Wednesday 24 September 2014

Volatility ground back down

With US equities putting in a key floor of sp'1978, and building gains across the day, the VIX was ground back lower, settling -11.1% @ 13.27. Near term outlook is for VIX to slip back to the 12/11s.




Despite breaking a marginally lower low in the US indexes, the VIX failed to break the Tuesday high of 14.94.

We're clearly headed at least down to the 12.75/12.25 zone.

Daily VIX (and equity) MACD (blue bar histogram) cycles are offering at least 3-4 days in favour of the equity bulls.

more later... on the indexes

Closing Brief

US equities closed moderately higher, sp +15pts @ 1998. The two leaders - Trans/R2K, settled higher by 0.7% and 0.9% respectively. Near term outlook is for further upside into early next week. The big issue is whether the 2010s can be re-taken.. and held above.



Suffice to say... early minor chop... a test of the recent low of 1978...and then strongly up.

The equity bulls have a window of opportunity, probably no more than 3-4 days, in which to re-take 2010...and hold over.

Otherwise..this could all be setting up for a rather large H/S formation... which would target 1940/35 in mid/late October.

Certainly, the next few days will be critical, but aren't they always?

more later... on the VIX

3pm update - broken down trend

US equities has decisively broken the short term down trend from last Friday morning. A daily close in the sp'1990s looks probable, with VIX back in the 13s. Metals are weak, Gold -$5, which is naturally impacting the miners, GDX -1.4%



..another day soon to wrap up.

Frankly, I'm tired. I'm already burnt out this week for a number of reasons, not least a major one which I'll share later this evening.

Notable strength: BABA +1.8%

yours... adrift.

2pm update - broader trend remains intact

With the recent low of sp'1978 holding, equity bulls are making another charge to the upside. There will unquestionably be some stiff resistance in the 2000/2010 zone, but still.. the broader price pattern across the last 3 years is pretty clear... we're likely headed to new highs.



*I continue to refrain from using any wave counts on the bigger weekly/monthly cycles.

So..a blue candle on the weekly 'rainbow' chart, and this could easily be just another cruel tease to the equity bears.

The weekly 10MA - which I drone on about week after week....... after week... has held today. A simple review of the past few months.... does offer a pretty clear suggestion on how this usually turns out.

Best case upside for the bulls... mid October, 2030/40s. The 2050/60s look difficult to hit... even if earnings come in somewhat better than expected.

...indeed. Q3 earnings are barely two weeks away.

12pm update - pushing upward

US equities have put in a very decisive spike floor of sp'1978 - matching the low from Sept'15th. Immediate trend is now to the upside, the only issue is whether the market will break new highs... or get stuck in the 2000/2010 zone - setting up a bearish H/S scenario.




So.. a key floor is indeed in, and now the issue is... whether we put in the first lower high.... or push to new highs in early October (which is only next Wednesday).

Considering the broader trends, I have to believe we will eventually break to the 2020/30s.. although I realise many out there would disagree right now.

VIX update from Mr T.

Time for lunch... or something


12.23pm   sp'1990.. cooling a little, but still well above the earlier 1978 low.

I need a break...

back around 2pm


1.30pm.. sp'1991.. and the gains are comfortably holding. So.. we're headed higher...and as noted...the issue now is whether the bulls get stuck....or keep on pushing higher.

It'll probably be until at least next Mon/Tue before the current up wave completes...even if we do get stuck.

For now, there seems zero point in anyone re-shorting for a good 3-4 days.

11am update - VIX is melting lower

US equities continue to see minor weak price chop, having broken a new cycle low of sp'1979.. a touch above the recent key low of 1978. VIX is notable in that it is in melt mode, -3% in the 14.40s.




VIX looks exhausted in terms of upside... with equities attempting to put in another spike floor.

Problem for the bulls... there is now possibility of a bearish H/S formation.. if we get stuck around 2000/2010.  More on that later though.

Notable weakness: drillers, RIG -2.9%,   SDRL -1.7%... a sector that remains truly battered, with NO sign of levelling out. The weak commodity prices are not helping.

*I am having a lot of serious website/blog issues' in the past day or late evening post today... might be rather different. Stay tuned.

11.12am... snap to the upside.. and bears are getting heavily short-stopped.

A key turn looks to be in.

So... now... will we get stuck around 2000/2010... or break new highs?

Considering the broader trend and style of price action, I'm guessing...the latter.

11.16am.. A daily close around 1995/2000 looks probable...which would break the down trend...

On any basis one should be still short... time to exit is expired.

11.32am... no mercy for the bears... sp'1992.... and this is getting somewhat of a wild push back upward

10am update - opening chop

Equities open with some rather confusing minor opening chop. VIX is holding just under the Tuesday high.. and remains vulnerable to briefly breaking into the 15s.




...busy morning here....bear with me.

Hourly MACD (blue bar histogram) cycle on the indexes is still ticking higher... price momentum is SLOWLY swinging back to the bulls.

What is clear, anyone on the short side, should at the very least have a tight stop this morning. 

First upside target remains the hourly 10MA, but by the end of today, that will be around 1982/80... so, even a moderately higher close will start to turn things around.

Notable weakness, oil/gas drillers, RIG & SDRL both lower by a rather significant -1.7%.

10.15am.. market testing the recent low... but VIX still failing to break 15s.

This is a bit of a mess right now.

Even the metals are starting to slide again, Gold -$3

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pts, we're set to open at 1984. Next key support is the 1980/78 zone. With the USD +0.15%, the metals remain generally weak, Gold -$2, with Silver -0.7%.



Little to add. The sp'2000s look out of range today, it will likely take the best part of 2-3 days to claw back above the giant threshold.

There remains a very valid VIX gap in the 15s... which would make for a very natural top.

So...even if we open a little higher, a brief drop to the recent low of 1978 would probably equate to VIX 15s.

Hunter with Ms. Prins on the bankers.

Kinda interesting, especially for fans of Nomi

Have a good Wednesday

Net gains for September?

Whilst the broader equity market declined for a third consecutive day (ohh the humanity!), the bigger question is whether September will now settle with net gains.. or moderate declines?



Right now, the sp'500 is -20pts (-1.0%) on the month, but it will only take one decent up day to turn things around. With five trading days still left of the month, there is ample opportunity for the equity bulls to turn this around.

As I have been saying for months, until bears can achieve a monthly close under the monthly 10MA - currently @ 1904, there is ZERO reason to be shorting this market.

For me, I simply won't consider shorting any of the indexes until we're brushing the upper bollinger on the weekly and/or monthly cycles... and that sure doesn't look likely for some weeks.. if not at least another 2-3 months.

Looking ahead

There isn't much due tomorrow, just...  new home sales, and the EIA oil report.

*there is QE of around $1bn

Goodnight from London

Daily Index Cycle update

US equity indexes closed lower, sp -11pts @ 1982. The two leaders - Trans/R2K, settled lower by -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.




The R2K remains notable in its weakness, although is still (just) holding above the low from early August - when the sp'500 floored at 1904.

Underlying MACD cycle is pretty low for the R2K, and despite the ongoing weakness, it won't be easy to take out the August low.

As for the sp'500, we do have a break of rising support - that links to the large bull flag. A daily close <1978 would make things 'interesting'. Until then, it remains a series of higher highs...and higher lows.

a little more later...