The market begins the week with moderate gains, and they look set to build across the week. A daily close in the 1855/60 zone looks likely, with the 1860/80s viable in the days ahead - supported on the bigger weekly/monthly charts.
sp'60min
Summary
What is there to say about all the recent bearish talk? Actually, there is a great deal to say, not least about all those touting the sp'1700s recently. Where are all those who were recently posting 1929 crash charts?
Oh thats right, they have again crawled back into their little cesspool holes, where they will likely remain until the FOMC of next Wednesday. Then they'll appear once more, touting the end of the world, and an 'imminent crash'.
Idiots..every gods damn one of them. I guess that would make Daneric the doorman for the cesspool, yes? Most seem to have lost all perspective lately. I'm way beyond tired of it, and we're only 3 weeks into the year
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Notable strength: STX, TSLA
STX, daily
The mid 30s..from almost a year ago, now look a very long way down. The big $100 looks an easy target by mid 2015.
Good morning. Futures are moderately higher, sp +8pts, we're set to open around 1846. Precious metals are notably weak, Gold -$17, Silver -2.6%. Underlying hourly index cycles offer easy upside this week, with the bigger weekly charts offering the 1880s.
sp'60min
Summary
Well, the long weekend is over, and here we go again.
Naturally, market is pushing higher to start the shortened week. The only thing the bears do have in their favour today is that there isn't any sig' QE-pomo....that doesn't come until tomorrow morning.
The hourly chart is offering 1870 as a minimum near term target, and certainly, the weekly/monthly charts both allow that.
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Notable early movers:
STX, +1.3% in the $62s (upgraded by MS).
HAL: +1.9%..on good earnings
DRYS + 1.0%...battling to re-take the $4s.
9.06am.. sp +10pts in pre-market. New highs in the 1850s look very likely by 11am.
With QE tomorrow, a daily..and weekly close in the 1860s looks a pretty easy target to achieve.
Since the equity low of sp'1074 in Oct'2011, the VIX has seen a very steep decline from a spike high of 48 to the 11s. The US market remains at a very high level of complacency. Yet, as 2004-07 showed, the VIX can indeed remain at such low levels for a fair few years.
VIX, monthly'1, 9yr
VIX, monthly'3
SPY/VIX ratio, weekly, 10yr
Summary
Chart monthly'3, is not something I've posted before. I should note first, its just one of a number of scenarios. This particular outlook is based on the notion that we will see broad equity gains into late 2015/early 2016.
However, even though the broader trend in equities could well be higher for another few years, that sure doesn't mean the VIX won't at least briefly spike into the 20s..or beyond.
Frankly, even I find it incredulous to imagine the VIX not breaking >20 this summer/autumn. Consider the duration of the rally from Oct'2011, we are now at month 28, I have to believe we'll see some increasing market volatility this year. The SPY to VIX ratio is at pretty crazy high levels, and we're more than due for some significant degree of equity drop.
As ever..the only issue is how high?
A fair few chartists/commentators out there are seemingly agreed - if from very different perspectives, for some sort of equity intermediate top this summer/autumn, with a decline of something in the region of 20%. I'm certainly still on board with that outlook.
So, I certainly would see VIX in the 20s this year, but really, things only get real interesting if we see a break >30. The 40s will be a tough struggle, even if the market has fallen to the low sp'1600s. After all, who won't be buying the market then?
The summer/autumn correction
For the equity bears out there, one thing to keep in mind this summer...and early autumn. If we do see a significant drop in equities...and a spike in the VIX, is that it sure won't last long. The subsequent rebound in the market (if Yellen goes nuclear with the PRINT key), will likely re-crush the VIX back <20, where it might remain for another 12-18 months.
As I have noted a fair few times, in many ways, 2014 could prove to be a really messy year for most traders. The bulls might get rattled for the first time in over two years, with the equity doomer bears making huge short-side gains, only to get nailed on a subsequent renewed equity hyper-ramp.
Back at the Tuesday open :)
Goodnight from London
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Video from Gordon T Long
Interesting discussion, for those with an interest in the bigger issues.
