Tuesday 5 August 2014

Volatility battles higher

With US equities on the slide, the VIX naturally battled higher into the late afternoon, settling +11.6% @ 16.87 (intra high 17.14). A break above the Friday high of 17.57 looks difficult. Mid term outlook is for the VIX to melt lower...at least the 13/12s.




Suffice to say... we have a reasonable 5 wave climb in the VIX.. almost complete.

Best guess... Wed' morning, equities see a key floor... with the VIX similarly maxing out.. somewhere in the 17s.

more later... on the indexes

Closing Brief

US indexes closed particularly weak, sp -18pts @ 1920. The two leaders - Trans/R2K, settled -1.1% and -0.3% respectively. Near term outlook is for a key floor Wednesday morning, before very sig' upside across 7-10 trading days.



Today's declines certainly woke up many who have been absent since the weekend.

The daily close in the R2K is kinda interesting... bodes for a bigger turn.. UP in the market.

*I'll look to pick up an index-long tomorrow morning.. 11am would be a typical time for a reasonable low.

Good upside from the 1910s to 1960s.. which would make for a good trade.

more later... on the VIX

3pm update - weakness into the close

US equities remain weak, sp' looks set for a daily close in the 1916/12 zone... with VIX in the low 17s. Metals have turned positive, Gold +$3, whilst Oil remains significantly lower, -1.1%.



So...the closing hour....

If my nano scale count is right..we'll see another new low broken into the close...

I'd consider going long-index, tomorrow.. 11am or so.

*special note... equity bears need to be especially careful if the Dow breaks the 200 dma. It did it before in early February... and we remember how that ended..yes?

...1000pts.. across the following 5 weeks.

3.10pm.. VIX still notably below the recent high...something I really would like to see hold.

Certainly...a fair few have finally woken up with this afternoons further declines.

3.25pm.. minor chop...still set to close with sig' declines.

Notable weakness: airlines, -3%...  Oil/Gas drillers RIG -3%

3.36pm.. would be surprised if we break >1925 today. Should still see a little lower.

3.42pm  minor chop.... a day for the bears... with VIX +10%

2pm update - bull rats getting twitchy

Mr Market continues to slide... with the sp' likely to close in the 1922/16 zone..with VIX 16s. A little extra downside is likely.... not least to test the Dow 200 dma in the 16300s. Metals remain a touch weak, Gold -$1. Oil is sig' lower.. -1.2%.


Dow, daily


...its nice to have a market that is 'behaving' as projected.

Well... we're getting kinda close now....

If we can break <1916 today...that'd open up the lower end of the target zone.. 1905/00.

Regardless.... on track.

2.11pm... 40pts to go on the Dow... but a 'BRIEF' break of the 200 dma is entirely fine.

Hourly MACD cycle should floor 11am tomorrow.... I'll go long then.

2.13pm.. Are we having fun yet?

I see a LOT of traders finally starting to awaken.. after what was a pretty quiet start to the week.

Dow -180.... 50pts to go

2.26pm... a VERY vain attempt at a nano count...

Maybe a Wed' minor gap higher...but weakness to 11am.. 1910/05...

2.35pm... typical turn time... but I'm guessing another wave lower (if minor) into the close... 1910 is viable...opens up 1905/00 by Wed' 11am... which is prime buying zone/time.

2.44pm.. no real buying pressure.... set for another little wave lower... will get us close to the Dow 200dma.

*note how the VIX has NOT broken the 17.50 high from last week? It makes for a good divergence for those looking to go long.

1pm update - minor fifth wave... on track

US indexes remain somewhat weak, the sp' looks set for the low 1920s this afternoon. Primary target zone is 1915/00.. with a VIX that should (notably) remain below the recent high of 17.50s. Metals and Oil remain weak.



So..... we're still weak..and seemingly headed to break the Friday sp'1916 low... how we react on such a break difficult to say..

could briefly spiral as low as 1905/00... but might just get stuck around 1915/10.

Regardless..still some way to fall from current levels.

1.07pm.. another 150pts to fall on the Dow.. to test the big 200 dma. Seems... .probable.

1.40pm.. slipping away..... right on track...still.  :)  Dow -135

100pts until the Dow 200dma.... due tomorrow.

12pm update - still headed lower

US indexes look set for more significant weakness this afternoon. The sp'500 looks set to slip into the low 1920s, which will likely equate to VIX in the low 16s. Metals are weak, Gold -$4, whilst Oil is lower by a rather significant -1.1%.



*the micro waves are notoriously tricky to fathom... but so far.. things remain on track for a minor fifth wave lower.. and then a multi-week up wave...into mid September.

Dare I say...the sp'2000s still look a valid target.

VIX update from Mr T.

time for lunch

12.20pm... CNBC... lunch time stock pump...


Look at how it jumped...

12.29pm... Morning low set to be broken....  VIX on its way to the low 16s.

11am update - morning chop

US equities see a minor up wave, but the Monday high of sp'1942 is comfortably holding. A further wave lower to 1915/00 zone is expected... which will probably NOT result in the recent VIX 17.50s high being broken. Metals/Oil both moderately lower.


R2K, daily


*notable strength in the R2K, but really, until it breaks out of the down channel...bulls have nothing to tout on that mess.

Nano scale bounce to 1935....

*its typical turn time..11am.... bears need to step up here..and push lower....

If break 1942...then 1960s.

otherwise.... we're still headed lower... enough to washout another wave of stops.

11.35am.. chop chop.... a rather clear bear flag on the 15min cycle...

1920 is viable this afternoon... which would make for Dow -125/150pts... That'll wake a few up.

11.43am... bear flag...


10am update - opening weakness

US indexes open moderately lower, and market looks set to break a marginally lower low in the sp'1910/00 zone.. tomorrow..or Thursday. VIX is pushing back upward.. but its possible it will fail to break the 17.50s in this new up wave.




So... an ABC wave'4 complete.

In theory.. a fifth should result in at least a marginally lower low <1916.... tomorrow..or early Thursday.

I realise some will be looking for far lower levels (mid/low 1800s), but I just can't see that happening.

10.05am.. a little weakness, and the bears are appearing again...

*as things are, I'll look to pick up an index-long around 1915/00. Timing as ever...is somewhat tricky.

10.20am.. nana bear flag setting up...

I'd be VERY surprised if we break yesterdays high of 1942... today..or even tomorrow.

For the pro traders out there..its a rather simple trading stop.

VIX.. as expected..despite sp-11pts earlier..not showing much concern..and the 17.50s should hold this week.

10.35am.. Any break >1942.. and sub'4 outlook is dropped.

So...bears better hold the line around here.. or we're going to the 1960s instead.

R2K +0.2%... with a red VIX.      Hmmmm

Hey, at least its not boring, right?

Pre-Market Brief

Good morning. Futures are moderately lower, sp -9pts, we're set to open around 1929. Near term downside target zone is 1910/00, which seems viable Wed/Thursday. USD continues to rally, +0.2%.. which will no doubt help the equity bears.




*we have an array of econ-data this morning to be mindful of.

So.. we're set to open somewhat lower, and with the hourly MACD (blue bar histogram) cycles as they are.. bears should be in control for much of today.

Certainly, a net daily decline, although I don't expect the 1910/00 zone today. That seems far more likely to take until tomorrow... perhaps early Thursday.

Good wishes for Tuesday trading!

update from a returning Permabull

 8,39am.. sp -11pts... 1927.... just 11pts away from the Friday low. I suppose this could all be wrapped up today.

Swings across the week

US equities started the week with a minor bounce, but remain highly vulnerable to breaking the Friday low of sp'1916. A further wave down to 1910/00 seems likely, before the bull maniacs get their first real chance of making an attempt to significantly rally.



*the above outlook is probably my 'best guess'. I would drop it if we break below the March high of 1897.

So, we've started the week with a blue candle (it was red in the morning)..and indeed, I'm somewhat still suspicious that the market will see another wave lower, before the bulls get a better chance of a more significant rally.

Best case for the bears?

For those who think a multi-month top might be in... the following would be a primary scenario...


Equity bears need a break under the March high of 1897. Only if that is taken out, can the much bolder target of the lower weekly bollinger - currently @ 1818, be a valid target. I remain concerned that a further wave higher high >1991 is possible into mid September.

Looking ahead

Tuesday will see factory orders, PMI & ISM service sector data

*next sig' QE-pomo is Thursday.

Just another day

Another day of summer 2014 has come.. and gone. A really scary thought (at least to me) is that it won't be long until NFL starts again - always one of the primary reminders that 'winter is coming'.

With last Thursdays index fall of -2%, I'm battling hard to 'not get lost in bearish hysteria'. The usual suspects are (not surprisingly) touting collapse waves in the relatively near term. I remain somewhat resistant to reading almost any news lately. After all, whats the point? Its just the usual 'death and destruction', with a sprinkling of irrelevant celebrity updates.

Tuesday will likely be just another day, I can only hope some of you out there, get something good from it.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately higher, 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 sp'1910/00 zone, before a more significant rally can begin.





A relatively quiet start to the week, but one which offered bulls and bears alike the opportunity to re-position.

The R2K closed with borderline sig' gains, but remains within a strong down channel. By end of this week, R2K just needs to be in the 1130s... but if the main market does see a further wave lower, then we're probably looking at R2K 1100. 

On any basis, the daily MACD (blue bar histogram) is close to flooring on ALL indexes, and it certainly does not make for the best of places to attempt a short side trade.

Closing update from Mr TopStep

a little more later...