VIX unable to hold opening gains

With equities opening lower to sp'2085, the VIX maxed out at 15.13. With a (not surprising) latter day recovery, the VIX rapidly cooled, settling +0.6% @ 13.94. Near term outlook offers continued equity upside, with the sp' in the 2130/40s by end month. The VIX looks set to remain subdued for another few weeks.


VIX'60min

VIX'daily3

Summary

*The opening hourly candle - with a clear spike, was a very clear warning to the equity bears they should have been closing out at the open.
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The big VIX 20 threshold looks out of range for at least another two weeks.

However... (and it is an increasingly valid doomer scenario)...

VIX weekly

Weekly MACD (blue bar histogram) is set to get a bullish cross in 2-3 weeks, and would bode (if briefly) for VIX in the low 20s.

Equity bulls should be somewhat cautious in late May/early June... not least if the market gets stuck in the sp'2140s.. where weekly upper bollinger resistance is.
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more later... on the indexes

Closing Brief

US equities closed moderately weak, sp -6pts @ 2099 (intra low 2085). The two leaders - Trans/R2K, settled lower by -1.2% and -0.2% respectively. Near term outlook is for renewed upside, with the sp'2120/30s by end week. There looks to be viable upside into the 2160/70 zone by the FOMC of June 17th.


sp'60min

Summary

*a touch of weakness into the close, but still...the bulls managed to claw the market way above the morning lows.
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Certainly, not a dull day.

Opening declines to sp'2085... but they sure didn't hold for long, with clear reversals... as especially seen via TLT and the VIX.

Overall, it would seem the market still has a high likelihood of breaking new historic highs (at least in some indexes).
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*I hold short Gold - via GLD, overnight.
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more later... on the VIX

3pm update - battling for a positive close

US equities are battling for net daily gains (sp>2105) which would be a full 1% swing from the opening low of 2085. VIX is naturally cooling, and has already turned fractionally negative into the 13.80s. Metals are holding borderline sig' gains, Gold +$10, with Silver 1.7%. Oil is back to +2.1%


sp'daily5

Summary

Well, the opening hourly candles for VIX and TLT were a pretty clear signal to the equity bears to close out this early morning.

I realise some are still seeking another wave lower to 2050/40s.. but that simply does not look likely.
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*I will hold short Gold overnight.. my entry is only a touch under the current level... so I can live with that!

60min

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back at the close

2pm update - afternoon chop

US equities remain moderately lower, but a few indexes did briefly already turn positive. VIX is back in the low 14s, as the market is a little more comfortable as bond yields have cooled. Metals are starting to cool from earlier highs, Gold +$8. Oil is similarly off the highs, +1.7%


sp'60min

GLD, 60min'2, rainbow

Summary

*I remain short Gold via GLD, seeking an exit tomorrow morning in the 113.25/112s
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So... the 1pm hour has seen equities cool a little, but still... we're already seen the Dow turn fractionally positive, and net daily gains still look more probable than not.

The opening level of sp'2085 looks a fair way lower, along with VIX having spiked in the low 15s.

This remains a market that wants to break new highs.
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notable strength:  Discovery (DISCA) +4.6%.... am not sure why... will check.........

1pm update - bond yields and equities

US equities remain a little lower, but there remains high opportunity for a daily net gain >sp'2105. It is highly notable that bond yields have rapidly cooled, with TLT having swung from the $118s to 120s. If 123/24s by Friday, the sp'500 will likely be at new highs.


sp'daily5

TLT, daily

Summary

*Daily sp'500 chart is offering a bullish spike floor, just need 2106/07 to really make it a bullish floor/turn.
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I have a lot to say on bonds, but rarely get around to covering them.

Suffice to say.. it remains ironic how crazy equities can react to bond yields. Last October, falling bond yields saw an equity capitulation. Now the market gets upset at rising yields!

Today, we had an opening reversal candle on TLT (60min cycle, not shown), and we look set to battle into the 125/130s in June.

I still think there is a viable grand bond top of TLT 140/50 zone by Sept/Oct.
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notable strength, oil/gas drillers, SDRL +5.3%,  Oil +2.2% is really helping.

12pm update - battling to turn positive

With bond yields rapidly cooling, the equity market is seeing a rather natural rebound. A net daily gain >sp'2105 now seems very viable, along with VIX in the 13s. Metals have seen a secondary wave higher, Gold +$11, although remain broadly vulnerable to renewed downside. Oil has built sig' gains, +2.5%.


sp'60min

Summary

Well, it does look pretty clear, right?

We have a higher low of sp'2085.. with VIX having filled the big gap zone in the 14s. It would seem the door is now wide open to continued upside >2117... and then 2125.
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*metals remain a little annoying.. but still.. my entry level was what I had been hoping for.. so now it should just be a case of having some patience into tomorrow.. or a little later in the week.

GLD, 60min

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VIX update from Mr T.



'...da dah da... one million contracts'

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time for lunch

11am update - a higher low

US equities are offering an early floor of sp'2085... with VIX having maxed out @ 15.13. A latter day rally appears underway... with a net daily gain in the sp'2100s now viable. With bond yields cooling and the market calming down, the metals are already cooling from opening highs, Gold +$6.


sp'60min

VIX'60min

Summary

So... opening declines.. but we're already seeing a strong bounce... and it looks like it could be a rather standard 'turnaround Tuesday'.

Bears had a clear warning at the open via a black-fail candle on the VIX.

For the bulls, with a higher low of 2085, now its case of battling to break above 2117... and then new historic highs >2125. That is certainly viable before the Friday close.

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*I remain focused on Gold, and am currently short via GLD

15min

I'll look to close out if Gold is moderately lower this afternoon.

10am update - opening weakness

US equities open lower, with the sp' offering an early floor of 2085. VIX has seen a jump into the low 15s, +7%... but viable to a negative close. With the moderate market concerns, metals have bounced, Gold +$8, but is highly vulnerable to turning lower.


sp'60min

VIX'60min

Summary

*notable black-fail candle on the VIX...  equity bears... beware!
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An interesting open, and it should be enough to have satisfied the algo-bots to wash out the weaker bulls.
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notable strength: SDRL +3.8%... the higher oil prices are helping
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*I am once again short Gold via GLD..  I might exit later today if GLD turns somewhat negative. In any case.. it should be a case of short every bounce until $1000 this summer.


10.10am. It increasingly looks like sp'2085 was an early low.. along with VIX 15s.

A latter day recovery is very probable, a net daily gain in the sp'2100s is on the menu, with VIX 13s.

Pre-Market Brief

Good morning. Futures are somewhat lower, sp -15pts, we're set to open at 2090.With the USD -0.6% @ DXY 94.40s, the metals are bouncing, Gold +$10, with Silver +0.8%. Oil is +1.6%, back above the $60 threshold.


sp'60min

Summary

So.. as expected, we're set for a gap lower this morning, although its a little more than I was seeking.

Things really only get bearish with a daily close <2080, and I just don't see that likely today.

Equity bears should be VERY mindful of opening reversal candles in the indexes, with a black-fail candle on the VIX ...... especially in the 14.75/15.00 zone.
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Verizon bid $50 for AoL (Tuesday close $42s), although that only gets AoL back to the level from last December.
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China had a third good night.. +1.6% @ 4401. Any daily closes in the 4600s will confirm that 5K is coming.. as early as June, that would make for a very natural mid-term top.

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Meanwhile, I have my eyes more focused on Gold...

GLD, 15min

A re-short in the 114.50s looks very reasonable... considering the broader price structure, which remains a large H/S formation. Target remains Gold $1000... equiv' to GLD 95.
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Good wishes for Tuesday!
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9.32am.. Opening VIX 14.73... right in target zone.... a black-fail candle.. looks due.


9.50am.. SHORT GLD from 114.30s

China headed for 5K

Whilst US equities started the weak moderately weak, the China market has resumed normal service, after interest rates were lowered for the third time this year. The Shanghai comp' has a viable floor of 4099, and is already back to 4333. Continued upside to the giant 5K threshold looks very probable.


China, daily

China, monthly

Summary

*I continue to think it is useful to keep in mind many of the non-US markets, as everything is connected of course.
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So... a second consecutive daily gain for the SSEC, and there will be clarity on any daily close >4572.

Considering the recent rate of gains, 5K looks viable by late June.

From there.. a natural retrace back to the multi-year breakout zone of 3500 looks probable... and yes.. that is a VERY powerful 30% lower.
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Looking ahead

Tuesday will only see US Treasury budget data.

*Fed official Williams (the T-shirt guy), will be talking in the lunch hour, and Mr Market will again be listening for any talk of int. rates or equity valuations.
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Goodnight from London

Daily Index Cycle update

Equities closed moderately weak, sp -10pts @ 2105. The two leaders - Trans/R2K, settled -0.1% and +0.1% respectively. Near term outlook offers Tuesday weakness to sp'2095/90, before the broader trend reasserts itself. The sp'2130s remain a valid upside target by end week.


sp'daily5

R2K

Trans

Summary

Transports - 'old leader' looks increasingly poised to break to the upside. A daily close in the 8900s would be decisive enough to offer clarity that a challenge for new historic highs in the 9300s is viable in June.
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As for the sp'500.... some moderate weakness to the 2095/90 zone tomorrow... before 2120/30s later this week. The weekly cycle offers the 2140s before end month.
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Mr Riley is back :)


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a little more later...