s.

more later... on the indexes

Closing Brief

It was a day of minor swings for most indexes, sp -8pts @ 1969 (morning high, 1984). The two leaders - Trans/R2K, settled -1.4% and +0.2% respectively. Near term offers the low 1960s.. but the 1990/2000s look viable shortly after.




*awaiting earnings from TWTR and AXP

So.. a day of relatively minor chop, with some rats selling into the close... King O's appearance sure didn't help with his comments on Russia/Ukraine.

As for tomorrow...

From a pure technical perspective, the 5/15/60min cycles are not particularly setup well for the bears tomorrow.

We could open in the low 1960s...but I'd expect that to hold. There are many aspects of support in the 1965/55 zone...


TWTR bears getting obliterated...

Set for the $50 level

4.13pm.. TWTR +26%.... and ALL TWTR bears...utterly destroyed.

4.21pm.. A horror show for anyone short TWTR stock, now +29% in the $49s.

4.32pm.. TWTR +32% @ $50.... even a little earlier than I thought.

4.40pm... TWTR +36% @ $51s...

next upside zone is 58/60... might take until late Aug/Sept... regardless.. that is one hell of a gain today.

more later.. on the VIX

3pm update - minor chop into the close

US equities look set for further minor chop into the close.. ahead of what will be a very important Wednesday. Metals remain weak, Gold -$5, whilst Oil is moderately lower, -0.7%.



Earning at the close: TWTR, AXP

So much for the micro bullish pennant.. with that failing.. yet another snap lower.

A somewhat tiresome day...  I don't expect much in the closing hour.

Equity bears have a 'fair chance' at the low 1960s tomorrow morning, but new historic highs look likely shortly after.
R2K battling to hold gains of 0.5%

3.29pm.... From a bearish perspective, the cycles are BADLY setup for tomorrow.

5/15..even the 60min cycle are not particularly good for anyone holding short overnight.

There is sig' risk of a gap right into new highs at the Wed' open.

3.43pm.. King O' speaking live on Ukraine..... not exactly helping the market mood.... morning low taken out.. sp'1972.

Let me be clear though... the setup for the bears tomorrow is 'technically' a lousy one. 

Sure we could open Dow -75/100pts...but I'd not expect it to last...but then, that has been the case for many...many months.

2pm update - is it Wednesday yet?

Mr Market is holding moderate gains, with a likely daily close in the sp'1980s. There remains 'best bear case' downside to the low 1960s early Wednesday - if 'weak GDP', but regardless, overall price action does not favour the bears in the bigger picture.



I am probably annoying myself more than anyone else could, with such a small cycle chart..

Price structure is a micro bullish pennant... it certainly favours the bulls into the close.

It really is a case of...

Do we just gap straight into the 1995/2005 zone..tomorrow....

or.. (arguably more likely)...

a brief foray to the 1965/60 zone... and then battle higher to 1990s.. by late Friday?

Regardless... primary trend STILL remains... up.

2.28pm...minor flag... fail....with a snap....back to 1975...

pretty tiresome overall though...

1pm update - continued chop

US equities rebound from the little wave lower, and indeed.. it is just a day of minor waves.. ahead of an important Wednesday. Metals remain weak, Gold -$7, whilst Oil is now a significant -1.1% lower.



So... a wave lower... a wave higher.... but its all minor chop.

Little else to note right now.

*I would 'prefer' a close for the R2K in the 1150s.. but considering the broader chop, that looks to be just out of range.

back at 2pm

12pm update - minor down wave

US equities have seen a rather sharp turn at the typical turn time of 11am. Yet.. in the scheme of things, this all remains minor chop within the sp'1990/50 zone. VIX remains subdued, and is barely able to claw 2% higher..still in the 12s.




*reason for the break lower, is arguably the news that the EU is widening sanctions against its Gas master... Russia.

Suffice to say, its all minor chop..ahead of the infinitely more important Wednesday.

VIX update from Mr T

time for lunch

11am update - spike floor for the R2K

US equities are building moderate gains, with the sp'500 a mere 0.3% away from breaking a new historic high. Meanwhile, yesterday's daily candle in the R2K is offering a rather attractive spike floor.... the 1170s remain first upside target.

R2K, daily


Again, I have to note, we could easily see some minor weak chop this afternoon... as Mr Market merely churns ahead of tomorrow.

As for the R2K...

Yesterdays candle does look pretty good as a test of the 1131 low - from over a week ago. A daily close in the 1150s.. today or tomorrow.. with 1170s viable by late Friday.
*I remain moderately long, via the R2K.

Transports, -0.5%... lower for the fourth consecutive day... but more on that later...

11.10am... pretty sharp turn..... washing out the day-trading bulls....


First support around 1970.

Its all minor chop though..still within the 1990/50 zone.

11.25am... minor chop.. teasing the bears...ahead of tomorrow. At best, bears could test the low 1960s... worse.. a gap straight into new historic territory Wed' morning.

VIX set to close today red.

11.32am .. NEWS update...  EU places more sanctions against Russia.

...they seem to forget where the Nat Gas comes from... and that 'winter is coming'.

Idiot bureaucrats... but not surprising.

11.35am.. Looks like Mr Market wants to wash out as many of the bulls..ahead of tomorrow.

Barring a break <1960... none of this is to be taken seriously.

10am update - opening minor chop

US indexes opened moderately higher, slip a little, and look set for minor chop across the day. Metals are a touch weak, Gold -$2, whilst Oil is -0.9%. VIX will very likely remain below the Monday spike high of 13.64.




More than anything, I just can't expect much of today.

There is ZERO reason why the market will see price action of any consequence today. In many ways.. most should turn off their screens... and come back tomorrow morning!

10.01am.. Consumer confidence 90.9... the best since Oct'2007... when the market was peaking some 400pts lower.. in the 1570s.

...and that number should rattle the retail bears.

10.10am.. R2K making a play for the 1150s today... and yesterday's daily candle would make for a reasonable spike floor/re-test of the 1130s.

First upside remains 1170.

Any weekly close >1170.. and the sp'2100s.. etc.... would all remain on track.

10.33am.. Sp'500 a mere 7pts from breaking a new high... that is just 0.3%... reflect on that.

R2K looking good for the 1150s.

Regardless of any latter day 'weak chop'... the issue is tomorrow.

Based on everything I see... we'll see net weekly gains.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +4pts, we're set to open at 1982. Metals are flat, whilst Oil is weak, -0.7%. Mr Market looks set for a day of churn, ahead of what will likely be an important Wednesday.



I'm really not expecting much of today. Price action will likely be less dynamic than yesterday, as Mr Market merely waits for GDP Q2 data tomorrow morning, along with the FOMC announcement of QE-taper'6.

It is notable that we're only 0.6% from breaking a new high, and a daily close in the 1985/90 zone seems viable.

If market likes the GDP data tomorrow, in theory..we could gap right into the 2000s..which would surprise many.

Good wishes for Tuesday trading

9.42am.. opening reversal...

black-fail candle on the indexes...
hollow-red on the VIX.

As it is though, I see little reason why the market would see any sig' move today though.

Few buyers... fewer sellers. 

Asian equities poised for a breakout

Whilst many of the US indexes remain very close to breaking new historic highs, it is notable that Japan and China have remained relatively weak. However, both the Nikkei and the Shanghai Comp' are now close to breaking out.

Japan, monthly

China, monthly


Just a brief note on the Japan/China markets.

With 3 trading days left of the month, the Nikkei and Shanghai comp' are higher by 2.4% and 6.3% respectively.

I think both of these markets are important to be mindful of. If the Nikkei can break into the 16000s this summer, along with 2500s for the Shanghai Comp', that would surely bode somewhat bullish for the US market.

I realise some would argue against that (perhaps for capital flow reasons), but still... I will be keeping a close eye on both of these Asian markets across the rest of the summer.

*I'll be covering the rest of the world indexes this weekend.

Looking ahead

Tuesday will see Case-Schiller HPI and consumer confidence. Overall though, market will be more focused on Wednesday..which will see GDP Q2 and QE taper'6.

*next sig' QE is not until early August.

Choppy top... or just price consolidation?

Consider the following....


We have started the week with a fourth consecutive blue candle on the weekly 'rainbow' chart. Typically, I'd start getting real bearish about now, yet price action is not weak, and hell, we broke a new high (1991) in the sp'500 just last Thursday.

Best guess... sp'1995/2000 zone this Friday... along with VIX 10s, maybe even the 9s.

*I hold moderately long the R2K... naturally, I'm underwater on that position. The 'Permabear curse'... you could say.

Goodnight from London

Daily Index Cycle update

US indexes closed somewhat mixed, sp +0.6pts @ 1978. The two leaders - Trans/R2K, settled -1.1% and -0.4% respectively. Near term outlook is for minor churn, before a break to the sp'2000s.. which seems very viable this Friday.





Morning weakness, but with a somewhat typical latter day recovery.

Most notable today, the declines in the Trans/R2K, both of which had significant declines in late morning.. but even they recovered to some extent.

The closing candle on the R2K is offering a spike floor, but until the R2K is >1165, I won't be able to get confident that the 1120s.. or worse - the 1080s, are safely out of range.

Closing update from Riley

a little more later...