Thursday 21 January 2016

VIX in cooling mode

Whilst equities saw a rather choppy day, the VIX was similarly seeing moderate swings, but settling -3.3% @ 26.69. Near term outlook offers a short term floor of sp'1812, with viable upside to the 1940/70 zone.. and that will likely equate to VIX 20/18 zone.




Suffice to add, if sp'1812 is a short term floor, then VIX is going to melt lower into February.

VIX will likely lose the key 20 threshold (if briefly) before the next surge.

First target with then be the low sp'1700s, which should see VIX 35>

more later... on the indexes

Closing Brief

US equity indexes closed moderately mixed, sp +9pts at 1868 (intra range 1889/48). The two leaders - Trans/R2K, settled +1.0% and -0.2% respectively. Near term outlook is bullish, as the sp'1812 low looks set to hold for some weeks. Regardless of a bounce into February, the broader downside target remains unchanged.



*closing hour action: a little weakness, but holding the hourly 10MA

Little to add, from what I've babbling about across today.

It does seem we have a short term floor, but clearly, price action remains very twitchy.

Sustained action >1900 seems more viable after Yellen appears.

more later... on the VIX

3pm update - a little cooling, but neither imploding

US equities have cooled from an intra high of sp'1889 to 1859 (1.5% swing), but now rebounding from the hourly 10MA. Price action remains shaky, but with each passing hour, the 1812 low is solidifying as a short term low. Oil is holding sig' gains of around 3%.



Well... a trend break remains a trend break.

Despite the ongoing shaky price action... we are 50/60pts above yesterday's low.. and it doesn't seem like we'll be trading that low for at least a few weeks.

For now... it is a case of be long.. or at least no shorts.

notable weakness...

BAC, daily

There will clearly not be another rate hike next Wednesday, nor at the following FOMC of March'16th.

If I am correct about broader downside to the sp'1600s, that rules out another hike until at least Q4... and even then, would the Fed dare?

The market is similarly minded, as the bank stocks are still struggling.

Indeed... clown finance TV is asking the question..

The answer is clearly no... at least for the 'mid term'.

Barring the apocalypse, I'll return at the close.

2pm update - significantly higher

Most US equity indexes remain holding borderline significant gains, as the equity/energy bears look exhausted. Indeed, despite a net build of 4 million barrels, Oil is +3.8%, around the key $30 threshold. Current price action is suggestive a bounce is underway, that will take us into early February.




Little to add.

It does seem we have a short term floor of sp'1812... and have already climbed almost 4%. Clearly, the markets attention will now swing toward the FOMC next Wednesday.. and the Q4 GDP data... the latter of which won't likely please the macro-bulls.

notable strength..

CNX, daily

Arguably representative of many energy related stocks... a hyper gain of almost 20%, but then.. this stock is net lower by around -80% since last summer.There is nothing bullish about the bigger picture, as the US 'war on coal' continues.

2.28pm.. Hmm.... cooling from sp'1889 to 62.

Broadly though, that is still 50pts above yesterdays low... and I expect that to hold.

Arguably, bears getting another chance to close out... and/or go long.

1pm update - provisional bullish break

With the sp'500 pushing to 1889 - along with VIX 25.01, there is a clear provisional break, as seen on the daily charts. Equity/energy bears look exhausted, with a viable bounce to 1940/70s into early February. Any bounce does nothing to the mid term outlook though, the 1600s remain on track.




Not much to add.

Anyone resolutely holding short has an increasing problem.

Sure, we could trade lower tomorrow/early next week (but holding >1812) - ahead of the Yellen/FOMC, but broadly... it looks like we have a short term floor.

Oil is certainly helping, having swung from -2% to +4%... despite another inventory build.

*watching a few analysts on clown finance TV discuss Oil, it remains a little bizarre how they are talking about a core floor... whilst the over-supply issue has still not be remotely resolved.

There is yet to be industry capitulation in the oil/gas AND mining sector.

back at 2pm

12pm update - positively choppy

US equities remain moderately higher, having hit an intra high of sp'1881, along with VIX cooling to 25.94. Despite a net build of 4 million barrels, Oil has swung from early declines of -2% to +3%. Equity/energy bears are looking very exhausted.




Suffice to add... a short term floor for equities and oil seems probable.

Of course, the mid term outlook into the late spring/early summer remains utterly unchanged.

If the market can rally to sp'1970 or so.. that will merely make for a straight forward re-short in February.

VIX update from Mr T

time for tea

11am update - leaning toward the bulls

Despite another very messy open, with the market swinging from sp'1868 to 1848, the underlying price momentum is starting to turn back toward the bulls, with the sp+18pts @ 1877.  For the moment, there is no clarity until >sp'1900, or a break of <1812.

spdaily3 - fib issues



*awaiting EIA oil report

**a second spiky floor daily candle.. offering another sign that the bears are exhausted.

It remains messy, but having fallen from 2018 to 1812 (269pts, 12.9%)... we're clearly at increasing threat of a bounce.

re: chart' sp'daily3

I see a lot of talk about sp'2040.. but that looks damn difficult... and would take the market back above the monthly 10MA. So. no... I'm ruling that out. Instead... the sp'1970s would be my best guess. From there... target would be the low 1600s.

Meanwhile.. here in London city...

Short term sunset for the equity bears?

Bear market under construction

Another damn chilly day in the metropolis, but another day closer to summer :)

time to cook

11.01am .. EIA , oil surplus,, 4 million barrels!

Oil is seeing minor chop.... one of those days where still a lousy number, but vulnerable to upside as the energy/oil bears need to close out.

11.08am.. Oil bears are getting hit.... Oil +1.2%....   and that is inspiring the broader market.

For those resolutely holding short...its starting to look kinda ugly.

10am update - opening shaky gains

As has been the case many times in the past few weeks, US equities open higher... but the gains are clearly shaky, with indexes quickly turning negative. On the bullish side, a powerful spike floor from sp'1812. On the bearish side, 1812 makes little sense as a key low, with weekly/monthly cycles suggestive of 1730 before end month.




Draghi has done his best to 'inspire' the EU/world capital markets.

Clearly, the gains still aren't sustaining, but neither is the market imploding.

Best guess... 1812 holds.. with a daily close >1900... tomorrow/next Monday. However, I will note, I have VERY LOW confidence in the near term outlook.

The bigger mid term looks clear though, with the sp'1600/1500s by late spring/early summer. Ironically, the real issue is how will the central banks respond to that kind of equity drop?

notable weakness....

CHK -4%.. ahead of the oil/nat' gas reports

NFLX -5%, I guess a PE of >300 is just a little too high?
STX -6%
TWTR -2%...  lousy..

time for some sun... or I'll get even more twitchy than this market.

... back for the Oil report at 10.30am.


10.30am.. Ohh right.. the Oil report is 11.00am.

sp +9pts @ 1868....  equity bears looking tired.. but until >1900... there remains threat... if decreasing.

Pre-Market Brief

Good morning. US equity futures are a little higher, sp +2pts, we're set to open around 1861. USD is -0.1% in the DXY 99.00s. Metals are cooling, Gold -$2. Oil continues to implode, -2.0%, around the $28.00.



*awaiting the ECB/Draghi...

So.... is sp'1812 a short term low? The daily candles - esp' Trans/R2K, are suggestive of yes.

We need a daily close >1900 to give clarity.

In terms of downside, best bear case remains 1750/25 zone.

Update from an increasingly loud Oscar

Overnight action...

Japan: holding steady for most of the day, but then spiralling lower into the close, -2.4% @ 16017. Not pretty.
China: much like Japan, falling into the close, -3.2% @ 2880
Germany: shaky gains, currently +0.8% @ 9469

Have a good Thursday

8.13am... ECB keep rates unchanged (keep in mind, they are already negative).

Now its a case of word games from Draghi. Will he threaten increased QE... and would the market buy such threats?

sp +4pts... 1863.... clearly, just getting to 1900 won't be easy.... and seems unlikely today.

8.27am.. sp +11pts... 1870.... as Draghi is due in a few minutes.

*keep in mind, we've the EIA oil report at 10.30am. It could be one of those days when despite a bad inventory number, the Oil market still rallies.

8.36am... with talk of 'extended period'... markets initially ramping, sp +18pts... 1877.

8.38am... continued threats.... sp +21pts... 1880.

So.. Draghi is giving the market a major kick higher.... now its about how the market inteprets the Oil report at 10.30am.

9.13am.. twitchy market.. sp +8pts... 1867.

Still... 1812 is a long way down...... time is, or has already run out for the bears.

Bland capitulation?

It was another day for the equity bears, with a new multi-year low of sp'1812, along with VIX climbing to the 32s. However, the hyper ramp into the closing hour to 1876 was a powerfully bullish swing, and with VIX cooling from an intra high of 32.09 to 26.59, we may have a rather bland capitulation floor.


R2K, weekly


So, new multi-year lows for most indexes, but the ramp from the morning low of sp'1812 and R2K 958 was powerfully bullish.

The daily close could have been a little stronger, but anyone holding short overnight now faces the threat of Draghi inspiring the EU market tomorrow.. before the US open.

Any break back above sp'1900 would be decisive, and then it would be a case of how high the market can rally across February/March.

Looking ahead

Thursday will see an ECB meeting, with Draghi set to appear around 8.30am EST.

data: weekly jobs, phil fed', EIA oil report, Nat' gas report.

Fibonacci nonsense

Here is something that crossed my mind earlier...


The chart should explain itself. Anyone out there with some related ideas/thoughts?

A multi-week bounce is obviously inevitable, but with broader weakness into the late spring/early summer. The ultimate issue remains whether the the sp'500 can hold the 2000/2007 double top of 1553/1576? For now, I'm holding to the original outlook that I posted Jan'3rd.

Market/econ chatter from Schiff

As ever, I sure don't agree with everything Schiff says, but I usually think he is worth listening to.


A frustrating year so far

Frankly, its been a damn frustrating start to the year. Equity bears were teased across 2015... and I think many are simply battle scarred.

A bounce seemed due last week.. but never came. Today, the Oct'2014 low of sp'1820 was decisively broken, followed by a natural rally into the 2pm hour. I launched a VIX-long (via TVIX) position, there was some market chop, but then the market hyper-ramped (especially the Trans/R2K)... with VIX imploding from the 29s to 26s.

I have a very low tolerance lately, and I was more than content to make a run for the exit door, as there now appears serious threat we've made a short term low.

I suppose it could be worse. I could have been long from sp'2081.. or using margin to be long energy stocks/Oil. No doubt some retail amateurs will have been zeroed out since the start of this year.

I guess you could say... another battle has ended, but the broader war continues.

Goodnight from London

Daily Index Cycle update

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.





sp'500: the Oct' 2014 low of 1820, decisively broken, but then a rather powerful wave to 1876 in the closing hour.

R2K, a hyper swing of 5% from 958 to 1008, settling @ 999.

Trans breaks a new cycle low of 6403, briefly turning positive in the closing hour, but settling -0.5% @ 6625. It is notable that the 200dma is at 8125.. and looks out of range for many months.

Closing update from Riley

a little more later...