VIX remains in melt mode

With US equity indexes closing broadly higher for a third consecutive day, the VIX remained in melt mode, settling -2.3% @ 16.70 - the lowest daily close since Dec'30th 2015. The VIX looks set to stay subdued into mid March.


VIX'60min

VIX'daily3

Summary

Suffice to add, VIX has now almost been cut in half since the Feb'11th high of 30.90.

If sp'2K tomorrow, VIX 15s look due.

By the next FOMC of March 16th, if sp'2020/40 zone, VIX 14/13s look briefly viable, before the next multi-week up cycle in volatility.
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more later... on the indexes

Closing Brief

US equity indexes closed broadly higher, sp +6pts @ 1993. The two leaders - Trans/R2K, settled higher by 1.1% and 1.0% respectively. Near term outlook offers the sp'2K threshold for 'jobs Friday', with the 2020/40 zone viable by the next FOMC of March 16th.


sp'60min

Summary

Closing hour action: further micro chop, but breaking a new cycle high of 1993.
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Another day for the bull maniacs, as equity bears remain utterly powerless.

I realise some might see tomorrow as an excuse for a significant retrace lower, but the 2K threshold looks due.. and it could easily cascade into next week to the 2020/40 zone.

Indeed, the weekly MACD cycles are set to see a bullish cross... as early as tomorrow, or the Monday open.

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more later... on the VIX

3pm update - double top for gold/miners?

Whilst US equities remain in what is classic algo-bot upside melt, the precious metals and miners are threatening a short term double top. Having ramped from mid December, the metals and miners are unquestionably due a retrace, but regardless, still set for much higher levels into the early summer.


GLD, daily2

GDX, daily

Summary

*clearly, ANY break above the recent highs.. and the double top notion gets dropped.
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In terms of time, there is a problem in that, even if we fall for two straight weeks into the next FOMC, the metals/miners will not have cooled for very long.

In any case... whatever level Gold/miners are trading at the time of the next FOMC, in theory, both are default long-side trades.
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As for equities, we look set further micro churn into the close, but much like yesterday afternoon, still leaning on the upside.

Anyone doubt 2K won't be hit tomorrow?

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3.24pm.. Well, thats a pretty decisive break through for GLD and GDX.

No doubt, Gold is being helped via the weaker USD, -0.7% in the DXY 97.50s.
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2pm update - micro churn, but leaning higher

US equities remain in micro chop mode, but clearly... underlying price pressure remains leaning on the upside. The giant psy' level of sp'2K looks due tomorrow. No doubt, a great many bears will get short-stopped out, and some of the bull maniacs will then start touting new historic highs for this late spring.


sp'60min

VIX'daily3

Summary

Seen on the bigger daily chart, the VIX continues to melt lower, with the 15s viable in the near term.

Naturally, the 2x lev' bullish VIX instruments of TVIX and UVXY have been cut in half since the Feb'11th high.

UVXY, daily

With another two weeks of decaying churn, and if the sp'500 can battle to the 2020/40 zone, it will likely knock another 15/20% off these widow making VIX ETF/ETNs.

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back at 3pm

1pm update - the junk is soaring

Whilst the broader equity market is seeing a day of moderate weak chop - ahead of the Friday jobs data, there is notable hyper strength in a great many of the obliterated energy stocks. Chesapeake (CHK) is +22%, whilst  Seadrill (SDRL) is +18%. Broadly, both companies remain on track to... disappear.


CHK, daily

SDRL, daily

Summary

I dread to think how many retail amateurs have been trying to 'average down' in many of the energy/resource names since the 2011 commodity peak.

What should be clear... the current gains are entirely unsustainable.

I do not expect CHK or SDRL to last the year, and they are but two of a long list of listed names set to disappear.

Capitulation remains due in the oil/gas/mining sector.
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*I have ZERO interest in meddling in what remain beaten down stocks. I will merely look to short the broader indexes around mid March.
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back at 2pm 

12pm update - moderate weak chop

US equities remain moderately weak, which cyclically, is arguably the worse setup for the equity bears into 'jobs Friday'. VIX continues to reflect a market that is increasingly confident that 'everything is fine again'. That is clearly not the case, and its just a matter of another few weeks before this latest multi-week up wave concludes.


sp'60min

VIX'60min

Summary

Little to add.

There is HIGH risk tomorrow that the market will consider the latest jobs data as 'Goldilocks'... with a break through of sp'2K.... washing out a huge amount of bears into the weekend.

... and that will open the door to 2020/40 zone by the FOMC of mid March.

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**I'm guessing no VIX updates from Mr T. at all this week.

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time for lunch :)

11am update - VIX is the tell

Whilst equity indexes remain a little weak, the real tell is the VIX, which has already turned negative, currently -1.3% in the 16.80s.The market remains broadly bullish, and looks set to remain so into mid March. The precious metals have built sig' gains, Gold +$13, with Silver +1.2%.


VIX'daily3

GLD, daily2

Summary

Equity bears should be spooked at the ongoing subdued VIX.

It offers ZERO hope of any sustained equity upset in the near term.
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However, far more disturbing is the trailer for Ghostbusters.



Its yet another heretical remake of an 80s classic.

Should we expect 'the breakfast club' or St Elmo's fire soon?

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time to cook

10am update - opening weakness

US equities open a little lower, but it should be clear to most, the equity bears remain largely powerless. By the close of today, rising support will be at sp'1970, and that should comfortably hold... with the 2K threshold viable tomorrow.


sp'60min

sp'daily5

Summary

*note the upper bollinger on the daily cycle.. now >2K. The door is wide open for Mr Market to wash out another tranche of short-stops.
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Today will likely be even more choppy than yesterday, as the market will want to be in a holding pattern ahead of tomorrow's monthly jobs data.

It seems inevitable that the market wants to see most indexes test their respective 200dmas.

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notable weakness.. INFN

Infinera sure is struggling, and eventually looks set for much lower levels into the early summer. Despite the current weakness, there remains threat of $16.50/17.00 zone by mid March. $16s to 8s... would be a rather dynamic move.
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stay tuned

Pre-Market Brief

Good morning. US equity futures are a little lower, sp -2pts, we're set to open at 1984. USD is -0.2% in the DXY 97.90s. Metals remain strong, Gold +$4, with Silver +0.1%. Oil is cooling, -0.6% in the $34s.


sp'60min

Summary

The sp'2K threshold looks out of range today, but it sure will be viable (if not probable) tomorrow.

There will doubtless be some powerful resistance around the 2K threshold, but given the fact the bulls upside window will likely remain open until the FOMC of March 16th, that should be enough time to get to 2020/40.

*I'm still looking for a retrace in Gold and the related mining stocks. For now though.... they appear very strong.

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Macro chatter, Mr Long with Mr Summers




This was actually rather good, and I do suggest you listen when you have the time!

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Overnight action

Japan: +1.3% @ 16960
China: choppy, +0.3% @ 2859
Germany: currently -0.3% @ 9743

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Have a good Thursday

Oil is still due capitulation

Whilst the equity market saw a day of moderate consolidation chop, Oil managed a sig' gain of 2.3% into the $34s, despite another monstrous weekly surplus of 10.4 million barrels. The over supply issue has not been remotely addressed, with WTIC oil set to get stuck around mid March. Capitulation remains due in the commodity, and the broadler energy sector.


WTIC, monthly

WTIC, weekly2

Summary

re: monthly. Having bounced from natural support of $26/25, Oil has already made a strong move to the 35s. On a break <25 this spring/summer, next level is $20, and then 16/15.

re: weekly2: a notable green candle, the first since last October. There will be STRONG resistance in the 38/40 zone.
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Without question, there is yet to be capitulation in the oil/gas industry. The recent low of $26.05 is almost certainly just an intermediate low.

The real issue is not so much how low might oil reach this year, but how long might it remain there? Many now seem resigned to sub $50 oil for some years.

Yet.. how much of the industry can survive if Oil is sustainably trading in the $20s.. or even the teens?


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Looking ahead

Weekly jobs, product/costs, PMI/ISM serv', factory orders

*fed official Kaplan is on the loose in the morning.
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Goodnight from London

Daily Index Cycle update

US equity indexes closed moderately higher, sp +8pts @ 1986. The two leaders - Trans/R2K, settled higher by 0.2% and 1.1% respectively. Near term outlook offers the 1990s, with 2K viable this Friday. Broad upside looks due into the FOMC of March 16th.... best case is the gap zone of 2038/43.


sp'daily

Dow

Summary

Suffice to add, a second day gains, with the Dow and sp'500 headed for their respective 200dmas.

Price structure could be argued is a giant H/S formation (as Oscar.. and a few others have noted). In theory, equity bulls should not be able to manage any sustained action above sp'2020 / Dow 17200.

In any case, the broader outlook is bearish - as suggested by the bigger weekly/monthly cycles.

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a little more later...