Volatility melts lower

With equities battling slowly higher, the VIX naturally melted lower across the day, settling -11.2% @ 15.12. Near term outlook is for a renewed wave lower in equities, although that might not equate to a new high >17.57.


VIX'60min

VIX'daily3

Summary

Suffice to say, VIX is cooling down, but will very likely see another wave higher.

One thing I will be looking for later this week..a new low in equities (<1916).. but with the VIX failing to break above the 17.50s. Such a divergence would be highly indicative that a 5 wave decline in equities is complete.
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more later... on the indexes

Closing Brief

US equities closed with moderate gains, sp +13pts @ 1938. The two leaders - Trans/R2K, settled higher by 0.3% and 0.9% respectively. Near term outlook is for a further wave lower to the 1910/00 zone, before a more significant bounce.


sp'15min

sp'60min

Summary

In the scheme of things, a pretty quiet day.
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Mr Market appears highly vulnerable to a further wave lower - call it a fifth, E.. or whatever.. I'd be surprised if 1916 is a key floor.

Target is 1910/00... which I suppose might drag out into Thursday/Friday. First real upside bounce zone are the low 1960s, but that seems unlikely this week.

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more later... on the VIX

3pm update - minor chop into the close

US equities are building moderate gains, with the sp' likely to settle in the 1935/45 zone. VIX continues to melt lower, primary target remains 14.25/13.75 zone by late Tuesday. A further wave lower to sp'1910/00 zone is expected.


sp'15min

vix'60min

Summary

*VIX has a fair chance of hitting 14 gap zone..before we see a lower high in equities.

What I'm suspicious of, is that we might see sp'1910/00.. but the VIX might not put in a higher high. It would make for a rather classic divergence, before a much more sig' equity rally.

Something to watch for across the next few days.
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3.05pm.. ALL smaller cycles highly vulnerable to rolling over from here.. sp'1939... looks to be a valid 30/40pts of downside.

As Riley noted earlier... a typical pre-opex floor.. Thurs/Friday.
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3.40pm.. As things are... minor follow through to 1945/50 looks possible tomorrow morning, before renewed weakness.

I'd actually consider a short trade... but on a VERY short term basis, probably just a few days... with a broader aim to be long from 1910/00.


Eyes on the VIX..which is fast approaching the low 14s..... which should be the flooring zone.


3.46pm.. Hourly upper bollinger resistance.. .1946... will be hard to hold much above that....1950 would make for a natural 'brief' opening Tuesday high..before roll lower.

Certainly...we're almost 1.5% above the Friday low....kinda significant.


3.57pm... rolling over....slowly.

2pm update - clawing higher

US equities are battling to break into the 1940/45 zone by the close. A further wave lower..to 1910/00 seems likely... although that might not equate to a higher high in the VIX (a divergence to watch for). Metals are weak, Gold -$4.


sp'15min

Summary

All things considered... near term outlook is increasingly clear.

The sp'1940s...then a slightly lower low... 1910/00... then UP.

The bigger question is whether 1970s will be seen in the next multi-day up wave..

Notable weakness: Airlines.. UAL -3.4%

Oil/gas drillers were downgraded (according to clown finance TV)... RIG -3.0%
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2.42pm.. sp +10pts... getting close to the target zone...

1pm update - a little higher... then lower

US indexes are moderately mixed. The smaller 15/60min cycles are offering upside into the sp'1940/45 zone.. where the market will likely get stuck. A lower low in the 1910/00 zone is then expected across Tue/Wed.


sp'15min

Summary

Things seem a little clearer right now.

We probably have a standard ABC wave'4... then a marginally lower low... <1916.

I'll consider picking up an index-long in the 1910/00 zone tomorrow/Wednesday. There looks to be a reasonable opportunity for at least the 1950/60s.

VIX continues to cool, -6.5%
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Intraday update from Riley



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stay tuned!

12pm update - still seeking a lower low

The week has begun with some mixed chop. There looks to be high probability of a lower low.. somewhere to the sp'1910/00 zone for Tue/Wed.. before a more substantial bounce will begin.


sp'15min

Summary

A bit of a messy start to the week, and no doubt a fair few are confused.

Until we break <1900, the bull maniacs still have a chance at yet another wave higher - although my bigger target of the 2100s is now completely on hold until next year.

Despite the weak index chop.. the VIX is cooling, -3% in the mid 16s.
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VIX update from Mr T.


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time for lunch

11am update - weak chop

US indexes are turning fractionally lower.. and there remains threat of a further minor wave lower (but likely holding >sp'1900) across the rest of today/early Tuesday. Metals remain a touch weak, Gold -$2.


sp60'min

vix'60min

Summary

*notable weakness in the R2K, -0.4%, 1080 remains the critical threshold
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So... some weakness.. and we're just not seeing the upside kick to clarify a major turn.
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*Right now, I've no interest in getting involved. The 1910/00 zone would be a tempting place to go long though...with upside at least to the 1950s.
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11.03am... Dow 200 dma,.. 16327...... a mere 0.8% away... that does seem likely to be tested.

Often... dow 200dma can fail.. but then a reversal... I'd guess that will be the case this time... along with sp'1910/00.


11.25am... Still choppy... probably annoying many....

Notable weakness in the airlines, they opened higher.. but are now sig' lower, UAL -2.8%
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11.36am... something like this... maybe...

A long from 1910/00 tomorrow...to the 1950s seems 'reasonable'.... but first.. need that lower low...

10am update - minor chop to start the week

The week begins with some minor chop, but with a touch of underlying upward pressure. VIX looks especially broken... now on the slide, first target would be the 14 gap zone. The big issue is what happens in the 1950/60s.


sp'60min

vix'60min

Summary

So....what now?

If you count last Friday 1916 as a sub'3 low..there is viable fifth wave lower.. to 1910/00 zone.

To me..the critical level is 1897. If that fails...it should be enough to clarify the bigger picture, which is something I really clarity on. More on that issue later though.

Best guess? A few 'messy days', maybe a marginally lower low, but then UP

So long as we don't break 1897... bulls still have a chance of renewed upside into September.

*weekly 10MA... @ 1957 will further serve as major resistance on all bounces this week.
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10.20am.. messy minor chop.... no real upside kick...

Another minor wave lower... <1916... looks increasingly likely... how we trade around sp'1900 will be pretty interesting to see.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +4pts, we're set to open at 1929. Metals are starting the week.. a touch weak, Gold -$2. Equity bulls face a touch challenge to break back into the 1970s this week.


sp'60min

Summary

...well, here we go again.

I hold to last Friday's upside target of 1955/65. What happens then.. that is the big unknown.
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*I'm honestly not sure what I might do this week. The problem with any short is that the market just keeps on pushing higher.. through the 1970s..and into the low 2000s by early September - even though that seems impossible to many right now.

Hourly cycles look exhausted on the downside..at least for 2-3 days... certainly, right now is a lousy time to be on the short side. We could easily close +0.5% or so today, with stronger follow through Tue/Wed.

Have a good week
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9.20am... For the sp'500 at least, a break under the March high of 1897 would be very significant.

A real problem remains, unlike summer 2011, the indexes are not in sync. We've a strong transports, vs the weaker R2K/Dow.

I still fear a break into the 2000s into Sept. before <1897.


9.40am.. minor opening chop... its a tricky morning to call.

Threat of another small wave lower..but still.. the 1950/60s look an easy target, even if we break lower today/tomorrow.