Tuesday 25 August 2015

VIX naturally cooling

Equities opened higher, but with severe closing hour weakness, the VIX rebounded (intra low 28.08), settling -11.6% @ 36.02. Near term outlook is uncertain, and will be dependent on whether the market can hold the sp'1867 level.




With the severe equity weakness into the close, the situation is far from clear.

There is high threat of further equity downside to the Oct' low of sp'1820.. which would kick the VIX back into the upper 40s.

Regardless... VIX is greatly over-extended, and a broad cooling to around 20 looks due within the next week or two.

*perhaps a more interesting question is... after a sustained multi-day equity bounce (as we're still due) how high might the VIX spike in the next equity crash cycle? Are we looking at VIX 60s.. 70s? Frankly, if sp'1700s.. then... yes.

more later... on the indexes

Closing Brief

US equity indexes saw a severe late day downside reversal, sp -25pts @ 1867 (intra high 1948). The two leaders - Trans/R2K, settled lower by -1.7% and -0.7% respectively. Near term outlook is very borderline.. if 1867 fails on Wednesday, downside to 1820... otherwise... renewed upside to 2000.



Q. Do I get a prize for worse post title in the past hour 'upside into the close' ?

Closing hour candle... the worse net hourly decline since the Monday open... swinging from 1926 to 1867...a monstrous swing of 59pts.. almost 3% !

So... I had expected some downside from the earlier high of sp'1948... and I thought 1920/15 was a bold target.

The closing hour candle is a serious problem to those seeking renewed upside tomorrow.

Now overnight futures/Asia market action will be critical.

No doubt - and justifiably so, some bears will be clawing for the Oct' low of sp'1820 tomorrow.

*I hold overnight, long-AAPL, from the $107s, with sp'1916. Seeking an exit in the 109/111s... within 2-5 days, although after today's closing hourly candle.. that is probably optimistic.

more later... on the VIX

3pm update - upside into the close

US equities are set for significant net daily gains, with the VIX having already cooled from a Monday opening spike in the 53s to the 28s. It remains a case of how many days.. or even a few weeks... might a bounce last. For now... first target is the psy' level of sp'2000.




*I'm tired... and not exactly running on full power today...

Suffice to say.. market looks set to push higher tomorrow... very likely above today's high of sp'1948.

A test of the sp'2000 threshold before the weekend remains very possible... and I sure won't short anything right now.

*as of the past hour, I am long-AAPL from the $107s.. with sp'1916, and will hold overnight.

back at the close... unless something bizarre happens.


3.23pm.. Hmm... some weakness..

Ironically. relative to recent days.. even on the 15min cycle... a 15/20pt drop doesn't look big.

sp'1906... Mr Market trying to washout the weaker bulls, before next wave up?

After all... unless you think we're going to see renewed severe weakness to 1820... this is merely a 'relatively' moderately down wave.

3.32pm.. so.. err.. the title of this post was 'upside into the close'.... hmm

sp'1904.... with the Monday close of 1893 looking within range.

3.35pm.. sp'1897..... just 4pts from the Monday close... with the R2K already fractionally red.

Hmm.... well, not such a predicatable close after all.

*I would add to long-AAPL from these levels... but I am in 'trade light' mode, and will merely hold what I have.

3.41pm.. indexes turning red... sp'1891... a full 57pts below the earlier high... almost a 3% bearish swing!

3.43pm.. That sure ain't a pretty candle on the hourly...

Bears will be screaming to break the 1867 low tomorrow... but I'm guessing... no.

3.46pm  1884.....     I guess you could say.. 'shields weakening'.     

2pm update - its the turning hour

Having seen some notable weakness from an earlier high of sp'1948 to 1914, US equities look set for renewed upside into the close. With the USD +1.2% in the DXY 94.40s, commodities are somewhat mixed... Gold -$14, whilst Oil +2.1%.



Hmmm..... we might have seen the floor for the day...

AAPL, 15min

Again, despite a likely attempt to make some gains on the long side across the next few days, I've eyes on the bigger prize.

2.10pm... still waiting.. .with sp'1918

There is a micro bear flag threatening sp'1908/06 this hour.

2.15pm.. still waiting... 1915...

2.17pm.. LONG-AAPL.. from the $107s.. with sp'1916.

2.30pm.. so. sp'1921....     and I'll surely hold AAPL overnight...    Hmm... never easy... playing that side of the game.

1pm update -still awaiting a little weakness

The smaller 15min cycle remains threatening a down wave across the next few hours. Notable, the hourly cycle has a bullish MACD cross, officially ending the collapse wave from sp'2103-1867. Regardless of the exact close... net daily gains.. with further upside for at least another few days.




Little to add.

Lets see if we get a minor snap lower.. .washing out a few of the bull maniacs in the sp'1920/15 zone.. before resuming higher.

*I continue to have eyes on AAPL. To be clear though.. if I do get involved, it will be a moderate size position. I have not lost sight of the broader bearish outlook for Sept/Oct.

stay tuned

1.17pm.. things are getting marginally interesting.   15min MACD cycles turning negative.

As ever.. 2.30pm is often a key turn... so... I'd like to give this another hour.

Interesting that by waiting a mere few hours.. AAPL calls have cooled 10% .. despite the price largely flat lining. No doubt.. largely due to the cooling VIX.

1.25pm... still melting lower...

... on track for a 2.30pm turn/floor

1.30pm.... sp'1917.. with AAPL 107...  hmm....

Naturally, I am the impatient one... but so far... I am containing my inclination to start hitting buttons.

12pm update - holding gains

US equities are holding strong gains, but still look moderately vulnerable into the afternoon. Regardless of any afternoon cooling, US indexes are set to close net higher, and a break into the 2000s looks due before the weekend. Again though.. such a bounce does nothing to negate the recent critical break.



Little to add.

I'm still looking for some kind of minor wave lower.. maybe to 1920/15 zone.. by 2.30pm

*will consider picking up a 'small' AAPL-long position in the 2pm hour... but if the price don't drop... I ain't buying.


An update from Riley... that appeared just this morning

time for tea. :)

11am update - bearish, bullish, and bearish

Many are no doubt feeling like they are in a washing machine on spin cycle. Yet for those watching the various time cycles, there is some degree of clarity right now. Moderate weakness into the early afternoon, with strength across the next few days.. but broadly bearish on a multi-week/month basis.



Well, its 11am.. which is a typical turn time.. lets see what kind of weakness we can get into lunch time... and the 1pm hour.

notable 'weird' action in XIV (1x short VIX), which despite the VIX (-21%), is only +0.9%.

Yes, I realise its due to some kind of futures-structure issue, but still... its surprising.

meanwhile.. TVIX/UVXY -14%... and that is not surprising.

I continue to have eyes on AAPL.

15min cycle

For now.. there is no hurry.. I'd prefer a moderate long entry from 106/105.. this afternoon.

11.15am... Hmm, new morning highs to sp'1942....  with AAPL $109.. oh well....  I ain't buying at that price...or this time.

notable weakness, Gold -$18.. with the miners following, GDX -3.1%

10am update - opening gains

US equities open powerfully higher, but the market looks highly vulnerable to an intraday down cycle into the afternoon. Price structure is offering a short term floor of sp'1867, with a multi-day up wave... at least to sp'2000.. with VIX 20. Broader outlook though remains bearish.




*I've eyes on AAPL as a potential long... but there is no hurry.... and the stock looks set to cool to 106/105 this afternoon.

Opening black-fail candle certainly bodes for further cooling today..

As for the main market.. net daily gains look a given, and if China/Japan soar overnight (why wouldn't they?)... we could be trading close to sp'2000 by late tomorrow/Thursday.

Yes, the VIX has an opening reversal candle.. and that does offer some equity cooling today, but VIX 40s.. and 50s look out of range for some days.

notable weakness, Gold -$8, with Silver -0.7%

10.08am.. Considering price action in a number of stocks - not least AAPl, a floor in the 1-2pm time frame looks probable... before resuming higher into the close.

time to cook !   back soon

10.27am.. looks like we have a morning high of sp'1940.....

Pre-Market Brief - PBOC act

Good morning. Futures are screaming higher, and the PBOC have acted (rate cut, bank res' req'), sp +55pts, we're set to open at 1948. USD is bouncing, +0.7% in the DXY 94.00s. Metals are weak, Gold -$3, whilst Oil is soaring, +3.8%, but still only in the $39s.




*PBOC cut rates around 6.10am EST, by 25bps, and loosened the bank reserve requirement ratio by 50bps.

Although it is important to note that US equities were already significantly higher before the news.

We have clarity.

A marginal higher low.. yesterday afternoon... and now we're going to see some days of upside... back above the sp'2000 threshold.

Best guess... a move to the 2040/50 zone.. with VIX getting cut in half to around 20.

The highest the bull maniacs can likely drive this is 2070... along with VIX in the mid teens.

early movers

AAPL +6% @ 106
DIS +3% @ 98
NFLX +75 @ 104

Overnight Asia markets...

Japan - Nikkei, -4.0% @ 17806

China - Shanghai comp': -7.6% @ 2964.  This close was before the PBOC acted... but regardless, with the loss of 3K.... the door is now wide open to 2500.. a level I've considered since the June top in the 5100s.


Plan for today?

Well. shorts are absolutely off the menu. I suppose I could pick up a small long position... on any intraday down wave... and would be content to hold overnight... for a few days.

The bigger issue though is of shorting the next bounce - with confidence, as the bigger weekly/monthly cycles are BROKEN. Regardless of this bounce.... equity bears remain in control.

Eyes on the prize.
Have a good Tuesday.

7.59am sp +56pts... @ 1949

meanwhile... more nonsense comments...

8.53am  sp +50pts... so..  thats 1943... will take some days just to test the 2000 threshold.

Watching the Cramer talk about the 'Chinese clowns'.. the irony.

Ohh... APPL is stock is higher today, I guess no need for another letter from Tim Cook to Cramer today? All is well in cheerleader land today.

9.38am Opening gains.... I'd look for an intraday pull back from 10/11am... into 1/2pm.

Bigger hourly/daily charts are offering a multi-day rally.. that could last into next week.

*opening black-fail candle in AAPL.... a retrace to 106/105 looks probable.  I might go moderately long at that level.

One hell of a day

It was another wild and crazy day across world equity markets. With the Shanghai comp' collapsing by -8.5% to 3209, the US market duly followed, with the sp' settling severely lower for the third consecutive day, -77pts (3.9%) at 1893.. along with VIX having spiked to 53.29.


Dow' monthly'2

sp'monthly1b - the critical 10MA

China, daily


Where to begin?

Do I start with China having taken out the key low of 3373.. or perhaps the VIX which didn't even show an opening print until almost 10am. Or how about the fact that today saw the third consecutive severe net daily decline of more than 2%?

Without question, it was the wildest market day since August 2011. Based on closing hour price action, there is high threat of continued downside tomorrow.

Even if a bounce does start in the next day or so (most realistic bounce upside 2000/2050) the bigger weekly charts are absolutely clear... we're headed broadly lower.

If you believe that everything from Oct'2011 was one giant wave.. then a natural fib' retrace of such a wave would be to the low 1700s. There are a few other aspects of support in the low 1700s.. so it'd make for a very natural cycle low into the early autumn.

Looking ahead

Tuesday will see Case Shiller HPI, New Home sales, consumer con', and the Richmond fed manu'.

Watching the train wreck

For yours truly.. it was a busy day. In fact, it was the busiest day I've ever had on these pages. It was great to receive so many messages.. including via email.

As for trading though, I remained on the sidelines. I watched the open.. .but with price action as wild as it was, I sat back and watched. The rally into the afternoon was very much expected, but despite hitting my target in the sp'1950s... I still didn't launch an index short.

Oh well... at least I didn't lose any money. I live to fight another trading day... and that is something not all retail amateurs will be able to say this night.

Goodnight from London

Daily Index Cycle update

US equities closed severely lower for a third consecutive day, sp -77pts @ 1893  (intra low 1867). The two leaders - Trans/R2K, settled lower by -3.5% and -3.8% respectively. Near term outlook offers renewed weakness to the Oct'2014 low of 1820.. with VIX again in the 50s.


Dow, daily




An incredible day in the US equity market, with the main indexes opening severely lower, then a hyper-ramp into the early afternoon.

Not surprisingly though, there was renewed severe weakness.. with a great many wild swings in the closing hour.

The daily closing candles are ALL bearish, and bode for lower lows in the near and mid term.

If the R2K reaches the Oct' low of 1040, that would equate to sp'1725/00 zone.. with Dow 14000... and VIX 60/70s... an incredibly bizarre thought.

a little more later...