Wednesday 14 January 2015

Volatility holding the 20s

With US equities falling for the fourth consecutive day, the VIX was naturally still on the rise (intra high 23.34), settling +4.5% @ 21.48. Near term outlook offers a hit of the 200dma of sp'1965.. and that will likely equate to VIX 25/27 zone. From there... VIX to cool into early February.




Suffice to say, VIX higher for the fourth day.. naturally a mirror to the 4 days of equity downside.

The daily black-fail candle does bode in favour of the equity bulls, but on this occasion... I'm still very open to a brief hit of the 200dma of sp'1965... before VIX maxes out.

more later.. on the indexes

Closing Brief

US equities closed lower for the fourth consecutive day, sp -11pts @ 2011 (intra low 1988). The two leaders - Trans/R2K, settled -0.9% and -0.3% respectively. Near term outlook is offering a hit of the 200dma around sp'1965. From there... upside into end month.. via 'inspiration' from the ECB.



*not surprisingly, some latter day gains...  the closing candle is still within the short term down trend. 

So.. a fourth day for the bears... but as ever.. the declines can't last forever. There remains TRILLIONS of new money looking to find a home.. and the US equity market remains the prime place.

There remains a real chance of a washout low around sp'1965... but regardless.. we're headed higher from there.

Meanwhile... for those in the UK... and even yours truly in London city... there IS a storm coming this night...

Yours... with all bunker doors/hatches... secured.

more later... on the VIX

UPDATE 4.12pm..

Samsung have just put in an offer for Blackberry....

BBRY, 5min

No doubt.. Ticker guy.. aka Denniger just exploded.

Update 6.15pm.... BBRY denying the bid story... stock collapsing... two thirds of the gains have evaporated in AH.

see HERE for AH quote.. and related story details.

3pm update - a fourth day for the bears

US equities are set to close lower for the fourth consecutive day, with a daily close probably under the giant sp'2000 threshold. Oil has swung sharply higher, +3%... - for no known reason... helping the market claw back above the low of sp'1988



We're seeing sporadic little attempts to ramp... but still.. it will be a fourth day of declines. There is NO clear turn/floor yet.

Primary target remains the 200dma.. around sp'1965... that seems viable as early as tomorrow.

Those currently short.. should be mindful of next weeks ECB.. when the printers are about to be spun up for t-bond buying.

...updates into the close..

3.09pm.. Hourly 10MA... now 2006.... first level for a bullish break.. but overall... it looks like 1960s... before this wave concludes.

3.20pm.. R2K Jumps.... now just -0.3%... a positive net daily close... just about viable. It still doesn't negate the chance of a hit of sp'1960s though.

VIX rapidly cooling, +5%... a red close would merit some consideration.

3.31pm.. sp' 2011... bears getting short-stops hit.... sure is one messy day

*precious metals turning red.... as the 'fear bid' is lost.  Miner ETF.. GDX -2.7%

3.39pm.. Equity bull maniacs need a daily close of sp'2015 to break down trend... but that looks out of range.

In any case... day'4 for the bears... but the ECB printers are being plugged in.... ahead of next Thursday.

3.43pm.. R2K and Nasdaq... both with bullish reversal candles... bodes for renewed upside...rather than things 'spiralling outta control'.

3.50pm... Short term down trend.... being challenged.. sp'2012...  

Notable gains.. Nat' gas +11% .. something I've overlooked... the second strong day of gains.. a MAJOR breakout for gas on the daily cycle.

3.55pm.. the relative strength in the R2K should greatly concern those who are seeking much lower levels in the weeks ahead. The R2K is warning of renewed upside.. for the broader market.

... back at the close.

2pm update - time for a book

US equities remain broadly weak, breaking last week's low of sp'1992. Even the more resilient R2K is starting to show significant declines of -1.3%. VIX is confirming the weakness, +12% in the 23s. Gold is catching a 'fear bid', +$5. Oil remains weak, -0.7%. The first fed 'beige book' of the year is due.



*awaiting Fed beige book at 2pm

So... we've taken out the recent 1992 low... next stop is the 200dma at sp'1965... which is certainly viable.. if not likely tomorrow... or Thursday.

For the bulls... its now a case of 'pray the ECB do not disappoint' next Thursday.  Otherwise, January will end on a real down note.. and the bigger monthly cycles will close bearish for the first time since late 2011.

Notable weakness, coal miners... BTU -11.8%

..more on the coal miners later... on my 'fair value' page.

2.24pm.. Oil swings +2%... taking the main market with it... but still.. with the break of 1992.... an attempt on the 200dma at 1965 looks likely.

Notable gains, CHK +1.3%...

2.33pm... pretty bad ass hourly candle... sp'2008...  no doubt... many short-stops getting hit... at what is ... a typical turn time.

Bears.... beware.    VIX cooling, now just +5%

2.36pm.. Hourly 10MA... sp'2010... a move over there... would be crazy wild.. into the close.

12pm update - messy market

US equities remain very weak, with the sp' having lost (if briefly) the giant 2000 threshold. There remain a number of signs that a renewed push higher is due.. not least with the ECB set to start to buying t-bonds. VIX is holding gains, but nothing that would indicate any serious market concern.




*hourly candle is attempting to make a spike low from sp'1999

Suffice to say... it remains another dynamic day in the market... as reflected in the VIX in the 20s... something  that has been a rarity since late 2011.

Best downside case for the bears is probably the 200dma of sp'1965... but that won't be easy. We haven't forgotton how strong the market rallied yesterday morning, have we?

*the giant monthly MACD cycle has seen a bearish cross this morning (as it briefly did in mid Oct' and also last week). Were we to see January close negative.. that'd be VERY important,  but more on that later... on my MARCON page.

VIX update from Mr T.

time for lunch... .back at 2pm - when the Fed beige book is due.

11am update - the R2K is not confirming the declines

Whilst equities do remain a fair way to the downside, there is notable resilience in the second market leader - the R2K, which is only lower by around -0.5%. With a typical turn/floor around 11am, there is threat of R2K turning positive into the afternoon.

R2K, daily



*the opening black-candle on the VIX is similarly something to be very mindful of. They don't always play out... but usually... 80% or so.

So... we're certainly lower, but there are a fair few non-confirmation issues that have me wary.

In any case... 11am is typically a turn time.. lets see what the bull maniacs can manage into 1-2pm.


Notable weakness, copper miners, FCX and TCK, both lower by -11%. Both are fast approaching a level which could be a key cycle floor.

11.24am Sp' remains -1%, having briefly hit 1999.

It remains a very messy situation.. and there remains high possibility of a wave higher this afternoon.

Notable weakness, AA -6%

10am update - very mixed open

US equities open sharply lower, but... there are signs of an opening reversal, with a black-fail candle on the VIX. Gold is catching a fear bid, +$7. Oil remains weak, -0.2%... but well above early lows.




*not shown, but there is a reversal candle (to the upside) on the R2K.

What is clear, equity bears should have good tight trading stops... in case this nonsense rallies from here.

Notable weakness: copper miners, FCX and TCK, both lower by around -9.8%.. see my 'fair value' post on both.

A LONG day ahead.... stay tuned!

10.12am.. VIX continuing to cool.... bears should be careful (as ever).... 

10.35am.. chop chop...  still holding the sp'2k threshold (surprisingly)...  bears exit window will typically close at 11am.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -13pts, we're set to open at 2010 - just 2pts above yesterday's low. Metals continue to battle upward, Gold +$2. Oil remains in collapse mode, -1.5%. Copper hits a six year low of $2.42 (-7%).



It is not looking good for the equity bulls. We look set to take out the Tuesday low... and the 2k threshold now looks set to be lost.

Primary downside target is the 200dma... around sp'1965.

Hunter with doomer Nenner

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

Notable early weakness, TSLA -8% @ $288

... next key support is the May low, around $180.

*awaiting retail sales data at 8.30am

8.30am Retail sales: -0.9%    vs -0.1% exp... pretty lousy.

Market upset, sp -23pts.... we're about to lose 2000.. in pre-market., sp -26pts.... we're set for 1997.... 1.6% until the 200dma

Surprisingly strong gains... and declines

Opening equity gains were expected this morning, and with the sp'500 hitting 2056, the day looked set for a strong net gain. Yet... a turn began from around 11am... the market spiraled lower, with a rather severe downward swing of 48pts to an intra low of sp'2008. Certainly... it was not a boring day!



The weekly 'rainbow' chart is sporting the first red candle.. after two blue candles. Lower rising trend remains intact... just.

Increasingly, it is a mixed picture. The rising trend from the Oct' low is still intact, but the weekly MACD (green bar histogram) cycle is now negative. In theory... equity bears could justifiably aim for a hit of the 200dma in the sp'1960s.

Despite today's wild swing, the notion of a sustained (as in weeks.. not days) break <sp'2k seems unlikely.

Dr Copper continues to slide

A brief update on Copper, monthly

Best guess remains for continued weakness to a 'deflationary' target in the $2.30/20s, which is another 15% or so lower. If correct, mining stocks such as FCX and TCK have a considerable way yet to fall... probably on the order of 20/25%.

*update.. as at 9.53pm EST, Copper has seen a further major snap lower, -7% to $2.42... getting rather close to target.

Looking ahead

Wednesday will see quite a few bits and pieces...

Retail sales, import/export prices, bus' invents. There is a fed beige book due at 2pm.. no doubt, the algo-bots will be waiting to churn on that.

Goodnight from London

Daily Index Cycle update

It was a wild day for the US equity market, with the sp'500 swinging from an early high of 2056, to an afternoon low of 2008, and settling -5pts @ 2023. The two leaders - Trans/R2K, settled -0.5% and u/c respectively. Near term outlook will offer the 1960s.. if market slips <2008.





The opening gains were rather impressive, and the market came within 0.4% of breaking last Friday's high of sp'2064. The cooling from 11am was no surprise, but rather than hold a baby bull flag, the market spiralled out of control... and with the loss of the 2022 low... another snap occurred.

Market floored at the typical turn time of 2.30pm... clawing from 2008 to a brief spike high of 2028.. but settling @ 2023.

Price structure is holding 'just' within the broader up trends... but price action is increasingly volatile.. and bearish.

a little more later...