Thursday, 18 September 2014

Volatility continues to slide

With equities continuing to break new historic highs, the VIX continued to slide, settling -4.9% @ 12.03. Near term outlook is for VIX to remain within the 13/10 zone. The big 20 threshold increasingly looks unlikely to be hit until next year.



Little to add.

Not surprisingly, with equities gaining for the third day, the VIX saw a third day of declines.

VIX remains very subdued, and the 20s look increasingly unlikely until next year.

more later... on the indexes

Closing Brief

US equities closed higher for the third consecutive day, sp +9pts @ 2011. Notably, the sp' and Dow both broke new historic highs. The two leaders - Trans/R2K, settled higher by 0.3% and 0.5% respectively. Near term outlook is bullish.

Cut to the left



..and another day comes to a close.

Equity bears remain especially weak, and it was notable that today was a daily close above the giant sp'2000 threshold

With new historic highs in the Dow and sp'500, there is simply nothing for the bears to hold onto. We look set for the 2030s within a week or two.. and as many are now starting to accept.. the 2050s look a reasonable target for October.

more later... on the VIX

3pm update - the sun sets on the Kingdom

The sun has set over the United Kingdom... probably for the last time. Things could be very different tomorrow morning... and the implications for the rest of Europe are pretty damn serious. Regardless of any index action into the close.. a very long night is ahead for some.

The sun is setting, not just on the empire.... but the Kingdom



We look set for the third consecutive day of gains... and it will make for a rather bullish week. The weekly cycles continue to suggest 2030s in the near term...certainly by end month.

...updates into the close

3.07pm.. looking at the micro 5/15min cycles.... first support is around 2004 early tomorrow.

Certainly, the big 2000 threshold looks pretty secure.

It should probably concern the bears that the best we saw in the previous down cycle was a mere VIX 14s. 

3.29pm.. market in melt mode... no sellers....shorts covering.... pretty standard conditions.

In theory, the 2020s are viable tomorrow, with a VIX weekly close in the low 11s

2pm update - indexes stuck

US equities are holding moderate gains, with the sp' stuck around 2009/11. Some will no doubt call it a double top with 'big downside to come'.. but with the past few days of price action, the broader trend remains... unquestionably bullish.



...back from a final walk...on what is very likely the last day of the Kingdom.... naturally, I look straight up...and I see the following...

A sign from the gods?

Seriously though... the rest of the evening is a pretty monumental one for anyone in the UK. There will be blanket TV coverage across the night... we should have a clear idea of the result by midnight EST.

As for the market...2 hrs to go... on any basis, we're due some degree of natural down cycle, but clearly, the pressure remains broadly to the upside.

*I remain content on the sidelines, and considering the weekend is tomorrow, will likely remain that way until next week.

2.15pm.... chop chop...... night is falling over the city..... and the Kingdom

Just imagine if Texas or California was splitting from the USA this night!  No doubt, many in Spain will be watching tonight... ready to be inspired..or horrified.

1pm update - another hour closer to the end of the Kingdom

Whilst equities continue to hold moderate gains, it is notable that the Kingdom (the one on the eastern side of the Atlantic) is due to splinter tonight. The loss of Scotland will be a major psychological and financial hit to those south of Hadrian's wall.



It would seem the younger generation will be highly prone to vote 'YES' to leave, and since most are voting for the first time today (I think 16 year olds can vote today)... that extra few percent look set to make all the difference.

Scotland leaving the United (or should that be Dis-United?) Kingdom is a major issue, but it is nothing compared to the likely implications for the area of Catalonia, in Spain.

A yes vote tonight... will light a spark across the EU.

...time to go out, and take a few pictures.. before the Kingdom comes to an end.

12pm update - still battling higher

US equities continue to climb, with new historic highs for the Dow and Sp'500. Metals are moderately higher, Gold +$4, whilst Silver is +0.2%. Oil is on the slide, -0.8%, whilst Nat Gas -2.3%.


BTU, daily


*notable major declines in the coal miners.

Pretty tedious... this remains no market for the bears.

Hourly cycle looks a little toppy..but really... where is the sell side going to come from this afternoon?

*Personally, I've zero interest in chasing the indexes higher at these levels... not least with the weekend approaching. Unless we pull back to 2000 or so... I ain't interested.

time for lunch

11am update - new historic highs

The third consecutive day of upside, with the Dow and sp'500 breaking new historic highs.. there is little reason not to expect most other indexes to follow. VIX is in melt mode -5% in the 11s. Metals have turned moderately higher, Gold +$4.



So... new highs..and zero sign of a turn.

Meanwhile, there is absolute carnage in the coal miners.... which is quite an achievement considering the declines since 2011.

ACI -5.7%.
BTU -5.1%
WLT -8.4%

Truly horrific multi-year declines, with ACI, ANR, and WLT all looking vulnerable to ending up on the pink sheets.. if not disappear entirely.

*As things are, this looks a lousy place to get involved on the long side - in terms of the main indexes, so I'll stay on the sidelines. At worse.. it just keeps climbing, but at least I'm not short.

10am update - opening gains

US equities open moderately higher, but so far.. no new historic highs. A minor down cycle into the typical morning floor/turn time of 11am looks... probable. Best case for the bears.. sp'2000/1998.. with VIX 13s.



So, opening gains, but I think there is a fair chance of most indexes actually turning fractionally negative by 11am.

*seeking to go long-index... a trade from 2000 to 2015/20 - by the Friday close would make for a good way to end the week.

Coal miners remain dire...

BTU...  headed for $12/10

Truly....dire... but then, the US Govt' has a 'war on coal'

10.00am   Fractional new historic high on the Dow, 17223.

....BTU still falling -5.1%

*phil Fed 22... down from 28.... somewhat disappointing...   market doesn't care though...

Pre-Market Brief

Good morning. Futures are a little higher, sp +6pts, we're set to open at 2007.Metals remain weak, Gold -$3. Equities look set for another day of gains, with the bigger weekly cycle offering the 2030s next week.



*weekly jobless claims: 280k... much better than expected

August housing starts -14.4%... pretty ugly number 

Hourly equity cycles are clearly over-stretched. It won't be easy for the bulls to keep pushing higher across all of today. I'd still not be surprised if we pull a touch negative later in the morning.

Notable early weakness, coal miners, BTU -2.7%

*I would like to go long-index, but finding an acceptable entry is going to be difficult.

9.11am.. sp +7pts... 2008... a mere 3pts shy of the historic high.

According to clown finance TV, the Alibaba IPO will price tonight, and so I guess the actual first trades won't be until tomorrow.

One taper to go

The Fed didn't surprise or upset the market, with all indexes closing higher for the second consecutive day. There is now just one more QE taper to come (FOMC Oct'29)... the equity bears will soon be free of the QE fuel.

sp'monthly'8 - QE periods



*with further gains, the weekly candle has turned green, and we're back to an outright bullish market. Upper bollinger is offering the 2030s.. which seems viable as early as next week. By mid October, we could be looking at 2050 or so.

So... QE will be a mere $15bn a month starting Oct'1st. It will be fascinating to see how the market reacts (psychologically) in the remainder of the year.

The sun is setting on QE3

Looking ahead

Many will be focused on the Alibaba IPO (ticker BABA). I'm unsure as to when it will be listed, but regardless, it'll be the worlds biggest single IPO. With investor demand and media attention at such high levels, I would not be surprised if it hit $100 on the opening day.

Weekly jobs, housing starts, and Phil' fed... will also be something to give prices a kick in early morning.

*there will be very minor QE-pomo of around $0.3bn.

Goodnight from London

Daily Index Cycle update

US indexes closed moderately higher, sp +2pts @ 2001. The two leaders - Trans/R2K, settled higher by 0.9% and 0.2% respectively. The Dow and Transports both broke new historic highs of 17221 and 8695 respectively. Near term outlook is for continued upside.




Little to add.

Today was arguably day'2 of a new up cycle, one that looks to take us into next week, with further broad upside into early October.

Closing update from Riley


a little more later...