Wednesday 6 August 2014

The VIX divergence

Whilst equities broke a new cycle low of sp'1911, the VIX notably failed to break last Friday's high of the 17.50s, settling -2.9% @ 16.37. Near term outlook is for VIX to melt lower, at least to the 13/12s.




Last week I mentioned that one aspect I was particularly seeking - in terms of helping confirm an equity low, was a divergence between equities and the VIX.

I was looking for a marginally lower high on the VIX, whilst equities broke another new low.

This morning saw that event.. and with the reversal, I've some confidence in the near term outlook. Equity bulls just need to see sp'1930s and R2K 1140s, and the market will be on the way to at least test the old broken support in the low 1960s.

more later... on the indexes

Closing Brief

US equities opened moderately lower (intra low sp'1911), but settled u/c @ 1920. The two leaders - Trans/R2K, settled -0.6% and +0.3% respectively. First target are the low 1960s, which seems viable early next week.



So.. was sp'1911 a key multi-week floor, completing the wave from 1991 ?

I believe so. Certainly, there is some provisional support via the VIX, and arguably also the R2K.

*I'm long from sp'1912 this morning, and looking for my next exit in the 1960s, which does seem very viable in the first half of next week.

more later... on the VIX.

3pm update - upside into the close

US equities look set to rally into the close, with moderate net daily gains. Sp'1911 is very likely a key floor.. first upside target is the old support - now resistance, in the low 1960s. Metals are holding gains, Gold +$20.



A somewhat tiresome day..not least with the morning site issues...

Overall though.. I'm content with my sp'500 long from 1912... an exit in the low 1960s would be great early next week.

3.08pm... Bulls just need 1925 to break trend...

3.21pm... market is trundling...but 1926/30 zone still looks likely at the close, and that will break the down trend (at least the one I'm following).

3.47pm... market stuck...and will close under trend resistance. Oh well, it'll give everyone a lot to think about overnight.

back at the close.

2pm update - baby bull flag

US indexes are holding minor gains. Price structure is a baby bull flag, which offers a daily close in the mid sp'1930s. Metals are holding strong gains, Gold +$20, whilst Oil is -0.8%.



*need to hold the sp'1917s or so in the immediate term.

A pretty clear micro bull flag.... we should see further upside into the close.

Eyes on the R2K...and the VIX for extra confirmation.

2.19pm.. target zone will be 1940/45. A weekly close in the 1950s would be viable...and give everyone something to chat about across the weekend.

notable strength: DRYS +5%.  TSLA +4.5%

2.30pm.. its turn time.... seeking 90mins of upside into the close..

Anyone still short...its arguably the last decent chance to exit. 

As ever..stops solve the indecision!

1pm update - Run R2K Run

Whilst the broader market is holding minor gains, there is borderline significant strength in the R2K, which has broken into the 1130s. A move much above 1135/40, will clarify a near term floor... and that would most certainly be bullish for the wider market.

R2K, daily


Suffice to say... 2 spike floors..and we've broken into the 1130s.... that is probably it for this down cycle... some FIVE weeks in duration.

Upside on the R2K? Near term 1150/60s.

1170s remain a strong resistance zone...won't be easy to clear that.

..saw this film last night....

   Divergent.. from London

1.27pm.. Now the bulls just need 1925 to break down trend... 1130 would be decisive.

1.40pm.. baby bull flag on the 5/15min cycles...  headed higher into the close..and early tomorrow.

12pm update - battling upward

US equities are holding moderate gains, having seen a very clear opening reversal. A five  wave decline from 1991 is complete.. with a floor of 1911, as reflected in a minor VIX divergence. We're headed higher...




*I am long from sp'1912

So..we're higher, and a break into the 1930s will arguably be the last confirmation needed that a floor is indeed in.

Bulls should be able to manage the 1960s within 3-5 trading days...and I'll be content to ride that wave higher.

VIX update from Mr T.

time for lunch..or something

12.30pm... Notable the R2K +0.7%... 1130s.... need the 1140s to really clarify things... 2 spike floors..looking okay though.

11am update - how high might we go?

US equities are battling to build a floor from sp'1911..and have already bounced 0.5% into the mid 1920s. If a key floor is in, how high might we push? The sp'2040s would be at the upper end of the 'bullish hysteria' outlook... but the weekly/monthly cycles will support it in September.

sp'daily3 - fib levels


*continuing to have real issues with blogger. I do post on such times.

A 'best bull case' fib extrapolation.. offers the 2040s by mid/late September.

I realise that might sound like crazy talk.. but we're only talking about another 6% higher.

11.19am... Blogger seems back up and running..thank the gods.

Mr Market does appear to have a secure floor at sp'1911..and as I noted last week... we did indeed see a divergence between equities and VIX...with the VIX failing to break a new high..and we even saw a black-fail candle at the open.


Just need the 1930s...whether today.. or open up 1960s.

10am update - key floor in?

US equities open moderately lower, but there are already a number of signs the market is exhausted on the downside. The opening VIX the equity indexes offering a spike floor of sp'1911.




*I am long from sp'1912... seeking 1960s as an exit.

Blogger is giving me serious issues right now...could be any one of a thousand reasons why... if anyone else is also having the same..let me know...

Pre-Market Brief

Good morning. Futures are moderately lower, sp -6pts, we're set to open at 1914. There is viable downside to the 1910/00 zone, before the first real attempt to rally to the 1960s. USD is +0.4%.. and that is again going to be a pressure on all US asset classes.



So.. we're set to open around yesterdays low, and will probably be trading in the 1910/00 zone by 11am.

As things are...I think there is high probability that today will be a key cycle floor.

*as noted recently, it is important for the bulls to hold above the March high of 1897. Although, some indexes - Dow/R2K, are already below it.

Update from Mr Permabull

Not surprisingly, Oscar is leaning on the bullish side, in terms of the current price structure.

*I will look to pick up an index-long this morning.. probably Dow/SP.

Good wishes for Wednesday trading

9.47am.. LONG the sp'500.. from 1912.

Opening black-fail candle on the VIX... turns red.

We a very viable key floor of 1911.

Blogger is giving me 'issues'... updates might be somewhat...sporadic.

Equity bears facing a problem

Whilst US equities saw some rather interesting declines, there remains a very high probability that a key short term floor is being put in. Even the giant sp'2000 threshold is still viable this September.



With the Friday low of sp'1916 broken, the weekly candle on the 'rainbow' chart has turned back to red. It is highly notable that we've not seen two consecutive red candles since late January.

All things considered though - as especially based via the hourly/daily cycles, a key floor is likely in the 1910/00 zone.

Looking ahead

There really isn't much tomorrow.. just intl trade data and the EIA Oil report.

*next sig' QE-pomo is Thursday

Goodnight from London

Daily Index Cycle update

US indexes saw rather significant declines, sp -18pts @ 1920. The two leaders - Trans/R2K, settled -1.1% and -0.3% respectively. Near term outlook is offering a key floor - near the Dow 200dma (16333), before sig' upside into mid September.




So.. the Monday bounce gains are reversed, and we've broken the Friday morning lows.

However, the broader market is likely very close to a key turn.

Equity bears need to be very mindful in that a break of the 200 day MA on the Dow might be brief...and a mere 'tease' - just like early February.

Closing update from Riley

a little more later...