Friday 24 October 2014

A major weekly decline in volatility

With US equities climbing across the week, the VIX naturally continued to slip, with a net weekly decline of -26.4% @ 16.18. Near term outlook is for VIX to slowly melt to 15/14s, ahead of the next FOMC. VIX 40s remain a viable upside target for November.




Suffice to say... last week's high of 31.06 is now a massive way up... and many are suggesting that the VIX will remain low for the rest of the year.

I strongly disagree, and instead see this merely as an initial wave higher - much like June 2011. The pull back to the teens was anticipated, and I'd be very surprised if the VIX doesn't at least climb back above the key 20 threshold in November.

Best bearish case...

Market gets stuck, unable to break/hold the sp'1970s, and rolls lower.. putting in a critical lower high. VIX eventually explodes into the 40s.. once the recent sp'1820 low is taken out.

If the sp'1650s are hit, then VIX should be in the mid/upper 40s.... which would be a level we've not seen since 2011.
more later... on the indexes

Closing Brief

US equities closed moderately higher, sp +13pts @ 1964. The two leaders - Trans/R2K, settled higher by 1.0% and 0.2% respectively. Near term outlook is for chop into the FOMC of next Wednesday... before the next major down wave.



*notable, new cycle high of 1965

... and another crazy week in market land comes to a close.

We've seen some rather incredible follow through to the upside, and we're right in my target zone.

Any higher.. and the bigger cycles will start turning up again.. which would be suggestive of new highs.. rather than a mini-crash scenario.

Next week... will be critical.... but then, isn't that always the case?

Have a good weekend
the usual bits and pieces to wrap up the week... across the evening

3pm update - a week for the bull maniacs

All US indexes look set to close with powerful net weekly gains of around 4%.. which on any basis, is the best week in a very long time. VIX is set to close flat... in the 16s. Metals are a touch weak, Gold -$2. Oil remains especially weak, -0.8%



A pretty crazy weekly gain, but then.. a bounce was expected..ahead of the FOMC.

The only now is whether this is merely a bounce...or the start of a run to new highs in the 2100s by early 2015.

Personally, considering the recent technical damage..I'm calling it a bounce... and will short it as such.. next Wednesday.

AMZN weakening...  -8.7% @ $287

3.24pm.. the chop continues... with VIX flat in the mid 16s.

back at the close.......

2pm update - renewed chop

Equities remain seeing mixed chop, with most indexes moderately higher. Overall, it remains a relatively subdued end to a bullish week, with powerful net weekly gains for all indexes. Oil remains weak, -1.0%



I'm tired.. and frankly... there isn't much to add.

Even a minor down cycle seems hard to achieve right now... a flat close still seems possible though.

Notable weakness, Ford (F) -4.2%, earnings were mixed, EPS was inline, but missed on sales.

1pm update - minor down wave

Equities have broken a new cycle high of sp'1962, with VIX hitting a low of 16.09. A minor down wave into the weekend looks likely, with a daily close somewhere in the 1955/45 zone.. along with VIX 17s.



It remains choppy, which frankly.. is probably a good thing... not least for the bears.

Notable weakness, AMZN -8.1% in the $287s

yours... awaiting Wednesday afternoon.

12pm update - moderate gains

US equities have seen a minor up wave, with the sp' in the low 1960s. Energy remains very weak, Nat' gas -2.1%, with Oil -0.7%. Metals are a little weak, Gold -$2. VIX is cooling into the weekend, -2% in the low 16s.



Without getting lost in the minor noise, the sp' is making a play to break a new cycle high >1962.

Still... some weakness in the latter part of the day seems likely. Who will want to hold long across the weekend?

*There is an EU bank stress test result, this Sunday, 12pm (CET), and that will be an issue for Sunday night futures.

Notable strength, BABA +3.7% in the $97s, making a move to test the $99 high.... early next week.

VIX update from Mr T.

time for tea :)

11am update - chop chop

Equities remain choppy, with a likely daily close in the sp'1955/45 zone. VIX is a little higher, but looks set for a weekly close in the mid teens. Energy prices are weak, Nat' gas -2.2%, with Oil -1.8%.


USO, daily


Little to add... on what is likely to be 'chop into the weekend'.

*I realise some are seeking some kind of small B wave lower... and the 1910/00 zone would be a valid target.. but really, price momentum has been so strong this week, its hard to get any sustained downside.

Bears would arguably do well to just sit it out until next Wednesday afternoon, when we have the FOMC announcing the end of QE3... not so infinite after all, eh?

Notable weakness, oil/gas drillers, RIG & SDRL, both lower by around -2.5%

time to cook

10am update - opening mixed chop

Equities open with some mixed chop, but with the underlying upside still noticeable, sp'500 +0.2% in the mid 1950s. Energy prices are weak, Nat' gas -1.8%, with Oil -0.9%, the latter sure won't help the market today. VIX is a touch lower, stuck in the mid teens.



*note the upper bollinger on the daily chart, it is falling.. and will be a key aspect of resistance next week... in the 1970s.. along with many other aspects.

So.. we open a little higher... but I don't expect much from today... probably chop... and a flat close. Overall though, a strong week for the bulls.

Notable movers

DRYS -27%.. on a new share offering

AMZN is lower by -7%, certainly nothing too dramatic, relative to the recent NFLX smackdown.

time to shop.... back soon.

10.12am.... chop chop.. a touch of weakness, VIX +5%, but really, barring another 'spooky' Ebola news headline during today,  I can't see anything other than moderate chop in the 1950/40s.

Oil continues to slide, -1.3%.. and that is a problem for the broader market.

Pre-Market Brief

Good morning. Futures have largely recovered from overnight lows, and are set to open just a touch lower, sp -1pt @ 1949. Metals are flat, whilst Oil is -0.7%. Nat' gas remains especially weak, -1.6%.

sp'daily5b - last line


So.. a little Ebola scare overnight in NYC, but still the market manages to stay effectively flat.

All things considered, market will probably see chop for the next 4 days, into the FOMC of Wednesday afternoon.

Notable weakness: AMZN, -10.3% @ $280, having taken out the May low of $284. after an earnings miss.

DRYS -23% @ $1.54, after a new share offering is announced.

Doom chatter from Hunter.. to wrap up the week

Thank the gods, its almost the weekend

The ramp continues

US equities have now climbed 141pts since last weeks low of sp'1820. With the 'old leader' - Transports, already close to breaking a new historic high, the bigger bearish scenario for November is in serious jeopardy.


Trans, weekly


For me, the transports will be key to watch across the next 4 days.. into the FOMC of next Wednesday. So long as the Trans' doesn't break a new high, there is still a chance of a bigger bearish down wave in November. As things are... its already too damn close for comfort.

As for the sp'500, the weekly 'rainbow' candle turned green this afternoon, but closed the day blue. Still, another move into the 1960s looks due.. the issue is whether this is merely a 'crazy bounce'.... or the start of a giant new wave to the sp'2100s - a level many are still seeking in early 2015.

Looking ahead

The only data due is new home sales.

*next QE.. the FINAL QE.. is next Monday.

Video update from Carboni

I do strongly agree with Oscar on Gold, and another crash wave in the precious metals - along with the mining stocks, could occur across the next 3-5 weeks. I look forward to further capitulation amongst the gold bug maniacs.. when Gold is testing the giant $1000 threshold.

Ebola headlines make for a twitchy market

As of writing (9pm EST), another Ebola headline has hit the market, and the futures have been knocked moderately lower by around -0.5%, offering an open of sp'1940 or so.

Reading around this evening, I see a fair few people open to the scenario of a VERY powerful down wave in November/early December. So long as we aren't consistently trading above sp'1970 in the days ahead, I'll certainly also strongly consider it.

For me, the two warning levels will be sp'1900... and then the key low of 1820. If the latter is taken out, there really isn't any reason why the 1650s - the key fib retrace target, wouldn't be hit within a matter of days of such a break.

Goodnight from London

Daily Index Cycle update

US indexes closed strongly higher, sp +23pts @ 1950 (intra high 1961). The two leaders - Trans/R2K, settled higher by a rather powerful 2.1% and 1.8% respectively. Near term outlook is for continued upside into the FOMC of next Wednesday.





Suffice to say.. the Wednesday decline looks to be a micro washout of no importance, and we're broadly still climbing.

There seems litlte reason why the market can't climb at least a little higher into the middle of next week. Whether the market can break and hold the sp'1970s... that is difficult to guess.

a little more later...