Pre-Market Brief

Good morning. Futures are moderately higher, sp +14pts, we're set to open at 2081. The bigger weekly cycles continue to suggest broader weakness to the Dow 17k threshold. The USD is bouncing, +0.4% in the DXY 96.90s. Metals remain weak, Gold -$2, whilst Oil is +0.2%.


sp'60min

VIX'60min

Summary

So... we're set to open higher, and now its a case of whether the gains fail right from the open, level out by 11am, or can build across Wed/Thursday.

Best guess... equity gains to max out by 11am.
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With the recent technical breaks - not least on the Dow, I find it hard to imagine new index highs in August.

Daily/weekly cycles remain suggestive of further weakness, to Dow 17k, sp'2000, along with VIX in the low 20s.. within the 'immediate term'.
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*I will strongly consider picking back up a VIX-long in the 14s... having dropped from 16.10. On any basis... long VIX from the low teens seems very reasonable considering the recent price action.

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Overnight China action: broadly weak, despite a serious attempt by the China leadership to 'inspire' the buyers and threaten anyone who even considers selling. The Shanghai comp' settled -1.7% @ 3663.
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*awaiting an array of econ-data this morning, although clearly, the big one remains Q2 GDP.. due Thursday.

TWTR have earnings at the close of today, unless they accidently release them in the closing hour instead.
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Have a good Tuesday
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8.37am.. sp +12pts.. 2079..... sustained action >2090 looks very difficult.

I will have eyes on the VIX around 11am.
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notable strength: Ford +2.7%, around the $15 level, on better than expected earnings, EPS 47 cents
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9.40am.. No hurry on the next short trade....   sp'2085/90 zone looks viable... before resuming lower.

Who wants to buy the China dip?

The bounce from 3373 is almost certainly complete, having maxed out at 4184. The Monday decline of -8.5% @ 3725 has naturally spooked many. Not surprisingly, the Chinese leadership are now suggesting all those in the trading community to refer anyone who dares 'maliciously sell/short' the market to 'the authorities'.


China, daily

China, monthly

Summary

The Chinese drama continues, with a starkly bearish Monday decline. All manner of reasons are being attributed to the fall, but regardless of whichever one you prefer, price action sure isn't bullish.

Downside to 3200/3000 zone looks a given.. the only issue is whether 2500... and considering a time window into early October... the latter looks easily viable.

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Looking ahead

Tuesday will see the FOMC meeting begin.

In terms of data: Case Shiller HPI, PMI service sector, consumer con', Richmond fed'
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Goodnight from London

Daily Index Cycle update

US equity indexes closed broadly weak, sp -12pts @ 2067. The two leaders - Trans/R2K, settled lower by -0.2% and -0.9% respectively. Near term outlook is for further weakness, and regardless of any Wed/Thursday bounce, the market looks set for Dow 17000, sp'2000, along with VIX in the low 20s.


sp'daily5

Dow

Summary

Little to add.

A fifth day lower for most US indexes, and with some key technical breaks on the bigger weekly/monthly cycles, the US market looks increasingly vulnerable.
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a little more later...