Volatility melts lower

With equities battling slowly higher, the VIX naturally melted lower across the day, settling -11.2% @ 15.12. Near term outlook is for a renewed wave lower in equities, although that might not equate to a new high >17.57.


VIX'60min

VIX'daily3

Summary

Suffice to say, VIX is cooling down, but will very likely see another wave higher.

One thing I will be looking for later this week..a new low in equities (<1916).. but with the VIX failing to break above the 17.50s. Such a divergence would be highly indicative that a 5 wave decline in equities is complete.
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more later... on the indexes

Closing Brief

US equities closed with moderate gains, sp +13pts @ 1938. The two leaders - Trans/R2K, settled higher by 0.3% and 0.9% respectively. Near term outlook is for a further wave lower to the 1910/00 zone, before a more significant bounce.


sp'15min

sp'60min

Summary

In the scheme of things, a pretty quiet day.
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Mr Market appears highly vulnerable to a further wave lower - call it a fifth, E.. or whatever.. I'd be surprised if 1916 is a key floor.

Target is 1910/00... which I suppose might drag out into Thursday/Friday. First real upside bounce zone are the low 1960s, but that seems unlikely this week.

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more later... on the VIX

3pm update - minor chop into the close

US equities are building moderate gains, with the sp' likely to settle in the 1935/45 zone. VIX continues to melt lower, primary target remains 14.25/13.75 zone by late Tuesday. A further wave lower to sp'1910/00 zone is expected.


sp'15min

vix'60min

Summary

*VIX has a fair chance of hitting 14 gap zone..before we see a lower high in equities.

What I'm suspicious of, is that we might see sp'1910/00.. but the VIX might not put in a higher high. It would make for a rather classic divergence, before a much more sig' equity rally.

Something to watch for across the next few days.
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3.05pm.. ALL smaller cycles highly vulnerable to rolling over from here.. sp'1939... looks to be a valid 30/40pts of downside.

As Riley noted earlier... a typical pre-opex floor.. Thurs/Friday.
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3.40pm.. As things are... minor follow through to 1945/50 looks possible tomorrow morning, before renewed weakness.

I'd actually consider a short trade... but on a VERY short term basis, probably just a few days... with a broader aim to be long from 1910/00.


Eyes on the VIX..which is fast approaching the low 14s..... which should be the flooring zone.


3.46pm.. Hourly upper bollinger resistance.. .1946... will be hard to hold much above that....1950 would make for a natural 'brief' opening Tuesday high..before roll lower.

Certainly...we're almost 1.5% above the Friday low....kinda significant.


3.57pm... rolling over....slowly.