Wednesday, 30 July 2014

Volatility spikes.. and cools

With equities seeing some moderate swings across the day, the VIX managed a spike high of 14.07 (with sp'1962), but settling +0.4% @ 13.33. Near term outlook is for the VIX to melt back down to the 10s.




So, the VIX managed a gain for the second consecutive day. Yet, the daily candle was a bit spiky, and the close - see hourly cycle, should not inspire the equity bears.

I expect the 10s by the Friday close. The only issue is when we'll see single digit VIX. Certainly, that appears likely...whether August...or perhaps more likely... September.

more later...on the indexes

Closing Brief

US indexes saw some interesting swings across the day, settling a little higher, sp +0.1pts @ 1970. The two leaders - Trans/R2K, settled higher by 0.7% and 0.4% respectively. Near term outlook is for renewed upside... with the 1990/2000s viable by this Friday.



A somewhat typical FOMC day, but with the usual underlying latter day upside.

I don't expect to see sp'1962 broken below for some weeks. I would say 'months', but... I'll only be more confident once we're back in the 1990s.

Frankly, no one can complain about today. Bears had plenty of opportunity to exit, and anyone not already long, had good chance to get involved.

*thanks to those who said hello today...good to know someone is out there ;)

Have a good evening

4.09pm... WFM miss on earnings, stock -7% in the $35s.

I don't have a position in that mess anymore though.

more later.. on the VIX 

3pm update - post FOMC chop

US equities have comfortably coped with QE taper'6, and most indexes look set to close with moderate gains. Metals are weak, Gold -$5, whilst Oil is lower by a somewhat significant -0.9%. VIX looks set to close negative.. in the 12s.



*price action sure is choppy, but then..that is normal for an FOMC afternoon.

Equity bulls should be content with any daily close >1972.... anything >1975 would be a bonus...and setup the 1980s tomorrow.

New historic highs in most indexes (Nasdaq remains the usual exception) appear likely within the near term.

3.04pm.. I'd be first to talk about a spike top... but the previous hourly candle is an FOMC hour candle.. and those are not often reliable.

Hourly MACD cycles are floored...everything is set for the bulls across tomorrow and Friday.

3.17pm.. chop chop.... the mid 1970s....well within range before the close.....

1980/85 will be a viable target tomorrow...

Notable weakness: GRMN, -6%.. after good earnings (but it was +9% at the open)

3.23pm spike floor on this hourly candle... here come the 1970s. looks stable...

...further upside seems likely into the close... 1972/74 zone would be fine.

3.34pm.. Dow could be +200pts tomorrow.... although that is only 1.2% or so.

Cyclically...everything is setup for the bulls from here.

Bears had their opportunity to exit.... NO excuses.

3.43pm... sp' looks strong...  Dow could close green... R2K/Trans...both moderate gains.

*I will hold moderately long overnight. Little concern for rest of the week....and indeed Aug/Sept.

3.54pm... long day.... indexes (most)...set to close green.

GDP/FOMC out of the way... next up... Friday jobs...and should be 'fine'.. at least from the markets perspective.

2pm update - time for QE taper SIX

To the surprise of many (myself included) the Fed did indeed decide that QE3 was not to be infinate after all. QE taper'6 will bring monthly QE fuel down to $25bn a month.. beginning this Friday.



*as far as I'm aware, there will be no Yellen press conf.

Expect some serious chop for this hour, but with underlying upside.

Equity bulls should be aiming for a daily close >1972.. which in my view is VERY probable. Even the low 1980s are just about possible on a mini hyper ramp into the close.

What is clear...having watched this nonsense for many years...

This setup does NOT in any way favour the bears.

yours... long the market..via the R2K.... seeking the 1170s by the Friday close.

2.01pm.. QE taper as expected...

Market seeing minor chop.... awaiting the whipsaw higher.

2.09pm.. and away...we go.   Next level is 1980.... possibly by the close.

back in 20mins.. ..or so.

2.35pm.... back...  and things look on track.

Notable weakness: VIX, -1%.. set for a close in the 12s.

Hourly MACD cycle is offering sig' upside tomorrow, to the 1985/90 zone.. new highs are viable at the Friday open.

2.40pm.. a choppy expected..and as noted....underlying upside.

Its.... ALL on track (are you out there Eddy?).

Thur/Friday both offering sig' upside.

1pm update - a floor at 1962

US equities have a high likelihood of having floored at sp'1962... with VIX 14.07. Metals remain weak, Gold, -$6, ahead of QE taper'6 - due to be announced at 2pm.



We have a 'reasonable' floor in the low 1960s... which many did correctly suggest earlier this week. I'm kinda surprised we didn't just keep pushing higher this morning, but hey.. I'm now overly biased to the upside (gods help me).

FOMC at 2pm... that will be sure to give price action a real kick.... almost certainly to the upside.

Seeking a close >1972
Intraday update from Riley

back soon

1.18pm... more minor chop....

Worse case... a brief spike lower at 2pm....and then snap higher.

I probably should have waited to use the word 'floor' before the FOMC announcement was out of the way, lol

1.29pm.. Well.... 1960 remains viable....

I've seen this situation so many times over the last few years.. and it is potentially nasty one for those on the short side. I'd still guess we close green on ALL indexes.

*it is notable that Trans/R2K remain positive.

12pm update - still no turn

US equities are mixed, with the sp/Dow moderately lower, whilst the Trans/R2K are moderately higher. Price action is still broadly bullish, and it is arguably just a matter of when the sp'1990s are hit again.. rather than 'if'. Metals are weak, Gold -$7, ahead of QE taper'6.



Clearly, no turn yet...

From how I see it though... equity bears have been given a bonus opportunity to close out.. ahead of the FOMC announcement.. and more importantly.. the Friday jobs data.

There can be no excuses (from the bears) for any whining later this week.. and across August.

VIX update from Mr T.

time for lunch

12.13pm.. another attempt at a spike floor from 1962....which is certainly the last 'reasonable' level I'm comfortable with.

Bulls should be pressing for the 1970/75 zone for the close...anything above that.. a bonus.

12.30pm... a good lunch... and Mr Market is attempting to level out in the 1962/60 zone.

12.38pm.. here we go... 15min cycle.... 10MA.. broken...  VIX cooling...

11am update - morning reversal

US equities have seen yet another reversal - much in the style of yesterday. Yet.. it is the typical turn time of 11am, with price action that remains nothing particularly bearish. VIX is relatively subdued +3% in the 13.60s.




*opening reversal candle on the VIX... so.. for those who are bearish...I can kinda understand if you're getting excited right now

Well, its another day where the minor waves are at least keeping everyone awake.

Typically..we'll turn around 11am... so...lets see....

Notable strength: TWTR +21%, but only in the $46s.... a long way below the AH high in the $51s.

11.05am.. need 1970 to clarify a turn... until then.. threat of 1962/60....

Regardless.. none of it changes the bigger outlook.

11.10am... where is my spike floor?

*metals remain weak ahead of the next QE taper... Gold -$7.

11.17am.. provisional spike floor of 1963...still need 1970s... to clarify a turn.

11.23am.. almost clarified a turn.....

Bears had a bonus opportunity to exit after the GDP data.... there can be no excuses later this week.

11.40am.. still no clear turn...quite yet... sp'1967... need the 1970s.

10am update - opening gains

US equities open moderate higher, with borderline significant gains in the Trans/R2K. Metals are weak, Gold -$5, whilst Oil is rallying 0.6%. Equity bulls should remain in broad control for the rest of the week.


R2K, daily


So..will today be like yesterday, with a major snap lower around 11am?

If the Trans/R2K have indeed floored..then the rest of the market will be fine.

I'd like to see the R2K break 1160s by tomorrow...with 1170s for the weekly close.

Some rather wild opening price action in GRMN - having had good earnings, swings from +9% to -5% within a few the rats sell a double top @$62.

*fed at 2pm...but no surprises likely there... just another QE taper.

10.02am.. micro down wave...equity bears getting another chance to exit....and likewise...anyone not already long...opportunity to go long here.

There is NO significant downside power.

10.08am... Bears getting a chance to exit... it is surely just a minor down wave.

Price action is the SAME nonsense we've seen for many months.

Micro 5/15min MACD cycles..both very close to flooring.

What a bonus for the bears this morning...or those wanting to buy.

10.15am.. major spike floor...looks set to be made...bears...beware!

10.23am.. looks like 1969 was it.... turn is in.

Now its a case.. of breaking the opening high of 1978... and then 1984.

Bulls need to be patient today.

10.41am.. chop chop.... fast approaching the typical 11am turn time. 

10.45am.... nano snap....Monday low taken out...hmm

Regardless... 11am is usually turn time.....

Pre-Market Brief

Good morning. Futures are moderately higher, sp +4pts, we're set to open around 1974. Metals are a touch weak, Gold -$2, whilst Oil is managing a minor gain of 0.4%. The Fed look set to announce QE taper'6 later today.



*ADP jobs, 218k net gains.. a little below expectations, but still 'reasonable'.

Q2 GDP: 4.0%   vs. a revised -2.1% (-2.9% previous estimate)

Growth comes in with a big 4 handle... MUCH better than anyone could have hoped for.

Equities rising, sp +8pts.... 1978.

Frankly...that... in my view.. seals the fate of the bears.. and the market for some months to come.

Next up.... Fed QE 2pm.. and then jobs Friday, both of which I'd see as a positive for the market.

Notable hyper strength: TWTR +26% @ $48.

Good wishes for Wednesday trading

8.57am.. So, we're set for sp +7pts... 1977.. and the 1980s look a given today.

1990/2000s are viable this Friday...which will probably equate to VIX 10s.

R2K should be in the 1150s this morning... a daily close in the 1160s.. difficult..but if the momentum builds..its just about possible.

Notable strength: GRMN +9%... on earnings I guess.

9.22am.. more notable movers...

X (US steel) +16%
UAL +3.4%

Metals are weak, and are highly vulnerable this afternoon.

9.37am... weird open for its collapsing -3%..

Awaiting an important Wednesday

Wednesday will be a major day for the US capital markets, with ADP jobs, Q2 GDP, and an FOMC announcement. Underlying price action continues to strongly favour the equity bulls, and the giant sp'2000 threshold still looks due to be hit.



In April, Q1 GDP was originally estimated at 0.1%. Two revisions later... -2.9%.

So, even if tomorrows number comes in at 2.5-3.5%... given another two months, it could eventually be revised to fractionally negative - which would make for an official recession.

Considering other data points in the past few months - notably Chicago PMI, I'd guess first reading will be around 2.7%

..and yes, that number remains artificially propped up by a significant amount of Fed QE. 

Looking ahead

Suffice to say...major day ahead... starting with ADP jobs (8.15am)

GDP is 8.30am - market is expecting 3.1%
FOMC announcement 2pm... there will not be a Yellen press conf.

*next sig' QE is not until at least Friday.

Best guess?

Even if we open lower tomorrow on weaker than expected GDP, I'd expect the weekly 10MA to hold... with 1990/2000s within the subsequent 2-4 trading days.

*I remain moderately long - via the R2K, and seeking an exit in the 1170s.

Goodnight from London

Daily Index Cycle update

US indexes saw a day of moderate chop, sp -8pts @ 1969. The two leaders - Trans/R2K, settled -1.4% and +0.2% respectively. There is opportunity of the low 1960s, before 1990/2000s.. within the next few days.





Suffice to say, a day of moderate chop for most indexes, ahead of Q2 GDP, and the announcement of QE taper'6.

The black-fail candle on the Transports remains the only particularly bearish aspect out there. Since that candle, we've seen 4 daily net declines... next support is around the 50dma... 8181.. that is only another 0.4% lower.

Even the weak R2K managed a minor daily gain, and looks set to make a play for the 1170s by end week.

Closing update from Riley


a little more later...