Volatility continues to cool

Whilst equities saw minor swings across the day, the VIX continued to broadly cool, settling lower for the third consecutive day, -5.2% @ 18.85. Near term 'best guess', is for a break upward in equities, which should see VIX continue a journey to the low teens into February.


VIX'daily3

Summary

Little to add.

On balance.. unless Draghi bizarrely disappoints tomorrow morning.... equities look set to climb.... with VIX melting lower into the coming weekend.. if not all the way into early February
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more later... on the indexes

Closing Brief

It was another day of moderate swings for US equities (sp' range 2012/38), settling +9pts @ 2032. The two leaders - Trans/R2K, settled +0.5% and -0.3% respectively. Near term outlook is entirely dependent on whether the ECB will spool up the printers enough to 'inspire' confidence.


sp'60min

Summary

... and a rather quiet Wednesday comes to a close.
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So... its now a case of whether Draghi disappoints... or inspires.

Either we jump >sp'2035 tomorrow... breaking trend-resistance... or it'll unravel... at least down to the 1960s where the 200dma is lurking.

Best guess... .we go UP.
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the usual bits and pieces across the evening... to wrap up the day

3pm update - an hour of chop... ahead of the ECB

US equities look set for minor chop into the close.. ahead of the rather important Thursday morning ECB announcement. Market is expecting €50bn a month QE... Mr Draghi needs to at least meet that expectation... or market will drop swiftly to the 200dma in the sp'1960s.


sp'60min

Summary

Suffice to say... choppy....

Best guess... QE...600/700bn annually.... which should be enough to maintain the current monthly gains for the EU indexes.

Few seem to consider it, but much of that printed money will be converted from euros to USD... pushing USD UP... along with the US equity market (where else would the money be spent?).
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*it should be kept in mind, the bulls only need to open moderately higher tomorrow to break declining resistance. A weekly close in the 2060/70s looks very viable.
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back at the close.

2pm update - stuck at declining resistance

Equities have cooled somewhat, having got stuck at what is rather obvious declining resistance. Price structure is offering a baby bull flag on the micro 5/15min cycles.. but with the ECB tomorrow morning... it really is a case of 'if... then'. Metals remain a touch weak, Gold -$2


sp'60min

sp'daily5

Summary

...tiresome... and cold. Is it Friday evening yet?
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back at 3pm

12pm update - moderate gains

The US equity market is holding moderate gains in the sp'2030s. It won't take much for a break above the 50dma... and once that is held over... the 2100s will finally be within range. Metals are cooling ahead of the ECB, Gold -$3. Oil is holding gains of 2.7% in the $47s.


sp'daily5

Summary

Little to add.. on what is merely the day before the Draghi.
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Notable strength, NFLX... jumping into the giant gap zone on better than expected earnings.

A black-fail daily candle... but for earnings... it can be dismissed. Equity bears never could break the April spike low... a move to the $500s seems likely.
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VIX update from Mr T.


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time for tea.. back 2pm

11am update - clawing upward

Equities appear in melt mode.. with a break into the sp'2030s. Next resistance is the 50dma of 2046. A break above that tomorrow will offer a weekly close in the 2070s. Metals have seen a strong swing lower, from +$10.. to -$5. Oil is holding bounce gains of 2.6%


sp'daily5

 

GLD, daily

Summary

*bearish engulfing candle for Gold...a turn lower.. post ECB?  Probably.
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Suffice to say... overall choppy...

With the daily MACD (blue bar histogram) set to go positive cycle tomorrow... equity bears have a lot to be concerned about.

Naturally... a fail to keep pushing higher.. and then its a trip to sp'1960s.. where the 200dma is lurking.

Best guess... UP, but then.. that remains the default trend.. right?

10am update - QE rumours

US equities open lower to sp'2012, but jump to 2029 on a news wire report that the ECB exec' board are suggesting €50bn QE a month...€600bn a year. Metals have cooled a little, Gold -$1


sp'60min

VIX'daily3

Summary

*opening black-fail candle on the VIX.... which itself has just seen its Jan' opex, settling @ 20.91
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No doubt those short at the open will be furious as this latest little rumour. Far from having a chance at break sp'2000 today... market is now vulnerable to 2030s.

However... it still looks to be a day of chop... most seem content to wait until the actual announcement.
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re: QE.

Would 50bn a month be seen as a disappointment? To some... yes, but frankly, this would effectively be QE1 for the ECB, outright t-bond buying... aka.. QE-pomo.

Right now, equity bulls should hope Draghi goes for something in the range of 700bn or so. Personally, I'd be VERY surprised at anything above 800bn.

Across the last week, I've seen talk of 1-2trn... which frankly, seems like crazy talk.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -5pts, we're set to open at 2017. Metals continue to climb, Gold +$7. Energy prices are bouncing after yesterday's huge drop, Oil +1.4%.


sp'60min

Summary

There is little to add.

Today will likely be a day of chop.... ahead of the ECB.
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Notable early strength: NFLX +18%, better than expected EPS.

Weakness: IBM, -3.0%... post earnings depression
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Update from the overly loud Oscar

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hmm

9.40am huge opening reversal... to the upside.... 

Someone just hit the BUY button... or rumours on the ECB ?

Energy prices remain exceptionally weak

Whilst the broader capital markets are in a holding pattern ahead of the ECB announcement this Thursday morning, the energy market continues to see exceptional weakness. Nat' gas and WTIC Oil settled the day lower by -8.3% and -5.0% respectively. Near term outlook offers no sign of a turn/floor.


WTIC, weekly

Nat' gas, weekly

Summary

*I'm tired.. so I'll keep this short...
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Suffice to say.. NO sign of a key floor yet in the Oil.. or Nat' gas market.

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Looking ahead

Wed' has very little, just housing starts.
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Goodnight from an icy London

Daily Index Cycle update

US equities closed moderately mixed, sp +3pts @ 2022 (range 2004/28). The two leaders - Trans/R2K, settled +0.9% and -0.5% respectively. Near term outlook is for Wednesday chop.. before a jump to the upside... 'inspired' by ECB QE. The sp'2100s still look probable in the near term.


sp'daily5

R2K, daily

Trans

Summary

A day of swings... failed opening gains.... sp'2028... down to 2004... but then a somewhat typical latter day recovery.

Overall.. market is in chop mode.. ahead of the ECB.

*underlying MACD (blue bar histogram) is offering a snap higher this Thursday.
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Closing update from Riley.. (not from the floor of the CME)

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a little more later...