Tuesday 23 September 2014

Volatility climbs into the close

Whilst US equity indexes saw broad weakness across the day, the VIX opened higher, with a further mini surge into the close, settling +9.1% @ 14.93. Near term outlook offers a gap fill in the 15s, before renewed downside back to the 13/10 zone.




It was a pretty interesting day in VIX land. The VIX opened higher, but immediately started to cool, and even though equities slipped across the day, the VIX only managed to surpass the opening high in the closing minutes of the day.

There remains a pretty clear price-gap zone in the 15s... which might equate to sp'1980/78 early Wednesday morning.

Right now, I would be VERY surprised if VIX can put in a daily close in the 16s or higher.

more later.. on the indexes

Closing Brief

US equity indexes closed moderately lower, sp -11pts @ 1982. The two leaders - Trans/R2K, settled -0.8% and -0.9% respectively. Near term outlook is for at least a bounce to 2000/2010, bears are so far yet to break the series of higher highs and higher lows.



*a pretty weak closing hour, with bulls still failing to claw back above the hourly 10MA.

So.. the broader market closes lower for the third consecutive day. No doubt some will be touting a major down wave to come.

Further, there will be the usual cherry picking of the weakest index - the R2K, to justify all manner of 'here comes the crash' scenarios.

For now, I simply can't subscribe to any such intermediate bearish outlook, it remains the SAME talk, from the same people that we've heard for months...and in some cases... years.

more later.. on the VIX

3pm update - still slowly sliding

US equities continue to slowly slide, with more notable declines (not surprisingly) in the R2K, -0.9% @ 1119. VIX is holding moderate gains of 6%, but still below the opening spike high of 14.83.


R2K, daily


Interesting day, and at least no one can complain its been boring since Friday morning.

The weakness in the R2K remains much the same as it has since the spring... and it remains bizarre how many of the cherry pickers have moved from touting the Dow as the big bearish index..to the R2K.

What will it be next year, the Nasdaq?

3.12pm.. First upside target remains the hourly 10MA.. currently 1990.

Most notable aspect of the entire day remains.. VIX.. which has had a divergence to the declining indexes across the entire day.

VIX is NOT confirming any of the underlying weakness.

There remains a gap in the 15s, but still... even that looks difficult to hit.

3.27pm... sp'1987... 33mins to go... bulls need 4pts to decisively clear the 10MA

3.42pm.. sp'1988... bears can't say they didn't get at least a good six hours to exit today.

At the current rate, the hourly MACD cycle will turn positive by tomorrow lunch time...at which point we will probably be in the 2000/2005 zone.

BABA remains weak, -3%

2pm update - VIX is not confirming the indexes

Whilst the sp'500 fractionally breaks a lower low of sp'1985, the VIX is not confirming it, remaining stuck in the low 14s.Clearly though, equity bears remain in control... and should be seeking a hit of the recent low of 1978.




So.. a pretty clear divergence, and all those using the C word today need to go re-read what they were posting 5-7 trading days ago.

That didn't work out so well for the equity bears then... did it?

Notable strength in some of the momo stocks, FB +1.5%, NFLX +0.5%

2.04pm.. another new fractional low... 1984.. and VIX is STILL below the opening high.

2.13pm.. The hourly 10MA.. currently 1991.. remains first upside break level.

Bulls should be content with ANY close >1992 or so.

1pm update - still holding

US equities remain seeing minor weak chop, with the sp'500 holding the earlier floor of 1986. VIX remains below the opening gap high of 14.83. Metals continue to cool from the opening gains, Gold +$5, with Silver -0.2%



Market is likely still in the process of churning out a floor.

Equity bears have nothing to tout unless we break under the recent key floor of <1978.. although yes, the R2K is well below the equivalent level.

For now... this is merely a place to exit shorts and/or go long.

1.40pm.. so much for the floor, a fractional break... sp'1985.. but again.. another attempt to spike-floor.

Bears getting a lot of opportunities to exit today... how many will be whining by the Friday close?

12pm update - holding the floor

Equities see another micro wave lower, but the early floor of sp'1986 is holding, and the VIX remains well below the opening gap high of 14.83. A daily close in the sp'2000/05 range looks likely, along with a red VIX in the 13s.



So..a bit of a choppy morning, and certainly, the bears have done some damage since the Friday morning high of sp'2019.

Yet.. we've been through this a hundred times since 2011, and it NEVER ends well for the bears. Those who were last week getting overly hysterical at the move down to 1978, were quickly nailed to the wall by a rally into Friday. I don't expect this week to be any different.

Notable weakness: BABA -2.3%, an interesting one to watch, the dubious aspect remains you're not actually buying a share of the company, but some fund in the Cayman Islands...urghh.

VIX update from Mr T

time for tea.

11am update - morning battle

It remains something of a battle, but the spike floor of sp'1986 with a VIX of 14.83 is probably the best the bears can manage. First target for the bulls should be a daily close back in the sp'2000s... which looks very viable.




Yes, things remain somewhat choppy, but the hourly spike top/floor candles look like a pretty definitive turn is in.

For the day-traders out there, it makes for a rather easy place for a trading stop.

Notable weakness, BABA -2.9%

*I remain resolutely long-indexes (sp'500)... and have ZERO interest in being short anything right now.

11.16am... the chop continues..and we're testing the earlier spike-floor... so far its holding, but its a bit of a close run thing.

VIX is NOT confirming this latest run lower..and its making for an interesting divergence.

Bears getting a bonus chance to exit.. although those in option put land..had their best chance at the immediate open.

11.22am...reading around a bit... I'm seeing more use of the C word... yeah.....'Crash'. Arguably, its just a sign that this down cycle from sp'2019 is likely complete.  

Still bemuses me that those touting the comparison to 2011 or even 2007 are not actually highlighting the key aspects.. which do NOT match with current cycles.

10am update - opening warning to the bears

Equities open a little lower, but the VIX is flashing a major warning to the equity bears to 'make a run for it'.. with a very clear black-fail candle. Equities are similarly starting to put in a rather strong floor-spike. QE of $1.7bn awaits this morning.




Suffice to say.. such black candles are not to be dismissed lightly.

Considering the hourly VIX/equity MACD cycles... bears should be very cautious today.

Notable early strength: coal miners, BTU +3.4%... but then, the sector remains utterly destroyed.

10.05am.. tea and chocolates (yeah, thats my breakfast)..helps...

Indexes turning green... VIX set to turn red.

10.13am.. King O' appears to tout some air strikes.... great... just great.

Indexes are seeing some chop... but broadly, I'd expect to see the sp'2000s today.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -8pts, we're set to open at 1986, clearly taking out the Monday low. Last weeks low of 1978 remains rather critical. Metals are trying to bounce, Gold +$14, the lower USD, -0.4%.. will no doubt help.



So... we're set to open lower, and with yesterdays low taken out, I'm not sure what to think.

The one thing the bulls do have this morning... $1.7bn of QE.... that will help, but will it be enough to negate the sell side volume?

Overall, today will be important... eyes on the recent low of sp'1978.

Notable early weakness, BABA -1.7%, TSLA -1.9%

Video update from Carboni


Good wishes for Tuesday

Keeping things in perspective

The week certainly started in favour of the equity bears, but really, it is somewhat laughable to see some getting overly excited, with the market just having broken new historic highs last Friday. The broader trend remains... UP.



*I remain reluctant to get overly focused on any kind of wave count. Without question, the broader trend is still a series of higher highs.. and higher lows.

So, we start the week with a blue candle, but we're still comfortably above the weekly 10MA - at least for the sp'500. Unless we lose 1990 this week, and get a weekly close <1975 or so, bears have little to tout.

Looking ahead

We have a trio of fed officials talking tomorrow, Mr Market will be listening as ever.

In terms of econ-data - house price index, PMI manu', and Richmond Fed'

*there is QE of around $1.7bn... bears beware!

Goodnight from London

Daily Index Cycle update

US equities slipped across much of the day, with the sp -16pts @ 1994. The two leaders - Trans/R2K, settled lower by a rather significant -1.4% and -1.5% respectively. Near term outlook is for sp'1990 to hold, with renewed upside.





The weakness in the R2K - which saw a death cross today, has garnered some significant attention, but then, the R2K has been weak since the spring.

Unless the sp'500 breaks back into the 1980s... there is no justifiable reason why anyone should be shorting the broader market.

Closing update from Riley

a little more later...