Pre-Market Brief

Good morning. Futures are moderately lower, sp -6pts, we're set to open at 2077. The hourly equity cycle is offering the 2060s today.. and that should equate to VIX in the 15s. USD remains a little weak, -0.2% in the DXY 96.20s. Metals are bouncing, Gold +$4, whilst Oil is largely flat in the low $42s.


sp'60min

VIX'daily2

Summary

*eyes on the VIX today... a break back >15 would bode for a break (whether late today.. or Monday) of the Wed' low of sp'2052.
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Well, its the end of the week... and I'll be glad for the weekend.

The setup on ALL cycles favours the bears today. If we can see a few of the rats 'bail into the weekend', then things could spiral lower across the day.

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Overnight China action: moderate chop... the Shanghai comp' touched 4000.. and FAILED, settling +0.3% @ 3965. The 3200/3000 zone looks on track next month. How the Chinese leadership will react to new lows... now that will be interesting to watch.
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*I remain long-VIX, I would prefer to close out into the weekend..  15s would be a moderately acceptable exit... 16s would be great.
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Have a good Friday.
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8.00am... notable early strength, US bonds... TLT +0.5% in the $124.30s.

TLT, weekly

For those seeking another sig' equity down wave... look for TLT in the 125s.. whether late today.. or Monday. I'm with Armstrong on bonds... upside into early Oct'... and then we might see a multi-decade turn.
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8.31am.. Producer prices, m/m +0.2%.. a touch above market exp'...

sp holding -6pts @ 2077.   A break <2070 before 11am would be useful.
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9.37am.. Despite the minor opening chop... the threat of a weekly close >sp'2100 looks well out of range.

It would seem to be just a case of when the market breaks into the 2060s.. and keeps on going.

notable weakness: AAPL, -0.4%.. a fair way to reach the $100 threshold.

Not the best of days

With one trading day left of the week, the sp'500 is currently net higher by 5pts (0.3%) at 2083. A weekly close <2070 would really help maintain the mid term bearish outlook... along with VIX in the 15/16s. Tomorrow will unquestionably be rather important.


sp'weekly1b

VIX'weekly2

Summary

re: VIX... the more significant upside does not look likely for at least another 2-3 weeks. Once the key 20 threshold is broken above though... the only issue is how high might we spike. The mid 20s look a reasonable target by next FOMC of Sept'17th.
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As for the indexes, bears really should be seeking a weekly close in the 2070s.. or preferably 2060s.. along with VIX 15/16s.

Considering recent price action, there looks to be a fair chance of a marginally lower low <sp'2052 (with VIX >16.28). The setup for Friday looks rather promising for the bears, and if the week does close on a particularly negative note, it certainly keeps in play the mid term bearish outlook across Sept/early Oct.

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Looking ahead

Friday will see Producer prices, indust' prod', consumer sent'. That should be plenty enough to give the market a kick... one way or another.
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Not the best of days

For yours truly it was not a particularly great day. It had started well, good breakfast, a haircut, a visit to the bank. I posted my pre-market brief at 7am, and I even got one of my (usually intentionally provocative tweets) mentioned on Bloomberg. A storm front hit London city around 8am EST... thunder, heavy rains, 62f... not exactly a great summers day.

Who doesn't want to get highlighted on clown finance TV?

As the rains continued into the afternoon, then I get news my housing move had fallen through.. as the other side of the move had cancelled on me. Frankly, I'm pretty devastated.. it was a home in a place I had dearly wanted to be living before end summer.

The market had naturally weakened into late morning, with VIX battling into the 14s. From there of course... VIX melted to the low 13s. That sure wasn't great to see... although I can be rather patient when it comes to VIX trades. At least my entry is in the 14s and not the upper teens.. or even 20s.

In the late afternoon, a loud crash outside... as yet another set of vehicles collided a mere 20ft from my desk. For some hours thereafter it was then a case of 20/25 emergency crew cutting vehicles open.  I've no idea if they were pulled out dead or alive, and in many ways, I'd rather not think about it. Living next to an urban freeway is rarely subdued, and its one reason I want out of the city.

The closing hour of the trading day was at least something for the equity bears, and the setup - especially on the hourly cycle, bodes rather bearish into the weekly close.

As for the housing issue, I hope I'll eventually arrange to leave London city, but right now... it seems like I'll not get out (or should that be 'escape'?) until at least next spring.

On that depressing note of resignation...

Goodnight from London

Daily Index Cycle update

US equities settled moderately mixed, with some distinct weakness in the closing hour, sp -2pts @ 2083 (intra high 2092). The two leaders - Trans/R2K, settled lower by -0.1% and -0.3% respectively. Near term outlook is for renewed weakness to the sp'2040s, which should equate to VIX 17s.. before churn/moderate upside into opex.


sp'daily5

Dow

Summary

Little to add.

Market looks set for lower levels across Friday.. and perhaps into Monday.
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Closing update from Riley


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a little more later..