Friday 2 October 2015

VIX cools into the weekend

With most equity indexes closing significantly higher, the VIX remained in cooling mode, settling -7.1% @ 20.94. There was a notable flash-print low of 20.35. Price structure on the hourly cycle is offering a big bull flag, with viable upside to the 27s by next Tue/Wed. The 30 threshold looks out of range, unless <sp'1867.





*a net weekly decline of -11.3%

Suffice to note...  VIX has been in cooling mode since the Tuesday equity low of sp'1871.

All things considered, the VIX looks set for renewed upside into the middle of next week... before cooling into VIX opex of Oct' 14th.

To be clear though, if sustained action >sp'1950 across next Mon-Wed, then a straight run to the 200dma in sp'2060/50s will be due, and that would equate to VIX losing the 20 threshold, and likely holding the mid teens for some weeks.

*I remain long-VIX across the weekend

more later... on the indexes

Closing Brief

US equities closed significantly higher, sp +27pts @ 1951 (intra low 1893). The two leaders - Trans/R2K, settled higher by 0.5% and 1.5% respectively. Near term outlook is borderline, with the market at soft resistance in the sp'1950s. Any sustained action >1950, will open up a straight run to the 200dma in the 2050/40s.



*closing hour action: another crazy short-stop cascade.. with a new intra high. What was the excuse? Did the earlier bad jobs news now become good news?

So much for 'weakness into the weekend'...

... and another wild week in this twisted casino comes to a close.

Frankly, I think it was the hardest trading week since 2011.

It is pretty bizarre to see the market hyper-ramp 58pts (2.9%) across just six trading hours.

*Yours truly managed to cash out gains in AAPL-short and DAL-short... so that was something. I hold DIS and GE short.. along with VIX-long across the weekend.

Have a good weekend everyone.

*the usual bits and pieces across the evening to wrap up the crazy week

3pm update - weakness into the weekend

Most US equity indexes are set to close net lower for the third consecutive week. The two leaders - Trans/R2K, remain leading the way lower.. and are suggestive of another push down.. before some kind of multi-week up cycle can begin. Regardless of the close... it has not been a dull week!


R2K, weekly


The smaller 5/15/60min equity cycles are highly suggestive of a rollover into the weekly close.

In any case... its been a pretty crazy day.. and week.

Unless we crash in the closing hour.. I'll return at the close.. to wrap things up

3.15pm.. Ohh.. so the market wants to do another short-stop run into the close.. sp'1938... VIX 21.60s

oh well.

3.20pm.. so.. with sp'1942.. that is the level from overnight Wed' futures.

A 49pt ramp from the morning low....2.4%.. based on.... NOTHING.

3.37pm... Well, sp'1945/46 is  50% retrace of the wave from 2020/1871....

Any sustained action >1950.. and we're going another 100pts higher.

Best guess is ... no... but I realise many would argue otherwise.

2pm update - eyes on the VIX

US equities break a new intra peak of sp'1935... as equity bears have been ground out from an early low of 1893. VIX remains subdued in the 22/21s.... but the micro 5/15/60min cycles are all set for upside across next Mon-Tuesday.




Q. Price structure on the VIX, a big bull flag.. with a corresponding big bear flag on the sp'60min cycle?

If yes.. then it'd bode not just for sp'1867.. but at least 1850.. if not the Oct'2014 low of 1820.

With the R2K (following the Dow/Trans in August) seemingly headed for the Oct'2014 low of 1040... the sp'500 could yet hit 1820 before first opportunity of a multi-week up cycle.

Anyway.. its just a scenario to consider.

notable weakness (despite the indexes)...

DIS, daily

I remain short- DIS... and considering the VIX and overall price structure, I will hold short into next week. First target are the $97s.

1pm update - another wacky VIX flash print

With US equity indexes turning positive, with a new high of sp'1930, the VIX has seen a sporadic flash-print, hitting 20.35.. before immediately rebounding. Regardless, from a pure cyclical perspective, the smaller 5/15/60min cycles are all on the very low side... the VIX is set for upside early next week.




*I remain long-VIX, and considering the price structure... and overall equity action (not least the earlier break <sp'1900)... I will be content to hold VIX across the weekend.. along with DIS and GE.. both short.

So.. with sp' @ 1930, everything is fine again?

With 3 hours still to go.. there is plenty of time for another down cycle.. at least to get close to 1910/00 zone. I admit.. a weekly close <1900 now looks overly difficult.

notable strength: GDX, +5.5%.. as Gold +$21.

1.24pm.. VIX trying to put in a (ignoring the flash-print) low of 21.52.... 22s will be provisional break UP.

Overall.. crazy day.. but then.... its October....  a typically wild month.

12pm update - due another wave lower

US equities have bounced from a morning low of sp'1893 to 1917.. with VIX cooling to 22.73. Equity bears should be seeking a weekly close <1900.. along with VIX 24/25s.. to keep the door open to 1867.. and lower next week. The rest of today... will be rather important.




*Fed officials Fischer and Bullard are due across the next two hours... and Mr Market will be listening.
All things considered, a break back under sp'1900 looks probable.

Here in London city...

A few hours of bonus summer warmth
VIX update from Mr T.

.. ohh.. and I receive a shoutout.  Is that bullish?

time for lunch

12.30pm.. the micro 5/15min VIX cycles... extremely low... we're due a turn.

sp'1926.... pretty crazy... as bears short-stopped out.

12.32 VIX sees a flash print of 20.35... trying to put in a hyper-spike low...


stay tuned

12.37pm.. Crazy algo-bots.... VIX back 22.20s.... a move into the 23s will confirm a turn.

*I hold long-VIX.. will very likely hold across the weekend.. with price structure as it is.

11am update - the battle rages on

US equities remain significantly lower, but as ever... the bull maniacs are out there... trying to find an entry level... helping to negate half of the declines. First target remains 1870/67.. with VIX 27s. With the USD -0.8% in the DXY 95.40s, there is a notable hyper-reversal in Gold from -$7 to +$23.



GLD, daily


All cycles currently favour the equity bears into the weekly close.

It makes little sense that the market won't at least test the 1867 low.. and in theory.. a marginally lower low around sp'1850 would be rather natural... although that seems out of range today.

*I remain short DIS, GE, and long-VIX.. seeking to 'clear the decks' before the weekend... but if price action looks okay.. I could just about stomach holding into Monday.... not least as I've now dropped DAL.

time for some sunshine... or I'll go crazy

10am update - bad news IS bad news

With the monthly jobs data coming in much lower than expected (along with lower revisions) the capital markets are upset. The sp' has decisively failed to hold the key 1900 threshold, and now looks headed for 1870/67 in the immediate term...  and that should equate to VIX 27/28s.




*EXITED DAL-SHORT.. from $43.45.. so that is 2 positions gone... 3 to go.

So.. we flipped from sp +14pts @ 8.29am to -28pts... and things look increasingly bearish.

Hourly cycles are set for bearish breaks this hour.... and in theory we should hit sp'1880 - with VIX 26s.. by lunch time.

A somewhat more important issue...


The weekly candles are looking a lot better - from a bearish perspective...  the Oct'2014 low of 1820 is viable in theory.

Anyway.. first things first.. lets see if we can get to 1870/67 this afternoon.

10.02am.. Factory orders, -1.7%... lousy number.

notable weakness: BAC -5.4% in the $14.70s.. as interest rate hikes are OFF the menu

10.19am.. little bounce to 1903.... as some are no doubt buying ahead of Fed official Fischer.. due at 12pm

.. VIX +6% in the 23.90s....

Equity bears really need to see the 25s within the next 2-3 hrs... to reflect at least some market concern

Pre-Market Brief

Good morning. US equity futures are moderately higher (ahead of the jobs data), sp +9pts, we're set to open at 1932. USD is +0.1% in the DXY 96.20s. Metals remain weak, Gold -$7... the $1100 threshold is set to be tested. Oil is broadly flat.



Little to add... ahead of the jobs data.

As ever, it will not be the number itself that matters... but how the market interprets it.

Overnight Asia action....

Japan: essentially flat.
China: remains CLOSED until next week

Update from Oscar


Eyes on 1900

If we don't break under sp'1900 today... it would bode badly for the equity bears next week, and will threaten a straight run to the 200dma in the 2050s by late Oct/early Nov. 

Long day ahead

8.32am.. 142k net gains.... 5.1 rate

Market snaps violently from +14pts.. to -5pts....


Bad news is bad news... really?

8.33am.. sp -12pts... 1911....

8.41am..  sp -18pts.... 1905.....    almost there.

8.47am  sp -20pts... 1903....

Watching Ms. Swonk on clown finance TV.. she feels like she is in quicksand.  Well, she never did see 2008 coming either.  At least she is consistent in her failure.

notable strength, TVIX +5%... but really. that is still a small move.

Can the VIX get to 27/28s today?   Technically.. it IS possible.... right now.. it'd imply a BREAK under 1867... if 27s - relative to yesterdays' lackluster VIX.

8.57am... sp -18pts... 1905...

.. but don't worry.. the Bernanke is on CNBC next Monday. He will make it all better..yes?

9.14am.. sp -24pts.. 1899.. so we have a threshold break.

In theory.. we should be -55pts.. around 1870/67 this afternoon.. with VIX 27/28s.

9.16am.. sp -27pts... 1896.. its pretty decisive now.

Today at least.. bad news IS bad news.. and the market is increasingly upset

9.36am.. Hourly MACD Cycle set for a bearish cross at 10am...    

Eyes on the VIX +8% in the 24.50s  ... first target 27s.

The big bearish monthly charts

Whilst Thursday saw some relatively moderate equity price swings, with a new month.. the giant monthly cycles have a new candle. For the chart maniacs out there, it should be absolutely clear that underlying price momentum continues to increasingly favour the equity bears.




re: sp'500. First, note the MACD (blue bar histogram) cycle.. now at levels not seen since May 2009. Second, the lower bollinger is around 1850, and offers rather strong support in the near term. In terms of upside resistance... we have the 10MA @ 2034.

Lets be clear.. until we see a monthly close >2030, the bull maniacs are facing a major problem. For the moment... the default trade remains to the short side. On the smaller daily cycle time frame.. the 200dma (2063) is arguably the last line in the sand for the serious 'big bear' money.

re: Dow. First, note the third consecutive red candle on the 'rainbow' (Elder Impulse) chart. Can Oct' also settle with a red candle? If so.. it'd be another major support to the notion that the August break was something other than just a short term washout.

Second, note the decisive break under the lower bollinger in August.. something not even seen in the initial break in late 2007/early 2008.

Indeed, right now... there is reasonable justification to target a test of the Oct'2007 high of 14198... some 2000pts lower than current levels.

Looking ahead

Friday will see the latest monthly jobs data. Market is expecting 203k net gains, with a static headline jobless rate of 5.1%.

Other data: Factory orders (10am).

*there is a wheel barrow of Fed officials speaking.. inc' Fischer and Bullard. If any of them say anything to that upset Mr Market, it sure would help aid a break <sp'1900.

Carrying the weight of the world?

For yours truly.. it was a better day than feared. Futures had largely cooled from overnight highs (equiv' to sp'1940). AAPL was knocked sig' lower in early trading, and I made good use of that opportunity to offload that position. Yet, I'm still left with four short-market positions (including long-VIX).. that I really want to exit.

If we do break <sp'1900 tomorrow (and that sure could happen even if we open higher) and are trading in the 1880/70s by late afternoon, I'll try to offload another position or two. I would consider holding across into Monday, as a test of 1867.. and even a brief foray to the 1850s still looks possible.


The current weekly candle is threatening a spike floor. I'd really like to see a Friday close <1900... as that would keep the door open to further weakness next week.

Thank the gods, its almost the weekend... I'm real tired... this week has felt like I'm carrying the world at times.

... always good to hear from some of you out there.

Goodnight from London

Daily Index Cycle update

US equity indexes closed moderately mixed, sp +3pts @ 1923 (intra range 1927/00). The two leaders - Trans/R2K, settled +0.6% and -0.3% respectively. Near term outlook is bearish... to the 1870/50 zone.. which would make for a rather natural mid term 'marginally lower low'.




Little to add.

The daily closing candles are arguably bullish, although the smaller 15/60min cycles are on the high side, and offer sig' weakness into the weekend/next Monday.

Best guess... a break <1900... and then at least 1870s.
a little more later...