Tuesday 7 October 2014

Closing Brief

US equities closed lower for a second day, sp -29pts @ 1935. The two leaders - Trans/R2K, settled lower by -2.5% and -1.7% respectively. Near term outlook offers a now seemingly likely brief wash out in the 1910/00 zone.. before the next up wave.




So, a second day for the bears. Monday was a clear failure to break and hold above the primary down trend.. and with today's significant declines, we're on track to break below last Thursday morning's low of 1926.

All things considered, some kind of mini washout looks likely before the end of this week... with sp' flooring in the 1915/00 zone.. which would equate to VIX somewhere in the 19/21 zone.

a little more later.... (8pm EST)... on the bigger cycles

3pm update - bears building momentum

US equities break new lows, with a likely daily close in the 1942/38 zone.. along with VIX 17s. Despite the trend... on any fair outlook, bears have no more than the remainder of this week to whack the market to the 1910/00 zone.. before renewed upside.


Dow, daily


... I had asked at the start of the day for Dow -200pts to lessen my headache. Well, we're almost there, but my head still feels hazy.... I really should be elsewhere.

*there was another aspect of support I forgot to mention earlier.. and that is the monthly 10MA. currently around sp'1913. A brief dip to 1910/00 seems viable.. before this madness whipsaws back upward.

As I will continue to note... what is critical, is whether the next up wave gets stuck 1970/90... or just keeps on pushing higher in Christmas.

...considering the EU indexes.... I'm still inclined to much lower levels before year end.

3.11pm.. sp'1943... VIX 17s.... imminent.

It sure looks like we're going to get that mini washout to 1910/00.. with VIX 19/21 zone after all... and in terms of time frame... it MUST be this week.

3.18pm... VIX 17s,,, with sp'1941.....not far to go now.. could all be wrapped up tomorrow... not least with a case of 'Lunar eclipse madness'. ;)

3.24pm.. R2K back under 1080.... looks headed for the low 900s...before QE4... Yeah...another QE. What else would the Fed do?

3.35pm.. at the start of the day, I had noted bears needed to take out the Friday low of 1948.. and we've bested that by 10pts.

A day for the bears.... more looks likely.. at least to 1915/10... whether the Aug' low of 1904 gets tested in normal trading hours....difficult to say.

Notable weakness: miners, GDX -3.0%.... close to taking out the 2013 low.

3.46pm.. Bull maniacs are clearly getting rattled after yesterdays FAIL to break/hold above the down trend.

Primary target... sp'1915/10
Secondary 1905/00.

..and then a bounce... at least to 1970/90...

back at the close.

2pm update - the bulls are a superpower of Al Capone

US equities remain moderately lower, with the sp'500 hovering around the 1950 threshold. With yesterdays failed breakout, many recognise there remains the threat of the Aug' low of sp'1904 being hit. VIX is relatively subdued, +5% in the 16.30s.



So... indexes remain red, and we'll surely close red... but the one concern remains the VIX.

Equity bears really need to see a VIX daily close in the 17s. Certainly it is viable by the close.. but VIX has been stuck for some hours now.

As for the post title... it was inspired by a reader

Baghdad bob.. the key figure of Iraqi propaganda in 1991 remains very memorable, although such bizarre deceit is now surpassed by almost everyone in the mainstream now.

I can't wait to see how the cheer leaders react in late October when German GDP is released... probably making it an official recession. But.. that is bullish right?

DAX to 8K... its the most obvious index target of all. If you agree on that... then the sp' equivalent would be 1800/1750 or so..before year end, and that is something very few are suggesting.

back at 3pm (probably)

2.30pm... VIX making a play for new highs... with sp'1948...... with 90mins to go...bears need a daily close in the 1945/40 zone, with VIX 17s. That will keep open the door to the 1910/00 zone.

Notable weakness; Oil, -1.7%

12pm update - declines, but only moderate

Despite breaking again into the sp'1940s, US equities are only moderately lower. VIX is seemingly unable to break above the earlier high of 16.78. Metals are holding minor gains, Gold +$3. Oil has turned significantly lower, -1.0%




It is notable that despite a crate of bad news this morning - not least the IMF growth downgrade, the market is holding up relatively well.

Overall, it remains... messy.

Notable strength, oil/gas drillers, building gains, RIG +4%, SDRL +4.9%

VIX update from Mr T.

time for tea............ back at 2pm.

11am update - back to messy chop

Equities break to a low of sp'1947, but have already bounced back to the upper 1950s. Overall price action remains weak, with a clear disparity between the hourly/daily cycles (mixed) to the outright bearish weekly cycles.




So... mixed weak chop, with the bigger weekly cycles still flashing red for a sell.

As ever, bears usually have a very limited time window to press lower before the algo-bots run it right back up, this mornings opening hour was depressingly normal.

Notable strength: TWTR +2.5%...

whilst SODA is -20%.. after a pretty dire admission of failure to attract customers.

11.19am. Renewed weakness... need VIX 17s to clarify the trend.

Notable strength: oil/gas drillers, RIG +3%, SDRL +3.6%...

10am update - opening weakness

US equities are building upon opening moderate declines, with the sp'500 back below the 100 dma. A daily close in the 1940/35 zone looks very viable, which will bring within range the key August low of 1904. VIX is reflecting the concern, +8% in the upper 16s.




Interesting open, and it certainly brings within range the 1910/00 zone..as early as tomorrow.

There are multiple aspects of support...

1903.. 200 day MA
1904  early Aug low
1917 lower weekly bollinger

On any basis, if we can get to the 1910s or even 1905/00... it'll be time for bears to make a run for it.

The only issue - at least to me.... does the next up wave get stuck around 1970/90....or just keep on pushing higher? Right now... bears still have a chance.

Notable weakness: airlines, DAL & UAL both lower by around -2.3%

VIX is set to go positive on the hourly MACD cycle in 10am hour.... certainly, bears should be looking for VIX 17s by 11am.

10.33am...  another half-crazy bounce.. 11pts... sp'1958.  VIX +4%... 16s....  hmm

Pre-Market Brief

Good morning. Futures are moderately lower, sp -5pts, we're set to open at 1959. Metals are turning lower. Gold -$2, with Silver -0.2%. Equity bears need to break below the Friday open/low of 1948... to still offer some hope of the 1910/00 zone.




So... we're set to open a little lower, but its nothing to get overly excited about. Hourly/daily charts are pretty messy... whilst the weekly cycles are still outright bearish.

The original target of the low 1900s is still within range, but really, bears have to at least break back to the low 1940s...today..or tomorrow.

Similarly, VIX 18/19s will likely be necessary to clarify that volatility is indeed returning to the market, rather than algo-bot churn into year end.

Update from Oscar, who has flipped bearish.. at least for the open.


I'll be around today... at times, but frankly...I still feel pretty dire. I could do with the Dow -200pts to take the edge off my blazing headache, amongst other things.

9.38am... sp'1949... close to taking out the key Friday open.... VIX +7%...a good start for the bears...