Wednesday, 20 January 2016

Volatility cooling in the afternoon

With equities breaking a new multi-year low of sp'1812, the VIX finally showed some upside kick (intra high 32.07), but then saw very significant afternoon cooling, settling +5.9% @ 27.59. Near term outlook is uncertain, as there is clear threat that sp'1812 is a short term low.





*I've included the bigger weekly cycle, to help put things in perspective. The 30s are kinda high.. but its nothing relative to the capitulation (53.29) as seen Aug'24th.

The two most recent weekly candles are somewhat spiky.. and threatening the equity bears with a short term floor from sp'1812.

Broadly.. VIX 40s look an easy target.. but perhaps not this cycle.

So.. what to make of today?

First, we saw VIX 32s.. which certainly confirmed the new multi-year lows seen across most equity indexes. Yet, VIX then cooled over 5pts to 26.59, before a minor rebound in the closing minutes.

Frankly.. its not a great close for those long the VIX. There is clearly still threat of renewed equity downside - not least from further weakness in Oil, but still.. VIX may have well maxed out in the 32s today.

*I launched a VIX-long trade (via TVIX) in the 2pm hour, but bailed a mere 45 minutes later as the equity recovery turned somewhat hyper bullish.

more later... on the indexes

Closing Brief

US equities closed very mixed, sp -22pts @ 1859 (intra range 1812/76). The two leaders - Trans/R2K, settled -0.5% and +0.4% respectively. With a rather powerful wave from 1812 to 1876, the market is threatening a short term floor, although 1812 makes little sense as a key floor.



*closing hour action: more crazy ass swings... with the Trans, R2K, and Nasdaq actually turning positive. There was renewed weakness in the closing minutes, but it was not a great close for those in bear land.

Well, that sure was much too wild for yours truly.

The market had setup a pretty good bear flag by 2.30pm.... and after a little chop... we saw a very significant hyper-ramp, especially seen in the two leading indexes - R2K swinging from 958 to 1008, a VERY powerful 5%

sp'1812 makes little sense as a key low, but I can't be in denial about the closing daily candles, which are warning of a spike floor.

*I went long TVIX around 2.30pm.. but bailed just after 3pm as the market went hyper bullish. If it was just a market fake out.. it was a nasty one.

more later....on the VIX

3pm update - trying to keep things in perspective

With price action increasingly wild - not least the earlier swing from sp'1812 to 1847 (for no good reason), it is getting a little difficult to keep things in perspective. However, the bigger weekly/monthly cycles sure help, with a viable short term target of sp'1750/25, and the grander 1600/1500s in April/May.




I think its fair to say many  - myself included, have been waiting for a bounce that just didn't come.

After trying to fine tune an intraday entry, I'm long the VIX, via TVIX, from sp'1844.. and VIX 28.70s.

All things considered, a target of sp'1780/70s, with VIX 36/38 does not look overly bold, whether tomorrow, Friday.. or early next week. It makes no real difference.

We are STILL due capitulation.

Right now, a daily close <1830 would be useful.. along with VIX >30

updates into the close....

3.18pm... sp'1866... now a full FIFTY FIVE points above the earlier low.

Urghh.. is that really it, or is it just a crazy ass short-stop cascade?

VIX remains broadly elevated in the 27s.. but that is a clear 5pts below the earlier high.

3.21pm.. A daily close >1870.. would be a real problem to those short.  Short term trend is broken..   urgh.

3.28pm.. Hyper-spike floor candles on the two leaders - Trans/R2K.

3.30pm. EXITED TVIX-long....  major fail.. as the market appears to be putting in a giant spike floor.

Seems no point holding short above sp'1870... VIX looking dire.. in danger of closing red.

3.35pm... The scary daily candle...

That is too bullish for my liking. sp'1812 makes little sense as a low... but it is.. what it is. 

3.49pm.. and now a swing from 1876 to 58.... another 0.8% within barely 30mins.

This market is really start to annoy me.

VIX rebounding, +7% inthe 27s... but that is still a long way from 32s.

back at the close......................

2pm update - just another intra bounce

Equities are seeing an intra bounce, with the sp' battling from a new multi-year low of sp'1812 to the 1840s. At the close of today, there will be soft declining trend/resistance at 1860. It should remain clear.. there still hasn't been any real capitulation, the 1700s remain due.




So.. Wednesday afternoon.. a little rally.. but overall.. its just the same tease we've seen since late December.

*ECB/Draghi is due tomorrow. Unless he literally spools up the printer tomorrow lunch time. there is little reason to believe the market will get hysterically bullish and begin a new up wave.

Current price action remains very unstable.. and the fact we've already broken the 1820 low remains notable.

Oil remains under severe pressure, -4.5% in the $27s.

notable hyper-reversal in...

TWTR, daily

I've no idea why.. but then.. are the 18s now to be touted as success?

*there will high threat of another strong reversal from 1845/50 zone in the 2pm hour.

A daily close >1860 looks extremely unlikely

2.04pm.. I've eyes on the micro 5min cycle... for sp'500 and VIX/TVIX.

A valid market re-short around 2.30/45 this hour....

2.12pm.. It continues to set up for a turn around 2.30pm.... with renewed equity weakness into the close.

I've eyes on TVIX....



Almost there..  in terms of time.. price.. sp'1850.. maybe.

2.24pm.. I am long the VIX, via TVIX, with sp'1844, and VIX 28.70.

Target exit is sp'1780/70s.. with VIX 36/38

*I've little stomach for dealing with options right now.. especially from these levels. TVIX for me seems a valid compromise.

Regardless... I'm involved.... now we'll see if we get those sp'1700s I've been babbling about since Jan' 1st.

1pm update - bears making progress

US equities continue to unravel, with the sp'500 breaking below the Oct'2014 low of 1820, triggering another truck load of long-stops. There is rather easy downside to the 1780/70s, which would equate to the Dow 15100/000 zone. VIX is confirming the mainstream upset, +22% in the 32s.



VIX' weekly


To be clear...

The bigger weekly/monthly cycles are highly suggestive we will see short term capitulation in the sp'1750/25 zone.. specifically 1730.

The Dow has clear support around 15100/000... and that would equate to 1780/70 or so.

So.. another 2% to go.. minimum...

The 1750/25 zone looks viable tomorrow... and that would make for a more natural short term low.

**ironically, even a multi-week rally to 1950/2000 zone in March/April, would STILL offer another wave lower to the 1600/1500s in April/May.

stay tuned.... and say HELLO !

1.32pm.. maybe its just me, but DISQUS message system is having issues. Overloaded by the hundreds of thousands of comments across hundreds of sites?

sp -51pts @ 1829... so... 4.5% away from target zone.

12pm update - this is not capitulation

Despite the sp -50pts @ 1831, there is still no sign that we've seen short term capitulation. Indeed, the bigger weekly cycles (big bear flag from Aug-Dec) have always suggested a basic fib' retrace target of sp'1730. VIX is similarly yet to see any blow off top.




Suffice to add, we're still due capitulation... and I'd guess that won't be today.

Right now, the 1780s look an easy target.. whether tomorrow or Friday, makes little difference.

I could reel off a long list of absolutely imploding stocks, its the usual suspects of course...

AA -6%
CNX -10%
CHK -7%
FCX -10%
SDRL -20%, market is effectively pricing it as warning of bankruptcy.
RIG -5%

even NFLX is -5%, despite earnings initially pleasing the market.

VIX update from Mr T.

time for tea :)

12.26pm... With the Oct' 2014 low of sp'1820 broken.. another tranche of long-stops are hit.. with a market snap lower.

Next level.. 1780/70 or so.... possible today..  in any case.... VIX is finally starting to show some upside kick.... +19% in the 31s.

11am update - winter has come for the bull maniacs

To use a Game of Thrones reference, Winter has unquestionably come for the equity bulls. Every micro bounce is being sold into, as the market appears headed for short term capitulation within the sp'1750/25 zone, and that should equate to VIX at least >35.




*note the 200dma, by March/April, that will be around 2K, and will be prime resistance in the next multi-week rally.

Getting kinda interesting, right?

Traders should be looking for some kind of capitulation day, the obvious signs, such as much higher vol'.

Regardless of the next bounce, broader downside to 1600/1500s looks extremely probable.

**I'll try to cover it later, but the two leaders - Trans/R2K, are set to turn MARCON 1 in Feb/March.  The headline indexes look due to follow in March/April.

Effectively... we're getting kinda close to be able to call it 'crash mode'.

Here in London city...

Bearish sun

Wintry showers

Another rather glorious sunset in the great metropolis, whilst remaining distinctly icy.

time to cook :)

11.30am... a lot of micro chop... as volume continues to build...

A daily close <1820 will guarentee 1700s tomorrow....  the only issue is where will short term capitulation be..

Dow 15100/000 = sp'1780s..  might get stuck there.

VIX should offer clarity.. seeking a clear spike high blow off top... at least >35.

10am update - twilight zone territory

US equity indexes continue to unravel, with the sp'500 decisively breaking below the Friday low. Next stop is the Oct'2014 low of 1820, but that makes little sense as a mid term floor. Instead, the door is wide open to the 1750/25 zone, where there are multiple aspects of support.

*without getting lost in the minor noise... the bigger cycles...




*that sure is one ugly monthly candle... indeed, very similar to Jan'2008. If you like the analogy, then the target is clearly the 1730s.. within days.

We're now in twilight zone territory, as we have a down wave that is longer than anything in many years.

Its notable that the VIX is yet to show any hyper upside.

If you believe we're headed for sp'1750/25 before end month, then VIX 35/45 would make for a natural capitulation spike.

notable weakness...

IBM, monthly

IBM is now -40% since March 2013. There is going to be strong support around $110... and that would equate to sp'1700s.

time for some sun.. and I need to shop... back soon

10.30am.. sp' hits a new low of 1837.. with VIX 28s.

Again, it remains the case that VIX is relatively subdued.. there is NO capitulation at all yet.

Pre-Market Brief

Good morning. US equity futures are sharply lower, sp -37pts, we're set to open around 1844, decisively breaking the Friday low. Oil continues to implode, -3.4%, with an overnight low of $28.45. Gold is catching a renewed fear bid, +$10, almost at $1100.




*overnight low, sp -43pts... 1837.

This is a decisive 1% below the Friday low, and absolutely trashes any hopes of a short term floor.

Instead, the door is wide open to a straight move to the 1750/25 zone, here there are multiple aspects of support. Again, I'd refer anyone to the Jan'2008 candle on the 'Guppy' chart. A similar move right now would be to the 60 EMA, in the 1730s.

early movers...

AAPL -2% @ $94s
BAC -3.7% in the $13.70s.. as hopes of another rate hike vapourise.
DIS -1.9% @ $92s
SDRL -11.8% @ $1.87... also on the 'disappear list'.

GDX +2.2%.. as Gold catches a temporary fear bid.
NFLX +3% @ $111 on earnings, but well below the AH high of $123
TVIX +12% @ $11.88

Doomer chat - Hunter with Williams

As ever.. make of that, what you will, I sure don't agree with any of the 'dollar doom' comments. Williams is much like Schiff, very inflexible, both of whom have touted the collapse of the USD for over a decade. Ironically, the USD increasingly looks set to further strengthen, as the ECB and BoJ print to oblivion.

Overnight market action...

Japan: -3.7% in the 16400s
China: -1.0% @ 2976.
Germany:  currently -3.0% @ 9371

Have a good Wednesday

**awaiting CPI data...

..ohh, and IBM -5.0% in the $121s is not helping the market mood either. Maybe they should just buy back more shares, that will solve the underlying problem, right?

8.57am. .We're off the lows, but still, sp -29pts.. 1852.. and that certainly breaks the Friday low.

Mainstream are getting spooked.

Equity bears should look for VIX 31s to confirm that 1750/25 zone is coming BEFORE the FOMC.

9.04am... Ray Dalio, aka.. Mr QE4 (remember the Bloomberg interview?) is in Davos, touting some 'depression' doom.

Q. Will the Fed launch QE4 when sp'1600s?

9.37am.. and there goes the Friday low....  there is no real sig' support until 1750/25 zone.. which is clearly viable before end month.

VIX is a little lackluster.. +8% in the 28s... equity bears need 31s to confirm.

It sure isn't dull

It was another pretty wild day in market land, with pre-market gains of sp +30pts - at the equivalent of 1910, reversing to hit 1864 in the afternoon. The daily close of sp +1pt @ 1881, keeps the scenario of upside into the next FOMC on track.




Suffice to add, today was indeed pretty wild, and continues to reflect the underlying weakness that we've seen since late December.

Broadly... the trend is clearly much lower, but a bounce into next weeks FOMC looks very viable.. if not probable.

Shorting from the sp'1960s would be very attractive indeed, along with VIX 20/18 zone.

re: monthly3d: I remain of the view that the market will level out in the late spring/early summer around sp'1600. So long as we don't see any monthly closes <1600 (1500 to be decisive), the deflationary collapse scenario of sp'1000 or even 500s is still in the realm of fantasy land.

Looking ahead

Wednesday will see CPI and housing starts

*the EIA oil report is delayed until Thursday, due to the holiday.

Goodnight from London

Daily Index Cycle update

US equities closed very mixed, sp +1pt @ 1881 (intra range 1901/1864). The two leaders - Trans/R2K, settled lower by -0.5% and -1.3% respectively. Near term outlook remains for a bounce into the next FOMC, best bullish case is for 1960/70s, before renewed powerful downside to the 1750/25 zone.




Most notably, despite closing net lower, the two leaders - Trans/R2K, did manage to hold above the Friday low.

Similarly, the sp'500 held the Friday low of 1857... with a marginally higher low of 1864.

Near term outlook: bullish to sp'1940/60s, battling upward into the next FOMC.

Broader downside to at least 1750/25.

a little more later....