VIX forms a clear spike floor

With another FOMC announcement, the VIX was briefly flash-crashed to 12.80. Despite renewed equity upside in the closing hour, the VIX closed well above the spike low, settling -7.1% @ 14.33. Near term outlook is for the sp'2K threshold.. and that should equate to VIX in the 18/20 zone.


VIX'60min

VIX'daily3

Summary

We have a very clear spike floor in the VIX 12.80, which gives some clarity that we're very close to a short term equity peak.

However, sustained action above the key 20 threshold looks difficult.
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more later... on the indexes

Closing Brief

US equity indexes closed significantly higher, sp +24pts @ 2090. The two leaders - Trans/R2K, settled higher by 0.1% and 2.9% respectively. Near term outlook is now bearish, with first downside target of the sp'2K threshold, and that should equate to VIX in the 18/20 zone.


sp'60min

Summary

*closing hour: renewed upside.. but the marginal new highs were not particularly reflected in the closing VIX.
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Despite the closing hour new high, there are clear reversals in other parts of the capital markets... such as the precious metals.


Having ramped from sp'1871 to 2090 (219pts) across 5 weeks, a retrace of 4-5% seems entirely natural.

Right now.. I'd only give a probability of 10% or so that we'll see a more powerful retrace to the gap zone of 1950. Frankly.. it seems just too difficult.. relative to recent price action.
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more later... on the VIX

3pm update - spooked on threats of higher rates

US equities have seen a very clear reversal, from a cycle high of sp'2084 (with VIX 12.80), after the fed press release contains a threat that rates may be raised at the Dec' FOMC. First downside target is around the sp'2000 threshold.. which would be very natural to hit.


sp'daily5

VIX'60min

Summary

*a VERY clear spike floor in the VIX of 12.80. It doesn't get much more definitive.
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So... we have a cycle high of 2084.

I've added a fib' retrace, and that is itself suggestive that a retrace would at least around sp'2000.

Ultimate 'best case' for the equity bears would be the price gap zone around 1950.. but really.. that looks out of range... and is not supported by recent price action.
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Metals...

Gold, daily

A hyper-reversal candle in Gold (and silver).. as higher rates are BEARISH metals. The fact it has lost the 200dma only adds to the bearishness in that one.

The bigger weekly cycle is offering a giant bear flag.

The $1000 threshold remains due.. and that ain't going to help the related mining stocks.

.. no doubt.. the 'gold bugs' out there will disagree with that outlook.
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3.07pm... a micro ramp.. back to sp'2077.. but really... new highs look difficult now.

notable strength: AAPL +3.3% in the $118s.

TWTR.. a bizarrely strong reversal... from -11% to -1%... who is buying that nonsense today?
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3.30pm.. sp' 2082...   testing the earlier high.   VIX 14.40s.

Oil set for net daily gains of 6.0%.. which is clearly stupid, considering the growing inventories.
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3.41pm.. marginal new cycle high sp'2085... but the VIX sure ain't breaking the 12s again.

Nothing has changed... I'm still seeking renewed weakness from here. 
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3.52pm.. USD +0.8% in the DXY 97.80s.... and that will be a problem... not least for commodities.

Regardless of the closing hour new high.... market is building a short term top.

2pm update - time for a press release

The FOMC announcement is imminent, and it seems a given that interest rates won't be raised.. yet again. The excuse this time could be 'soft jobs data', but whatever is in the press release.... there will be no opportunity for the press lackeys to question (if softly) the Yellen.


sp'60min

Summary

So yes, I'm not expecting any change in rates.
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Seeking a brief equity spike higher... the smaller 15/60min cycles are offering 2085/90... the daily offers 2095/2100.

Broadly.. a reversal into the close looks a real threat.
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.. updates across this hour.. and into the close..............


2.01pm.. no rate increase..

VIX getting utterly nuked... for capitulation floor...  -17% in the 12.80s.

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Possible cycle high of sp'2084... with VIX 12.80

Cyclically.. we're due a key turn from here
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2.04pm.. GOLD reversal.. about to turn negative... as USD +0.3%
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2.07pm.. It would seem we have a cycle top of sp'2084. A marginally red close would give extra clarity.

VIX.. back to -1%.. in the 15.20s.....   a clear SPIKE-floor @ 12.80.   First target is the 18/20 zone.

... and that IS a clear turn.
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2.16pm..  Clear turns in equities AND the VIX.

Primary target is the sp'2020/00 zone..   with 2002 being a basic 38% fib' retrace.

So.. we're sp -1pt @ 2064..    62pts to go... minimum.
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2.27pm.. a micro bounce.... but broadly.. we have a clear spike high of sp'2084.

*notable strength, financials... on higher rate hikes.   BAC +4.3%

1pm update - churn before the FOMC

US equity indexes break a new intra high of sp'2082.. along with VIX 14.58. There remains high threat of a brief spike higher to the 2085/2100 zone before a key reversal. Oil is holding powerful gains of 5.7% in the $45s.. whilst Gold is +$12.


sp'daily5

Summary

... the quiet hour.. before things get a little wild.
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notable strength... AAPL, +2.8% in the $117s

However.. cyclically.. AAPL looks vulnerable to selling lower into mid Nov'.. along with the rest of the market.
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notable weakness: TWTR, -3.5%.. but that is a clear 7% above the earlier lows... as some of the momo chasers have appeared.

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Back.. just before 2pm

12pm update - bullish sunset.. ahead of the Fed

US equities are holding moderate gains, breaking a new cycle high of sp'2081.. a rather bizarre 53pts (just 2.7%) shy of a new historic high. Despite the gains (including the mini explosion in Oil, +5.6%).. sustained action in the 2100s looks overly difficult. The sun is likely setting on this initial up wave from 1871.


sp'daily5

USO'60min

Summary

So.. sp'2080s have been hit... on Fed day no less.

Best guess remains: a spike high/reversal this afternoon...   most realistic downside target is the 2020/00 zone. I suppose a hit of the 50dma (1990/80s) would make for an equally natural retrace/test.

To be clear... I am NOT expecting new lows before year end.

We broke too far above the monthly 10MA...   and broader price action does not support the notion of another severe down wave to the 1800s.. or lower.

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... sunset... and it ain't even 4pm (GMT) yet...

Awaiting the Fed

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VIX update from Mr T.




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time for lunch

11am update - battling upward

US equities are building moderate gains, battling to break new cycle highs in the sp'2080s. Oil has seen a notable explosion to the upside, +4.7% in the $45s, as inventories 'only' rise by 3.4 million barrels. Gold is holding sig' gains of $14.


sp'daily5

USO'5min

Summary

*the explosion in Oil is no doubt largely due to short-covering. The underlying issue of over supply remains entirely unresolved.. as seen in this mornings 'better than expected' number.
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As for equities.. well, the higher we go before the FOMC.. the higher the risk of an afternoon reversal.

Equity bears should be looking for an FOMC spike... somewhere in the 2085/2100 zone.

Sustained action in the sp'2100s looks VERY unlikely in the current up wave from 1871.
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time for some sun... before its too late.

10am update - opening minor gains

US equities open a little higher, but price action is likely to be within a holding pattern ahead of the FOMC. Whilst the USD is -0.3% in the DXY 96.60s, metals are building sig' gains, Gold +$14. Oil is +1.0%.. ahead of the latest EIA report.


sp'daily5

Summary

There is little reason to expect any sig' action until the FOMC announcement. The sp'2080s do look due though

It remains VERY probable we'll see a short term top today... with Q3 GDP data likely to be lousy tomorrow... with the market using it as an excuse to trade lower.

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notable early movers...

AAPL, 15min

An interesting opening gain... but it looks like sustained action in the $120s is unlikely in the current cycle.

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TWTR,daily

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... awaiting the EIA report... (10.30am)

Pre-Market Brief

US equity futures are moderately higher, sp +5pts, we're set to open at 2070. With the FOMC certainly due to announce nothing, the market will likely use it as an excuse to break into the 2080/90s within the near term... before first opportunity of a retrace.


sp'daily5

Summary

We're certainly setup for net daily gains. Upper bol' on the daily cycle offers the 2080s later today.. .possibly 2090 on a spike.

GDP data tomorrow won't likely be great.. and there is high risk we'll see a short term cycle peak late today/early tomorrow.

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notable early movers.

AAPL +1.6% in the $116s
TWTR -10% in the $27s

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Doomer chat, Hunter with Schiff

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Asia action

Japan: +0.7% @ 18903
China: -1.7%  @3375... With just 2 trading sessions of the month, the SSEC is still set for a net monthly gain of around 10%.

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Have a good Wednesday

Energy prices remain broadly weak

Energy prices continue to remain broadly weak, with WTIC Oil settling Tuesday -1.2% @ $43.20, whilst Nat' gas +0.7% @ $2.09 (intra low 1.95). There remain underlying over supply issues for Oil and Gas, and it would seem that problem won't be resolved for much of next year either.


WTIC, weekly2

Nat' gas, weekly

Summary

*despite the net daily gain, Nat' gas saw the lowest intraday level since April 2012.
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Suffice to add, lower energy prices are going to continue to help the US/world economy.

It continues to bemuse me how some of the doomer econ/equity bears will tout 'see...the market is not breaking new highs.. despite lower oil prices'.. or 'retail sales remain weak'.

Yeah yeah.. I've heard it a thousand times.

Q. Do you think retail sales are going to do better with $100 oil ? .. because logically, that appears to be the mindset of some out there.


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Looking ahead

Wed' will see the latest EIA oil report.. but far more important.. the latest FOMC.

There is a policy announcement due at 2pm... there will NOT be a press conf.

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Goodnight from London

Daily Index Cycle update

US equities closed broadly weak, sp -5pts @ 2065. The two leaders - Trans/R2K, settled lower by -2.6% and -1.2% respectively. Near term outlook is for renewed upside to the 2080/90s.. not least if the market can cope with a dull FOMC announcement and somewhat mediocre Q3 GDP data.


sp'daily5

Nasdaq comp'

Summary

*Tech' held up very well today, certainly relative to the 'two leaders - Trans/R2K'.
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Despite a second net daily decline, the sp'500 - along with other indexes, look set for renewed upside. It is notable that today was the third close above the 200dma.
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Closing update from Riley



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a little more later...