Monday 13 October 2014

Volatility continues to push higher

With equities seeing renewed weakness in the late afternoon, the VIX snapped higher, settling at the high of day, +16% @ 24.64. Near term outlook is still offering an equity bounce - as corporate earnings appear, with the VIX cooling back to the mid teens.




We've not seen these VIX levels since summer 2012, when the VIX peaked in the 27s - whilst sp'1266.

Today's VIX close was suggestive of further upside early Tuesday (probably to 11am) before another attempt for the equity bulls to turn this market around.

Despite the recent equity weakness, I still find it hard to believe the market won't be able to manage a significant rebound by late October... putting in the first lower high - somewhere in the sp'1950/70 zone.

more later... on the indexes

Closing Brief

US indexes closed very weak, sp -31pts @ 1874. The two leaders - Trans/R2K, settled lower by -2.2% and -0.4% respectively. Near term outlook is uncertain, but there is an overdue bounce of some degree into late October.



The late afternoon weakness was a real surprise, I certainly didn't expect it.

With the morning low of sp'1890 being taken out, we saw a very sharp and swift stop-cascade.

As for tomorrow... more on that later...

*I'm still kinda struggling, am not 'well' since last week, will endeavour here... best I can this week, but it ain't easy. If I keep writing 1974... rather than 1874... just blame the sickness for my data errors.. urghh.

the usual bits and pieces to wrap up the evening...

3pm update - choppy day

US equities look set to close with further chop, but then, that is indicative of a flooring phase. VIX is holding flat in the 21s. Oil has turned a touch higher +0.1%, after declined declines of -1.4%.



Suffice to say...a new cycle low of sp'1890, but VIX only managed the 22s.

All things considered, today was day'1 for 'building a floor'.

3.35pm... surprisingly  (yes, I'm surprised).... market takes out the morning low of sp'1890, and ALL the long stops are getting hit.

I still calling a short term floor though..... would be truly bizarre if we just keep on falling.

Oh well..... 

3.45pm... market just unable to find a floor... 1879.... with VIX 23s.

2pm update - continued chop

US equities continue to see minor chop.. with a key floor of sp'1890, with VIX peaking at 22.45. Another day or two of chop remains very viable, but with a broader 2-3 week bounce likely. From there.. things get more 'fun'.



Little to add.

Notable strength: miners, GDX +4.5%.. although that does little to the broader trend from spring 2011.

back at 3pm

1pm update - floor looks to be in

US equities have likely floored at sp'1890, just 0.7% under the August low/200 dma. VIX is starting to confirm the floor, turning red, -2% in the 20.70s. Oil remains weak, -0.6%, but well above the opening levels.



It is looking rather good for a floor.

Just need a daily close >1910, which does look likely.

It doesn't mean we won't we see another few days of chop in the 1920/1890 zone, but still.... price action looks relatively calm.

Notable weakness, DRYS, -17.6%, having cancelled a bond auction.

1.30pm.. chop chop... sp'1906....  building a floor.    VIX still red, -2%... a close <20 looks probable.

12pm update - battling to build a floor

US equities are continuing in the process of trying to build a floor. Despite the extra weakness this morning, the VIX only managed to claw into the 22s. Oil remains very weak, -0.7%.. but off the lows.




Suffice to say, it still seems VERY likely that a floor is being found..and built by Mr Market. Equity bears have arguably merely had a bonus opportunity to exit this morning.

Right now, equity bulls should be seeking to re-take the hourly 10MA, which at the close will be around sp'1910...not too far up.

VIX update from Mr P.

time for lunch

12.37pm... and there is sp'1910... a little earlier than expected.

Regardless.... probably safe to call 1890 a floor.

11am update - moody Monday morning

US equities are so far failing to attract any buying interest, and we're moderately lower across all indexes. The break to sp'1890 is marginally interesting, but the VIX is not especially indicative of any real market concern, stuck in the 22s.




*Oil remains notably weak, -1.4%

...well, its typical turn time, so lets see if we can claw back into the 1900s by early afternoon.

Meanwhile.. London city is starting to flood (well, at least part of it).. and this probably sums everything up...

back soon

11.45am.. market levelling out.... VIX cooling.. 21s.. a daily close <20... very viable.. which would confirm a top in the 22s.

10am update - the 200 dma is hit

US equities open with some mixed weak chop, with a fractional break of the August low of sp'1904, and the 200dma of 1905. The next few days will be all about building a floor, before a 2-3 week climb to 1970/90. VIX is seeing some minor chop, currently a touch higher.



Things look on track.

Mr Market could easily chop around these levels for a few days before the first sustained up wave.

Regardless, the bears had their down cycle.... its effectively done.. at least for a few weeks.

Notable weakness, DRYS, -19%.... on news it is cancelling a debt auction...

I would hope it will stay afloat (no pun intended), I have been following the company since 2008, and it'd sad to see that one sink. (yeah.. that one is intended).

10.01am... sp'1997... with VIX 22s...

Price action remains chop... we're surely building a floor.

Equity bears getting another opportunity to 'make a run for it', before we climb to at least 1950/60... I'm still guessing 1970/90.

VIX cooling.......... Bears...beware!  

10.37am... sp'1893, although VIX still only in the 22s.

Overall.. this is still flooring building time.

Lets see if we can get a turn around 11am.... regardless, I still see this as a time for equity bears to be closing out.

Notable weakness: airlines, UAL -5.4%.... Ebola concerns? Hmm

Pre-Market Brief

Good morning. Futures have recovered from overnight declines, we're set to open just a touch lower, sp -1pt, at 1905. Metals are vainly trying to bounce, Gold +$3. US equities look set to build a floor this week, around the 200 dma of 1904.



Not surprisingly, futures did indeed turn around overnight

The first few days of this week will likely be about solidifying a floor around sp'1904, and then climbing into late October.

Notable early movers, SDRL +5.5%, RIG +1.7%

DRYS -3.2% in the $1.80s...

Good wishes for the week ahead

8.44am... indexes turning green ,sp +2pts... 1908..... but still., a few days of chop in the 1910/1890 range seem likely.

Notable weakness in Oil, -1.0%

9.01am.. It would seem DRYS is -9%, on news it has cancelled a bond now there will be questions about whether it has the capital/cash it needs to keep operating.

Sunday night meanderings

Good evening. Futures are moderately lower, sp -8pts, we're set to open around 1898. Somewhat understandably, the mainstream are starting to get a bit twitchy with the last few days of declines. The market should be able to build a short term floor around these levels.

sp'weekly9 - fib retrace levels


Well, its been a very sleepy weekend. The news is pretty lousy, as the northern hemisphere starts to fully realise a long winter is ahead.

Sunday night futures are notoriously unreliable for the equity bears, and frankly, I'd not be surprised if they turn green by the time I wake up in another 12hrs.

The following scenario is just something I am keeping in mind, and will get ditched if we consistently trade under 1900 in the current down cycle, but I don't think that likely. Similarly, any break much above 1990 in the next up wave... and the bears should be waving the white flag.


The ultimate issue is that any bounce, whether it is this week, next, or not until early November, will very likely just put in a lower high, and that is when the prime time for bears would arrive.

Oil for the deflationists

Its been some years of waiting, but we have a clear break of narrowing price structure... Oil is now lower for the fourth consecutive month.

WTIC Oil, monthly2, rainbow

$80 seems an easy target, and I will be looking for $70/65 early next spring.

Doom chatter, with Hunter and Rickards

As ever, make of that... what you will.

As for the week ahead... see the weekend post!

Goodnight from London...        back at the Monday open :)