Whilst equities closed moderately higher, the VIX was naturally back in cooling mode, settling -1.4% @ 19.34. Near term outlook offers increasing equity price chop ahead of the FOMC. Sustained VIX action above the 20 threshold remains difficult, with the 12/11s probable before year end.
VIX'60min
VIX'daily3
Summary
*it is notable that there are an increasing number of 'rogue' VIX price prints.. on the low end.
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Little to add.
VIX is battling to hold the key 20 threshold... as the FOMC looms next week. Once that is out of the way, the VIX will VERY likely cool into year end.
US equities closed moderately higher, sp +4pts at 2052 (intra low 2045). The two leaders - Trans/R2K, settled higher by 0.6% and 0.3% respectively. Near term outlook is for increasing price chop ahead of the Dec'16th FOMC. From there, first target remains 2115/20, and then the 2150s.. before year end.
sp'60min
Summary
*closing hour action: with a spike high of sp'2067 in the 2pm hour... there was distinct weakness into the close, as Oil broke new lows.
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A somewhat interesting.. if tedious day.
The good.. we're a day closer to the FOMC.
The bad... price action is likely to be increasingly choppy.
The ugly... Oil... with a new multi-year low of $36.38... and that sure won't be a key floor.
What should be clear by now though... a big move is coming after the FOMC.
Best guess remains: pushing upward into year end.. with new historic highs viable in the Dow, sp', and Nasdaq
After a few hours of price chop, US equities have resumed upward and are set for borderline significant net daily gains within the sp'2065/70 zone. A weekly close >2075 looks overly difficult.. as there remains anxiety ahead of next weeks FOMC, along with continuing weakness in Oil, -1.1% in the $36s.
sp'60min
USO'daily2
Summary
*the hourly upper bollinger will be around sp'2075 in the closing hour/early Friday, and that should restrain the bulls into the weekend.
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An Interesting.. if somewhat tedious day (if that makes any sense).
I'd rather just jump ahead to next Wednesday afternoon... lets get this damn int' rate rise out of the way!
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Whilst the broader market is holding moderate gains of 12pts at sp'2059, there is notable strength in the airlines. Delta (DAL), and United (UAL) are higher by 3.2% and 3.9% respectively. It is especially notable that Delta is close to breaking a new historic high, whilst UAL is on the edge of breaking out of a trading range.
DAL, daily
UAL, daily
Summary
*...as conditions remain choppy... I'll try to highlight a fair few individual stocks into next week.
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Whilst the actual Transportation index remains a mere 3-4% from the Aug' lows.. there is some distinct upside power in the airlines.
No doubt consistantly low oil/fuel prices are really helping improve margins... now its a case of whether those planes are filled with passengers.
*I favour DAL, it is a far more stable stock than UAL, and arguably.. a much better balance sheet.
The sp'500 is +6pts @ 2054, and for anyone at least semi-normal, its a case of 'turn off your screen until next Wednesday, 1.59pm'. Equity price action is increasingly subdued, and aside from the VIX hovering close to the key 20 threshold... its getting a little tedious.
sp'60min
VIX'60min
Summary
So yes... its getting somewhat tedious at the casino.
.. but that does give opportunity to put more focus on individual stocks across the next four trading days.
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notable strength...
Consol Energy (CNX)
A powerful gain of 8.5%.. but broadly... an utter train wreck. Even a move to $9.00 - where the 50dma is lurking, would do nothing to the broader trend.
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US equities are increasingly choppy, with the sp' currently stuck in the 2050s. Whilst the USD is +0.4% in the DXY 97.80s, metals are broadly flat. There remains notable weakness in the Oil market, -0.8%.. with WTIC having broken a new multi-year low of $36.52.
sp'60min
VIX'60min
Summary
*relative to equities, VIX is holding up rather well. Price structure is arguably a bull flag.
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After yesterday's wild price action.. today is relatively dull.
It remains very viable that we'll now be stuck between 2080/2036 until the FOMC announcement next Wednesday.
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US equities have swung from an opening low of sp'2045 to 2063. Much like yesterday though, the market will be vulnerable to renewed downside.. not least as the market is still very twitchy about the FOMC.. and the continuing weakness in commodity land.
sp'60min
USO'daily2
Summary
re: Oil.. trying vainly to turn upward.. but price action sure remains broadly weak.
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So.. we're moderately higher, but a key break (>2100) ahead of the FOMC looks increasingly difficult.
Mr Market, being what it is... increasing chop into next week looks probable.
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notable strength...energy
CHK +3.7%
CNX +10.7%
RIG +1.8%
SDRL +3.8%
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TWTR +6.5%.. on some bizarre story about being able to market ads to users who aren't logged in. How this merits the stock +6%... err.. no.
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US equities open with minor chop... but are making an attempt to build moderate gains into the sp'2050s. Price action is clearly going to remain unstable until the FOMC is out of the way. Oil remains weak, -0.8% in the $36s.
sp'60min
USO'daily2
Summary
I don't expect the same degree of price volatility that we saw yesterday.
What would be most surprising would be if the market can just push straight higher today.
Far more probable... broad chop all the way to next Wednesday.
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As a fair few have noticed, energy stocks are making repeated attempts to build a key floor
APC +0.3%
It is a rather bizarre thought that the $60 threshold is almost 20% higher.
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RIG +0.1%
SDRL +3.5%...
As for Oil itself.. even the $40 threshold looks difficult... not least after the way the market reacted yesterday.. despite a net draw of -3.6 million barrels.
*WTIC broke a new multi-year low of $36.52 in early trading.
Good morning. US equity futures are a touch higher, sp +2pts, we're set to open at 2049. USD is rebounding, +0.5% in the DXY 97.80s. Metals are broadly flat, whilst Oil is -0.8%.
sp'60min
Summary
Little to add.
From a pure cyclical perspective, we're due for a rally attempt today.
With the break of the 2042 low, even a net daily gain in the sp'2060/70s won't give clarity that another sharp down day is won't occur before the FOMC.
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Overnight Asia action
Japan: -1.3% @ 19046.... the 20K threshold is fading far away.
China: -0.5% at 3455, a key monthly close >3800 now looks very unlikely
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With the failure of the sp'2042 low to hold, the door has opened for the equity bears to break below the giant psy' level of sp'2K, ahead of next weeks FOMC. An obvious question is what level for the sp'500 would directly cause the Fed to back off from raising int' rates, 2000, 1990, or even a little lower?
sp'weekly1b
sp'monthly1b
Summary
The weekly candle sure ain't pretty.. taking out last weeks low. A weekly close >2100 is now out of range. Underlying MACD (blue bar histogram) is start to tick lower, although we're still at least 2-3 weeks from a bearish cross.
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A note on the bigger picture.
I will continue to hold that the monthly 10MA is a very fair MA to delineate the primary trend. Since the marginally higher low in Sept'... the market soared back and held the 10MA for the Nov' close.
Lets be clear... if Dec' closes <2050... the default trade will switch to the short side.
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Looking ahead
Thursday will see the weekly jobs, import/export prices, and the US Treasury Budget.
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As for Yellen and the other maniacs at PRINT HQ
Back off... back OFF !
Despite what they periodically claim, the Fed is very much 'data dependent' on the level of US equities. It is unquestionably true that the lower the market trades, the less likely it is that the fed will raise rates.
Right now, I'm still guessing the Fed will raise rates next week, but if sp'2K is lost next Mon/Tuesday, the Fed would have the excuse they need to back off.. yet again.
As was the case early this summer, the market needs to see this uncertainly end. A 25bps rise in rates is not going to kill the economy or cause capital market upset. Ironically, Yellen had better not disappoint next Wednesday, or there will be a repeat of the Aug/Sept' equity turmoil... and next time could be considerably worse.
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I shall conclude today with the following, that perhaps summarises today's rather fierce battle between the equity doomer bears... and the bull maniacs.
I'll leave you to decide whether Kirk would be the doomer... or a maniac.
US equities closed broadly weak, with the sp -15pts @ 2047 (intra
range 2080/36). The two leaders - Trans/R2K, settled lower by -0.5% and
-1.2% respectively. With the break of the 2042 low, near term outlook
is very uncertain. There is high risk of the 2020/1990 zone.. as the
market is increasingly anxious ahead of the Fed.
sp'daily5
Trans
Summary
A new cycle low for the 'old leader' - Transports, of 7765. Right now, the first target of the 200dma (8340s).... is a long way up.. and looks out of range before year end.
The fact the transports remains at such low levels, whilst Oil is sub $40 remains pretty bizarre, and is suggestive of other underlying economic problems.
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With the break of the sp'2042 low... the equity bears now have an open door to another 2-3% lower before next weeks FOMC.
An obvious question is whether sub' sp' 2K would spook the Fed, and see them back off from raising rates, but more on that... a little later...
