Monday 8 February 2016

VIX climbs for a third day

With equities seeing some very bearish follow through from last Friday's declines, the VIX was naturally continuing to climb (intra high 27.72), settling +11.2% @ 26.00. Near term outlook is borderline, as some equity indexes have already broken below the Jan'20th low - when VIX was in the 32s.




What to make of today?

Well, VIX is clearly getting stuck again in the 26/27s. Price action in the VIX is still relatively subdued - relative to equity weakness. Today was certainly not a capitulation day in the market.

Hyper upside to VIX 40/50s still looks out of range until at least mid March.

more later... on the indexes

Closing Brief

US equity indexes began the week with very significant declines, sp -26pts @ 1853 (intra low 1828). The two leaders - Trans/R2K, settled lower by -0.3% and -1.6% respectively. Near term outlook is very borderline, with serious threat of the Jan'20th low of 1812 bring broken.. as the Nasdaq and R2K have now done so.



*closing hour action:  a bit of chop, but then a clear break to the upside, with bears rushing to cover, terrified of what Tue/Wednesday might bring.

First, it is notable that the market floored at the typical afternoon turn time of 2.30pm. Always kooky how that is often the case.

With the market having cooled from last Monday afternoon @ 1947 to 1828, that is a pretty powerful swing, and its not like there was any particular spooky news. It is arguably the underlying econ/commodity related problems continuing to build.

The hourly MACD (blue bar histogram) cycle is set to turn positive @ 10am tomorrow, so the inclination will be for upside, at least to 1880.

Sustained action >1900 is clearly out of range until Yellen has 'inspired' things.

This market IS a beast...

I highly recommend the movie... which has a seriously intense score.

more later... on the VIX

3pm update - rough start to the week

Regardless of the exact close, US equity indexes are set to close significantly lower for the second consecutive day. It is highly notable that the Nasdaq and the R2K have both broken below their Jan'20th lows. That sure doesn't bode well for the rest of the market into the spring.

Nasdaq comp', daily

R2K, daily


Clearly, today's declines are way lower than seemed possible last week.

The problem for anyone trying to go long for a Yellen bounce is that the Nasdaq and R2K are suggestive the rest of the market might follow.. this week.

In any case.. the broader mid term picture is down. We can agree on that much.. yes?

re: VIX, +16% in the 27s... and relatively, I'd still argue this is somewhat subdued considering the indexes.


3.18pm... another vain attempt to bounce.. 1828 to 1841... with VIX cooling to the 26s.

Broadly though.. it sure ain't pretty, and problem for the bulls is that Yellen is still a full day away.

notable strength: Cracker Barrel, +2.6% @ $130.   Lately, that seems to perform a lot better than main market.

3.32pm... a clear attempt to floor (yet again)...

... are the cheerleaders talking about a 'turnaround Tuesday' yet? I've got them on mute.

3.34pm.. a clear UPSIDE break.  Bears will be rushing to cover now.. VIX set to lose the 26s.

3.42pm.. and there is 1850... a full 22pts above the low from 2.30pm... very dynamic action..

Yellen is on her way..................

3.46pm... Fierce short-stop cascade.... sp'1856... 1.4% swing since 2.30pm....  

3.48pm.. notable strength, AAPL +1.6%... with sp'1859..  VIX 25s....

2pm update - the struggling market

US equities break a fractional new intra low, having cooled from a bounce high of sp'1848 to 1831. VIX has naturally broken a new high, +16% @ 27.25. The USD is on the slide, -0.3% in the DXY 96.60s. Metals are catching a strong fear bid, Gold +$23, with Silver +2.5%.


UUP, weekly


Well, it sure ain't great... and Yellen is still another NINE trading hours away.

It remains merely a case of whether 1812 holds by Wed'10am... or a major fail... to next big support in the 1750/25 zone.

notable weakness... BAC, daily

Next key support is not until the psy' level of $10.00, and that is another 19% lower.

back at 3pm

1pm update - 1947 to 1833

The sp'500 has declined by a rather fierce 114pts (5.8%) since the high last Monday afternoon. It is notable though that VIX is still failing to show any real panic, remaining well below the Jan'20th high of the 32s. Gold has built a sig' fear bid, +$19, almost reaching the next big psy' level of $1200.


GLD, daily


So... we've moderately bounced from the late morning low.

Equity bulls should be seeking a daily close >1845 to break sideways out of the short term down trend from last Thursday.

notable strength: miners, GDX, daily

Not surprisingly, with Gold/Silver continuing to climb, the related mining stocks are significantly higher, back to levels last seen in early July.

Again though, I will note that it has to be asked, how will the precious metal miners react if some of their own start to file?   Anyone else looked at the debt for Barrick Gold (ABX) lately? That sure ain't pretty.

back at 2pm

12pm update - CHK deny... naturally

Whilst US equities remain significantly lower (new intra low sp'1833), Chesapeake Energy (CHK) have issued a denial that they are set to file for bankruptcy. The broader trend is clear though, as is the case for a rather large number of oil/gas/mining stocks.

CHK, 5min



What else would CHK do this morning? I can't blame them, they must be overwhelmed with incoming calls from some clients concerned that they are about to implode to zero.

Regardless of CHK though.. the bigger issue is how will the market cope when some of these mid tier listed names file this spring?

Further, what are implications for a few of the financials, namely Deutsche bank?

DB, monthly

DB is a clear system threat to the EU, already trading below the collapse wave lows of 2008/09 when it really did seem it was the end of the financial world.

VIX update from Mr T. 

time for lunch :)

11am update - fighting for a floor

US equities remain very significantly lower, with the sp'500 fighting to build an early floor from 1839 (with VIX 26.48). Overall market mood is extremely poor though, and other than pure cyclical issues of being oversold, there is little to halt the decline until the CEO of print central appears this Wednesday. For the bulls.. she can't appear soon enough.




So.. we've seen some rather strong follow through from last Friday. Indeed, it is notable that from last Monday, the market has declined by a full 5%.

For now, the VIX remains elevated in the mid 20s, but is STILL not showing any hyper upside.

Best guess... the 1812 low HOLDS, and we battle upward, but clearly.. from a level much lower than I expected.

Also... any rally (if we get one) is going to drag into next week.

*there are literally hundreds of notable movers already today... not least...

CHK, daily

Just consider that last summer this stock was trading in the upper teens. Now it looks headed for bankruptcy, along with a number of other mid tier names in the oil/gas/mining sector.

Indeed, the real issue this morning should be what other companies are set to disappear this spring/summer?

stay tuned

11.28am.. SDRL -10%..... as the market is clearly warning that is one is on the edge.

Gold +$19, making a play for the $1200 threshold.  Even Silver is following, +1.8%.

Miners, GDX +4.3% in the $17s, but how will they cope if FCX or Glencore implode this spring?

10am update - ugly open

US equities open significantly lower, as the market mood is again pretty lousy. Now its a case of whether things spiral out of control, or if the market will cling to attempted 'inspiration' from Yellen. Gold is gaining a powerful fear bid, +$16, pushing for the $1200 threshold.



GLD, daily


*there is a lot going on... bear with me...

re: CHK, -40% @  $1.80s. It looks like we'll see the first implosion from this one...or SDRL within 3-6 weeks.

How will the market react to losing a familiar name?  We've not forgotten about Glencore either, have we?

notable weakness, DB -5% in the $16s.... and that would be a system threat to the EU.

10.37am...  An early attempt from sp'1839...  but VIX is currently at the highs.. 26.48.

CHK -45%.. as the B' word is now being used in the mainstream.

Pre-Market Brief

Good morning. US equity futures swung from early overnight gains to rather significant declines, sp -26pts, we're set to open at 1854. USD is bouncing 0.4% into the DXY 97.40s. Gold continues to capture a fear bid, +$7. Oil is -3.7% in the $29s.



Well, for a billion people or so in Asia, its a happy new year..  year of the Monkey.

Despite the overnight declines, I'm still very concerned about a whipsaw higher, as Yellen is due this Wednesday.

Cyclically, we're going to open very low on the smaller 15/60min cycles, so there will be serious threat of a latter day recovery.

Q. Do I think we'll see <1812 before >1947  ?     Right now... still no.

early movers...

CHK -8.5% @ $2.80... market continues to warn this one might disappear
FCX -4.3% @ $5.44.. another one on the list.
SDRL -9.6% @ $1.87... and another.
NFLX -4% @ $79... I guess a PE in the 300s was no longer tolerable.

TVIX +8.3% in the $10.80s, but still a clear $2 below the Jan 20th high when sp'1812.

Doomer chat, Hunter with the infamous Mannarino

Clearly, we're headed broadly lower into the spring, but for now, I still consider any talk of sub sp'1600 (equiv' to Dow 13K or so), in the realm of fantasy land.

Until we see a monthly close <sp'1500 (to be decisive), the deflationary collapse doomers should be relatively mute.

Overnight action...

China: CLOSED... for spring festival.
Japan: +1.1%@ 17004

Germany: currently -3.0% @ 9009. The big 10K looks a long way up... with next big level, 8K - the double top of 2000/2007.

Have a good Monday

9.41am... Ugly open.... with a lot of chatter/rumours about CHK.

A key aspect of this spring will likely be capitulation in the oil/gas/mining sector.

Some of the mid tier names are going to disappear.  The likely suspects should be pretty clear by now.

VIX +12% in the 26s.... kinda interesting, but still nothing hyper.