VIX higher for a third day

With US equities closing broadly weak, the VIX managed a third consecutive net daily gain, settling +7.6% @ 18.67. Near term outlook offers early Wednesday equity weakness, which might equate to VIX 19/20s. Sustained action above the key 20 threshold still looks out of range until after next week's FOMC.


VIX'60min

VIX'daily3

Summary

Suffice to add, having cooled from VIX 30 to the 16s, we've now seen 3 days of upside. Still though, equities remain pretty strong, and the VIX is somewhat subdued.

Best guess... equities to break >sp'2009, with VIX 15/14s... at the next FOMC.
--

more later.... on the indexes

Closing Brief

US equities closed broadly weak, with the sp'500 -22pts @ 1979. The two leaders - Trans/R2K, settled lower by -2.7% and -2.4% respectively. Near term outlook threatens early Wednesday weakness, but it still seems highly probable that the equity bulls will push >2009, to at least test the 200dma, into the next FOMC.


sp'60min

Summary

*closing hour action: after a micro double top completed from sp'1994 at 2.15pm.. the market saw rather notable weakness into the close, breaking what was a baby bear flag, with a new intraday low.

In theory, early Wednesday should see at least 1975/70, perhaps the 1960s.. briefly, before clawing back upward, ahead of the Thursday ECB.
--

Clearly, not a great day for the bull maniacs.

..yet, the equity bears should not be getting overly excited just yet. There are still the two hurdles of the ECB and FOMC to get out of the way, before there is an clear window into April.

--
more later... on the VIX

3pm update - baby bear flag

US equities remain moderately weak, with the sp'500 so far unable to clear the hourly 10MA (1992). Price structure is offering a baby bear flag, with threat of renewed downside to the 1975/65 zone. Regardless of any Wednesday weakness, further upside >2009 still looks due.


sp'60min

Summary

little to add.

Regardless of any near term downside.. still seeking one more push upward

--
notable weakness... miners, GDX, -3.7%... the 18/17s look due by middle of next week.
-

3.08pm.. baby bull flag on the VIX.

60min

So.. the setup is weak into the close.. and early tomorrow.
--
Again, the next EIA report will be important... the bulls really need to see the market cope with another lousy inventory number... and push oil back into the $38/40 zone.

2pm update - the indirect signal

Regardless of today's close, there is notable weakness in the precious metals, with Gold -$3, and Silver -1.4% . The related mining stocks are naturally on the slide, with the ETF of GDX -3.4% in the $19.70s. A retrace was long overdue.. and appears underway.


GLD, daily2

GDX, daily2

Summary

The point is this...

I am looking for Gold and the miners to retrace... into the next FOMC.

Keeping in mind the recent bullish upside break, there seems high threat that Gold - and the related mining stocks will see hyper upside - as the broader market looks on track to implode this spring/early summer.
--

Yours truly would feel a hell of a lot more comfortable launching index shorts/VIX long... (along with GLD-long, and GDX-long), once GLD/GDX have seen at least some sig' retrace into next Wednesday.

So.. for now.. I'm seeking to use the next floor in GLD/GDX as an indirect signal that equities have maxed out.

Near term downside targets... GLD 115/113,  with GDX 18.00/17.50


From there... basic upside.. GLD 125 (Gold $1300), with GDX $24/25.

'Hyper upside' targets would be GLD 150 (Gold $1550), with GDX $40.. by June/July.

Considering the break of the multi-year down trend... the hyper targets are valid.
--

Any thoughts?

1pm update - the battle continues

US equities have seen an initial turn from the natural turn time of 11am, with the sp' swinging from 1979 to 1993. The hourly 10MA @ 1994 will be difficult to close above today, but if the market can tolerate the next pair of Oil inventory reports, then renewed upside >2K looks due.


sp'60min

Summary

Little to add.

Another push higher looks due.. at least to the sp'2020s.

Current price structure could be argued is a multi-day bull flag... and cyclically, we're on the low end.

--
notable weakness.. GLD, daily

Relatively, Gold is still holding up well, it looks vulnerable with the next ECB/FOMC.. if briefly.
--

back at 2pm

12pm update - still due another push higher

Despite the morning's significant declines, sp'2009 makes little sense as a key high. Further, there is high threat the market will use either the ECB or the FOMC itself as an excuse to formally test the 200dma (or even another 1% higher) before another lower high is put in.


sp'60min

VIX'60min

Summary

All things considered, VIX still isn't showing any significant upside power. I don't expect a red VIX close today, but sustained action >20 looks out of range in the near term.
--

notable weakness... miners, GDX, daily2'

The mid 17s look a valid target by next Wednesday, and that would seem an acceptable entry to be long... with first target of 24/25 zone.

-
time for lunch

11am update - increasingly bearish skies

US equities remain broadly weak, with the sp'500 having decisively broken the rising trend from Feb'11th. VIX is +7% in the 18s. Even the precious metals are struggling, Gold u/c, with Silver -1.5%. Oil remains under pressure, -3.2% in the $36s.


sp'60min

GDX, daily2

Summary

re: miners. Precious metals are holding up relatively well, but cyclically, are also due a retrace. GDX is offering a rather strong bearish candle so far today...  target are the mid 17s, and I realise that is a considerable way lower.
--

As for the broader market, a marginally interesting morning, but overall, bears are now setting up for a short term cyclical low ahead of the ECB.

notable weakness...

CHK -18%, talk of bankruptcy back on the rise.
FCX -11%, stuck under the 200dma
SDRL -18%... as last Friday's hysteria evaporates

--
Here in London city

This is not the sunny sky I was seeking. Urgh.
-

time to cook

10am update - provisional break

The sp'500 has seen a provisional break of the upward trend that stretches back to the 1810 low of Feb 11th. However, there still remains risk of renewed upside to the 2020/40 zone, as Draghi/Yellen are yet to appear. Oil is under pressure, as a Kuwaiti oil minister threatens to go 'full power' (on supply) if no agreement is reached.


sp'60min

VIX'60min

Summary

*metals and miners remain highly vulnerable - at least on a cyclical basis, but more on those later.
--

Vol' remains light, and with nothing scheduled today, other than sporadic news, there really isn't much hope for sustained downside ahead of the Thursday ECB.

I still see no hurry for bears to get involved.

--
notable weakness... the junk/usual suspects: CNX, CHK, FCX, SDRL, RIG,

FCX, daily

If you believe in the notion that sp'1810 is NOT a key low, then the junk will break new lows into the spring... and I find it impossible to believe a fair number of them won't eventually file for bankruptcy.
--

stay tuned

Pre-Market Brief

Good morning. US equity futures are moderately lower, sp -9pts, we're set to open at 1992. USD is +0.1% in the DXY 97.10s. Gold continues to climb, +$7. WTIC Oil is +0.8% in the $38s.


sp'60min

Summary

Overnight action has been pretty weak.

Japan: -0.8% @ 16783
China: recovering into the close, +0.1% @ 2901
Germany: currently -0.3% @ 9751
--

So... we're close to breaking rising trend... and I realise some will now be top calling.

However, equity bears still face the ECB and FOMC. Both of those offer threat of another lurch higher... for one final wash out.

For the moment, I still see no hurry, not least as the daily/weekly cycles are going to require more than just a single day of downside to turn.

Have a good Tuesday

WTIC Oil - resistance is near

Along with equities, WTIC Oil, continues to broadly climb from the Feb'11th low of $26.05, with a net daily gain of $1.57 (4.3%) to $37.90. Near term outlook offers the 38/40 zone. Sustained price action in the 40s looks extremely unlikely, as the underlying issue of over-supply remains 100% unresolved.


WTIC, weekly

WTIC, monthly

Summary

The current rally is arguably no different to those periodically seen last year, with the broader trend remaining bearish.

The $26s look no more a floor than the low from last August, when many touted the $37s as the floor.


In terms of downside...

On a break <26, first target is the psy' level of $20, with secondary target zone of $16/15.

Considering overall demand, but more importantly.. supply issues, the mid teens look highly probable.

How fast the energy industry capitulates - with mid tier (listed) bankruptcies.. is difficult to say.
--


Looking ahead

Tuesday has nothing of significance scheduled, and price action will likely be even more subdued than today.
--

Goodnight from London

Daily Index Cycle update

US equity indexes closed moderately mixed, sp +1pt @ 2001 (intra high 2006). The two leaders - Trans/R2K, settled higher by 0.4% and 1.1% respectively. Near term outlook is for further chop, but leaning on the upside. Next target is the 200dma of sp'2022, with the 2030/40 zone more viable next week.


sp'daily5

Dow

Summary

*A notable fifth consecutive net daily gain for the sp'500, the best run since Dec'2014.
--

Suffice to add, most indexes look set to test their respective 200dmas. With the FOMC next Wedneday, there is viable upside to the gap zone of sp'2038/43.. before the rally from 1810 maxes out.

--
a little more later...