Thursday, 13 February 2014

VIX fails to hold the 14s

With equities reversing from the open, and clawing upward from sp'1809 to 1830, the VIX lost the moderate opening gains (intraday peak 15.24), slipped to a low of 13.98, and closing -1.1% @ 14.14. Near term outlook is for the VIX to melt lower into the 3-day weekend.




Little to add.

Today was the sixth consecutive daily decline in the VIX. With the break >sp'1826, the equity market appears to have put in a tiny retrace of barely 1%, and is now back on the climb.

VIX 16s again look out of range, barring a break <sp'1800, which now looks unlikely.

more later..on those super resilient indexes

Closing Brief

Despite an opening gap lower to sp'1809, the market reversed right from the open, clawing into the 1830s in the afternoon, and closing +10pts @ 1829. The two leaders - Trans/R2K, settled higher by 0.2% and 1.3% respectively. With a break >1826, target zone of 1800/1790 is...dropped.



For those trading this market without stops, today would have been real annoying.

A gap lower..only to battle back higher..into the 1830s.

Just reflect upon this... 7 trading days....93pts UP., that is a very significant 5.3%.

I'm going to count the move from 1826/1809 as a sub'2. Regardless of whether you agree with that or not...the trend ain't down, and the weekly/monthly charts are offering new historic highs in March.

more later..on the VIX, which failed to the hold the 14s.

3pm update - no pomo, no problem

Despite a lack of QE-pomo, the market has managed to break new highs today, after an opening gap to 1809, which now looks a fair way down. Equity bears have yet another day to forget. Metals continue to slowly build gains, Gold +$9, and within 1% of testing the 200 day MA.


GLD, daily


*action in the metals and miners is really starting to get interesting. Miners appear to be leading the metals - at least from a 'who is above the 200 day MA' perspective. More on that..after the close, on my other pages.

As for the indexes, regardless of the close, this was unquestionably a major fail for the bears, with a latter day recovery/bounce of 21pts (1.3%).

**again, its notable there is no sig' QE-pomo until next week, and yet here we are..having already hit the 1830s. No doubt, there will again be talk of the sp'1900s in March/April...across this weekend.

Notable strength: GDX +4.1% - breaking the Tuesday high, and completely reversing yesterday's decline.

3.02pm... miners gaining...GDX +4.4%.. a 5% day would be VERY impressive, and bode well for March. Target upside zone would be 30/35. Gold +$10...and looking..'comfortable' at it approaches the big 200 day MA.

3.20pm... The two leaders - Trans/R2K, higher by 0.2% and 1.3% respectively, the latter sure looks bullish on the daily.

3.41pm... Gold and miners still building gains.

As for the indexes, regardless of whether we close in the 1830s..or doesn't matter. It'd seem..the best 'minor retracement' was indeed a mere 0.9%..and we're back on the rise.

back at the close.

2pm update - short side busted

With the...surprising break above the Wednesday high, any short side trader has been kicked out. The disturbing now is...'was the 1826-1809' move the entire retracement of 1737-1826? Really, barely 1.0%, and now we're on the ramp again, already? To quote C3PO ....'this is madness!'




*the opening fractional break of the 50 day MA, now looks like a cruel bear tease in retrospect.

I should note...Gold is now just $12 shy of breaking the 200 day MA, at which point, a lot of people are going to get interested in jumping aboard.

Bears seem to be facing a fleet of star destroyers today, not just the one...

Anyone not already aboard an escape out of luck today.

2.33pm... Smaller cycles remain looking exhausted on the upside, yet with the break of new highs, who could be short here?

A major problem for the equity bears (even if somehow we fall from here), the lower bollinger on the hourly cycle will be around 1820 by tomorrow lunch are we going to be trading under there?

The daily/weekly charts look fiercely bullish, and it is a disturbing thought that we've now seen a 97pt across 7 trading days.

1pm update - interesting afternoon ahead

Mr Market appears stuck just under the Wednesday high of sp'1826. We have a very viable micro double top, and with a bearish cross on the hourly MACD index cycle, bears have the opportunity to knock the market back lower into the close. Metals holding moderate gains, Gold +$8




The bounce from 1809 to 1824 was no doubt annoying for some, but it makes for a simple re-short opportunity, with a super tight stop in the 1825/30 zone.

Primary downside target zone remains 1800/1790..which is still viable long as we don't break a new high (>1826.55)

VIX looks set to close green, which would break the 5 day downward fall.

1.07pm.. who wants to go long at sp'1825.87 ?     ....and we're back to Dow 16000... clearly.. ALL is well again.

1.13pm... sp5min cycle....

What ya think? Double top...or are we gonna break?

I'm still holding to the double top..with downside to 1800/1790s....

1.20pm...busted multi-day high 1827s....hmmm

1.31pm.. its turning into a bit of a mess...we're now almost 20pts above the opening low, and with marginal new highs..and serious day trader bears just got the kick.

The small 5/15min cycles are looking exhausted, but really, with new highs..what now?

Surely the sub'2 retracement was not just 1826 to 1809 ? Was that it? I still find that hard to believe..

meanwhile, UGAZ still climbing +8.9%.... Gold +$9...getting real close to testing the 200 day MA.

1.46pm..clearly...short-side clawing to new highs.  VIX in danger of losing the 14s..if sp'1830s...urghhhhh

12pm update - micro double top in the mid 1820s

The bull maniacs have managed a borderline significant bounce to within 2pts of the Wednesday 1826 high. Barring a break >1827, this is a pretty straight forward situation.. chase long >1827/28..or re-short, with a stop in the 1825/30 zone. Metals continue to build gains, Gold +$8

GLD, daily



*Gold hasn't traded above the 200 day MA since Feb'2013, so....we're getting real close to where a lot more people will be paying attention.

The smaller 15min index cycle more clearly illustrates how a micro double top is probably setting up. We'll know soon enough, certainly within an hour or two.

12.11pm...rolling over on the 5/15min cycles.... VIX set to turn green.

VIX update from Mr..R.

How about a valentines day massacre? If only. At best..we might hit 1800/1790s...briefly.

stay tuned!

11am update - bounce from the open

Equity bulls manage a bounce right after the opening gap lower, from sp'1809 to 1819. Underlying weakness should resume later today, with target downside to 1800/1790s by late Friday. Metals continue the strength of recent days, Gold +$6


GLD, daily


*no doubt, the opening bounce annoyed those bears who weren't tightening short-stops at the very open.

A reversal candle on the daily index chart, but I'd still look for another wave lower later today.

All things considered, I can't see 1809 being the low of this retracement. It is notable we did break under the 50 day @ 1810. So.. a little tech-damage has been achieved by the bears this morning.

Notable strength: UGAZ +6.3%.. it sure is cold out there today.

Based on smaller 5/15min cycles..this latest nonsense should level out within an hour. Obviously...the last line of short-stops will be in the 1825/30 zone.

11.07am...provisional exhaustion on the smaller 5/15min cycles at 1822..a mere 4pts shy of the Wednesday high.

Day-trading bears have opportunity to re-short here..from the bounce of 1809. Pretty good risk/reward into Friday.

VIX is notably red, -0.5% in the 14.20s..but so far..holding the recent low of 14.02.

11.23am...bears on the edge.... 1826.55 is the level the bulls need to break...or its a micro double top..and we'll drop from here.

Easy place to re-short...with a nano scale tight stop!

If Mr Market wants to annoy everyone...briefly break 1827/28...then reverse.

UGAZ building gains...+8.3%.....

11.30am... bull maniacs gotta push here to new highs..or they gonna get whipsawed back lower this afternoon.

Even Zerohedge noting the morning ramp..despite no QE-pomo.

Seeking a reversal from here....just 2.5pts of buffer zone left for the bears.

11.45am.. perhaps most notable.. gold, building gains..+$8..not a dramatic move, but still...its been climbing for some days now. The only issue is that Silver is really lagging, still stuck under old broken support.

10am update - retracing.. as expected

The US indexes did indeed put in a short term peak yesterday at sp'1826, and we're now well into a natural retracement. Best guess..primary downside to 1800/1790, with VIX in the 16s. Broader trend should resume upward next week..and across most of March.




Mr Market seems to be behaving itself..and the retracement is looking good.

No doubt we'll see a little bounce today, but the general weakness should continue into early tomorrow.

*with no sig' QE-pomo until next Tuesday..bears have the window of opportunity!

The bigger question is how high might we go in March.? I did post on that last night, even the low 1900s still seem viable.

10.02am... Interesting continued strength in the metals. Gold +$6, and miners are gaining..GDX +2.2%,

So..a bounce from the open..1809 to 1814... I can't imagine that was it for sub'2, no way.   There is no reason we won't see renewed weakness.

10.17am... bears on the run.....ultimate short-stops will be 1825/30... an impressive bounce from the open. VIX set to turn red...

Notable strength in the momo stocks.. TWTR and TSLA both +2.5% 

Pre-Market Brief

Good morning. Futures are somewhat lower, sp -8pts, we're set to open at 1811. Equity bears seeking a retracement should seek a break of the 50 day MA of 1809, which will open up the downside target zone 1800/1790, which should equate to a VIX back in the 16s.



*awaiting a trio of econ-data: jobs, retail sales, business inventories

So, we're set to open a little lower, and the 50 day MA might be taken out by 11am.

re: targets

I'm somewhat cautious in the viable downside, and we could easily get stuck at 1800 or 1790. I had noted the 1780s yesterday, but that is going to be increasingly tough to hit.

Regardless, I have to think we'll see broader upside across March, and possible April.

As day at a time....

Notable early gainer: UGAZ +4%, but that sure could flip negative, if the Gas report this morning comes in favourable to the bears.

8.20am.. sp'-10pts, we're borderline breaking the 50 day MA in pre-market. This does bode well for the bears.

sp-15/20pts by 11am to 1805/00..then a micro bounce.
- and retail sales..kinda weak...

sp'-11pts.. we're set to open 1808

8.37am... -13pts.... 1806.     A test of the  big 1800 now looks likely by late morning.

UGAZ picking up.. +6%

9.16am... sp-11pts..we're still set to break the 50 day MA at the open.

Notable weakness: CSCO -4.1%

Upside targets for March

With sp'1737 appearing to be a rather secure short term floor, the question is how high might Mr Market be able to claw across next month? New historic highs seem reasonably viable - to the sp'1880/1920 zone. QE-taper'3 - at the FOMC of March'19th, will be the next problem for the market to deal with.



Considering the recent price action, it does look like 1737 is a key floor. I realise some will disagree with that. Personally, unless we break <1770, any hopes of a new multi-week low will remain on hold for another few months.

re: daily3b. I realise any count is highly subjective, but hey, a simple extrapolation is suggestive of the upper 1800s in March/April..possibly the low 1900s - as a number of notable chartists have been suggesting.

Yet another H/S idea

These H/S scenarios sure haven't worked out so well in the past few years (aside from summer 2011), but here is another one..assuming a multi-month top around late March/early April.


It is an appealing scenario, not least with downside from the 1875/1925 zone...down to 1625/1575 across just a few months.

Looking ahead

We have a trio of econ-data, jobless claims, business invent', and retail sales.

Yellen was due to speak to the US senate, but that has been postponed, probably for some weeks.

*there is no sig' QE-pomo until next Tuesday

Goodnight from London

Daily Index Cycle update

Equity indexes closed moderately mixed, with the sp -0.5pts @ 1819. The two leaders - Trans/R2K, settled higher by 0.1% and 0.3% respectively. There looks to be opportunity for a near term retracement down to the sp'1800/1780 zone, before new historic highs are broken in March.





A day of moderate price chop, with the sp'500 breaking to 1826..only to slip to 1815...before a tiny claw back to essentially the close.

Considering the 89pt ramp (5.1%) from sp'1737, we're more than due at least a minor retracement of 1.5-2.0%. With no sig' QE until next Tuesday, bears have a very viable window of opportunity.

Closing update from Mr TopStep

a little more later...