Tuesday 30 September 2014

Volatility a little higher

Whilst equities saw some rather notable swings across the day, the VIX managed to hold on to minor gains, settling +2.1% @ 16.31. There appears a decreasing chance of a renewed push higher, VIX 13/12s look a given within a week or two.




So...a minor up day... but holding below yesterdays opening level of 17.08.

Equity bears are still struggling, and even if we do somehow break a new high, I'm increasingly resigned that equities won't break much below sp'1950/40 in the current equity down wave.

Underlying MACD (blue bar histogram) on the daily VIX cycle is getting pretty high... maybe another few days higher..if that.

a little more later...

Closing Brief

US equities saw some real chop across the day, sp'500 settling -5pts @ 1972 (intra range 1968/85). The two leaders - Trans/R2K, settled lower by -0.5% and -1.4% respectively. Near term outlook is mixed.



More than anything, today was the second day of FAIL for the equity bears. A little weakness in the early morning...only for the market to ramp to 1985.

Even the latter day decline to 1969 was somewhat understandable, with the usual 'end month/quarter' issues.

*I am on the sidelines, having bailed from a short-index, @ sp'1972.

more later... on the VIX

3pm update - last hour of the month

It has been a real choppy mess, with equities teasing the bears, but still, the underlying pressure now looks to favour the bulls. VIX appears unable to break back into the 17s. Commodities remain weak, Gold -$9, Silver -3.0%, with Oil -3.3%.



*despite being moderately bullish about the immediate term, I am not going long..am tired... ending Q3 on the sidelines. Hell, at least I'm not holding short overnight.

We have end month/index rebalancing issues... probably chop into the close, but with some slight upside.

On any basis, bears FAILED yesterday...and today.

2pm update - its a mess

A break of trend on the upside, to sp'1985, but now a break of trend to the downside... back into the 1960s. VIX has taken out the morning high of 16.40s. Metals and Oil remain exceptionally weak.




Well... at least Q3 is not ending in a subdued manner.

*despite the weakness, I have no regrets on bailing earlier... not least with this pretty messy price action.

2.33pm... market trying to floor at sp'1969.... VIX unable to claw >16.50.

1pm update - minor chop

Equities see a minor down cycle, but the morning low is holding, with a VIX that is unable to show even moderate upside power. Meanwhile, there is carnage in commodity land - via a rising USD. Gold -$10, Silver -3.2%, with Oil -3.2%.



*I am marginally tempted to go long at these levels, but for now... not in the mood.

Hmm.. another minor down wave.. but really. the early morning low of sp'1970 should hold, along with a VIX peak in the 16.40s.

1.27pm.. minor chop... bulls need to hold 1970.

1.47pm  VIX breaks the morning high................ interesting.

Regardless.... I ain't short... and NO intention to chase lower.

12pm update - battling upward

US equities have turned moderately higher, with some marginal breaks of the down trend. With the VIX -3%, the equity bears have clearly failed.. again. Metals remain weak, Gold -$9, with Silver -2.7%. Oil is significantly lower, -3.1%


USO, daily


Suffice to say.... today is tedious, and the more bearish scenarios from recent days can be thrown out.

*I'm content to end Q3 on the sidelines

VIX update from Mr T.


time for tea

11am update - equity bears still failing

US indexes remain moderately mixed, and despite some earlier minor weakness.. there is little reason for the bears to not have waved the white flag. VIX is unable to hold the minor opening reversal/gains... now -3%. Metals are choppy, Gold -$4




*I exited the short-index block of last Friday...from sp'1972 this past hour. I've little patience after yesterdays bounce, with zero interest in going long today.... will merely see how the month/Q3 ends

Its only Tuesday, and this week is already pretty tiresome.

Bears had a chance...failed yesterday...and apparently..looks like we'll probably close moderately higher.

Regardless, this is no market I want to be involved in...

yours... sidelines


11.30am.. sp'1984... and that is already 12pts above my 'white flag.. tired of this nonsense' exit.

Little else to add... bears look powerless...  as reflected in  VIX -5%

10am update - opening VIX reversal

Equity indexes open a touch higher, but the VIX saw a rather classic opening reversal candle.. and has turned positive. Metals have turned around, Gold +$2 (from -$10)... whilst the USD holds gains of 0.4%.


GLD, daily


*Chicago PMI: 60.5... vs 62 expected (64 previous).. a somewhat poor number for the bulls.

For the equity bears out there.. the targets are pretty clear...

Need a daily close in the low sp'1960s..with VIX 17s.... seems overly difficult..considering yesterdays strong bounce.

As for the metals, could easily see a bounce - with broader market weakness, but it makes no difference.. Gold is still headed for $1000/900s.

10.01am.. Consumer confidence... 86... another miss.. market was looking for 90s.

Indexes sliding...but VIX is not showing any upside kick....yet.

10.06am.. I'm getting tired of this nonsense...

tight stop on my SPY put block (from last Friday).. will probably get the kick in a minute.

10.08am.  EXITED short-index block.. from sp'1972 (was short from 1978) .. minor gain, but at least its not a loss.

10.10am.. VIX starting to cool.. and really, a gain of 1% is just not good enough.

10.14am spike-floor hourly candle on the indexes.... doesn't look good for those in bear land now. VIX set to turn negative.

10.20am.. As I feared....indexes turning... green..... VIX red...

A lousy end to Q3 for the bears.

10.32am  Just where is the downside power going to come from? Bears had their chance..and once again...FAILED.

*I remain content on the sidelines for the rest of today, am not particularly in the mood to be long... at least today.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +5pts, we're set to open at 1982. Metals are significantly lower, Gold -$10, with Silver -1.7%. The USD is ending the month on a high, +0.6% @ 86.10.


USD, monthly'2


*well, if equity bulls manage a daily close in the sp'1990s, it will surely be white flag waving time for the equity bears.

The bears had their chance yesterday...and failed. There is little else to be said.

Today is of course the end of the month, but also more importantly...Q3.  Equity bears need a close in the low sp'1960s for a net monthly decline, but right now...that looks unlikely.

Notable early gain: EBAY, +10%, on the announcement it is spinning off Paypal...which is of course its key profit engine. Yeah... great move Ebay..sell off the best part of your company..and you're left with a stagnant online retail element.

*awaiting some data, notable the Chicago PMI, due at 9.45am. Market is seeking 62s.

9.25am..  equity indexes slipping.. a little... but still.. this is a lousy situation for those in bear land.

As ever... look to the VIX.. it'll usually be the tell.

9.31am.  VIX opens -3%.... bears had better praying now for an opening reversal candle by 10am.  The clock is ticking

9.33am.. VIX... hollow-red reversal candle... if this holds... it does somewhat favour the bears.. at least for a few hours.

9.37am... VIX set to turn positive.... interesting open...

9.39am.. R2K -0.5%... the 1080s sure would be a natural target...that is another 3.5% lower though.

9.42am... once again, VIX remains the tell.... and indexes turn red.

Without question though.. bears need a daily/quarterly close in the low sp'1960s.. with VIX 17/18s. Right now, I find that..depressingly unlikely.

Its rarely easy for the equity bears

Equity bears had everything in their favour to start the week, but the late morning bounce once again reminded many of the underlying 'buy the dip' mentality that continues. The weekly cycles continue to suggest some very viable further downside to come.



*the weekly 'rainbow' candle started red this morning, but turned to blue with the bounce. Regardless, another blue candle sure is better than green..and as things are, I'd guess it will flip to red again tomorrow.. to end Q3.

Brazil... whacked

I realise to many it is of little importance, but the Monday decline of -4.5%, is currently making for a net monthly decline of a very significant -10.9%

Brazil, monthly

The Bovespa is set to close the month with a bearish engulfing candle. Next support is the giant 50k threshold, that is another -8% lower. Most other world indexes are also weak, and certainly, the equity bears have a fair few interesting MACD (green bar histogram) cycle rollovers now underway.

*I will highlight ten of the world equity indexes (as usual) this coming weekend.

Looking ahead

A trio of data - Case-shiller HPI, Chicago PMI, and consumer confidence.

*next QE schedule is released tomorrow at 3pm

Holding short

For yours truly, it was a mixed day. The short-index trade I took on Friday afternoon (when everyone was getting overly bullish again) I should have exited shortly after the open.. since there was a rather clear black-fail candle on the VIX.

As it was, I'm trying to trade a bigger move to the downside, and remain holding for the 1950/40s... which still seem viable tomorrow.

Goodnight from London

Daily Index Cycle update

US equities closed moderately lower, sp -5pts @ 1977 (intra low 1964). The two leaders - Trans/R2K, settled +0.1% and -0.1% respectively. Near term outlook is for continued weakness, as supported by the bigger weekly cycles.




Suffice to say, the Thursday low of sp'1965 was quickly taken out this morning, but the late morning bounce sure did rattle many holding short (including yours truly).

Overall, some further technical damage was done... and with the weekly cycles bearish... I am still seeking further downside..at least to the sp'1950/40s.

Closing update from Riley

a little more later...