Tuesday, 4 March 2014

Volatility knocked lower

With US equities strongly rebounding from the moderate Monday declines, the VIX was naturally knocked considerably lower, settling -11.9% @ 14.10. Near term outlook is for the VIX to remain within the 15/12 zone. VIX 20s look unlikely until at least April.




As I tried to highlight across yesterday, the opening black candle - seen on the hourly chart, was a real warning to the equity bears.

The daily closing black-fail candle was indeed confirmed today.

Best guess, another two weeks of VIX in the low teens..perhaps briefly breaking into the 12/11s..before the next surge.

The big question I now have is how high will the next multi-week VIX surge be? I'd like to see a break >22, to help offer some initial confirmation that a bigger summer equity correction is coming.

more later...on the indexes 

Closing Brief

US equity indexes closed with very strong gains, sp +28pts @ 1873. The two leaders - Trans/R2K, climbed with powerful gains of 2.2% and 2.7% respectively. Near term outlook is bullish, the only unknown now is how the market will interpret the next monthly jobs data.



We have seen not only a claw back of the Monday declines..but breaking new highs in 4 of the 6 main indexes that I regularly highlight.

Incredible..but (at least to me)..not entirely unexpected. 

Tomorrow will probably see further gains into the afternoon, but then there is moderate risk of a brief pull back..if only 1%.

Primary upside target zone remains 1880/1920.

more later...on the VIX.

3pm update - sad clown for the doomer bears

US indexes are holding onto the bulk of some very significant gains. Most notable aspect of today remains the new historic highs for the sp'500, R2K, Nasdaq Comp', and the broader NYSE Comp'. VIX reflects a market that again has no concern of anything..least of all...a war.



*The above chart is a somewhat kooky one, but it has offered a rough guide for viable upside for this month, and I'm holding to it.

As for those still touting 'ultimate doom to sp'600/500s' in 2015..or beyond....yeah...I'm talking about YOU...Greg Mannerino, BrotherJohn, TF, Jim Sinclair...Harry Dent, the Schiff, Faber, Daneric, Tim Knight, Atila (Hi there!), the zombie hoards over at Zerohedge, and even deflationland...

for you...

Ohh, and one other thing I'd ask each of you...

What do you think the Yellen will do later this year, if the market is seriously upset? What button do you think she is going to start hitting a thousand times a hour if she believes the economy is seeing a significant (if brief) slow down?

As has been my concern with the Yellen since last year, she will probably make the Bernanke look like an amateur when it comes to money printing.

If you agree with that, then you can safely assume this market will be considerably higher next year...regardless of any pull back we might see this year.

updates into the close, but really...there is little to add.

3.19pm.. sp'1875....now we're pushing on the upper bollinger on the weekly chart.

Even to me..this is crazy strong price action..but hey.. it is the sort of thing we need to see, if we are to hit the sp'1900s this month.

Hell, why not by the Friday close?   

3.26pm.. for those watching, the hourly sp' chart is now offering 1885 in the IMMEDIATE term.

How about 'beige book' spike to 1885/90...then a minor pull back?

Anyway...utter carnage for those holding short from the 1830s yesterday....now 50pts lower, lol

2pm update - F flag on the hourly cycle

US indexes are holding very strong gains, especially on the two leaders - Trans/R2K. Price structure is currently an F flag...bullish into tomorrow - when we have some sig' QE-pomo to help sustain the gains. Metals are holding moderate declines, Gold -$11



..struggling to think of something else to note...on what is just another day for the bull maniacs.

Notable strength: UGAZ, +9%.  The last two days of price action in Nat' gas appears almost entirely back to front, relative to the geo-political news.

1pm update - VIX set to lose the 14s

With US equities holding strong gains, the VIX looks set to melt even lower this afternoon, with a viable daily close in the 13s. The big VIX 20 threshold looks out of range until at least April. Metals remain weak, Gold -$14.



Not much to add, on what is a powerful day for the bulls.

Again, the underlying upside pressure - seen better on the weekly/monthly charts, is over-riding what little downside pressure there has recently been.

Notable strenth: DRYS, +6%.

A break into the $4s would open up a swift ramp into the 5s before the next FOMC.

12pm update - powerful gains for the two leaders

US indexes are holding very significant gains. There is particular strength in the two leaders - Trans/R2K, higher by 2.0% and 2.8% respectively. Metals remain weak, Gold -$13, whilst the VIX is -10% in the 14s.

Trans, daily

R2K, daily


*certainly, the gain in the R2K is taking it close to what is some degree of resistance. Monthly charts are offering the 1250/75 zone by late March.

VIX update from Mr T.

time for tea.

12.20pm.. R2K now +3.1%...incredible!

11am update - new highs all over the place

US indexes push significantly higher, with new highs in the sp'500, R2K, and Nasdaq Comp'. Bears are being routed after the mild hysteria of Monday. Metals are losing the 'fear trade' gains, with Gold -$13. VIX has naturally been smacked lower, -10%, back in the 14s.



Suffice to say...new highs...and by my count...another 11 trading days to go, in this ramp from sp'1737

As ever, I reserve the right to change my mind..if price action at the next FOMC does NOT look toppy.

11.24am.. look at those gains in the R2K, +2.8%...with the Trans +2% or so.

Powerful day for the equity bulls, with VIX now in danger of slipping into the 13s.

10am update - clearly everything is just fine

US indexes open significantly higher, with the R2K and sp'500 breaking a new historic high. Metals are lower, with Gold -$17. Despite the current gains, market remains highly vulnerable to any sporadic news reports from the Ukraine. Volatility most certainly is...here to stay.



Suffice to say...despite the market gains, and the 'softening words' of Putin, I think the following video sums up how edgy the Ukrainian situation remains.

It will only take one soldier to go begin a massacre, and then the whole region goes hot in a matter of hours.

As for the market...

Daily charts will be offering the sp'1890s by end of this week, so long as things remain 'contained' in the Ukraine.

VIX is getting the smack down...and yesterdays black candle is confirmed.

stay tuned...

10.17am..well, here come the sp'1870s.

Weekly charts have resistance in the 1875 area, but that is now rising each day..if slowly.

Pre-Market Brief

Good morning. Futures are strongly higher on comments by Putin, sp +17pts, we're set to open around 1862 - a mere 5pts shy of a new high. Metals are sharply lower, Gold -$17, Silver -1.2%. Oil is -1%, whilst Nat' gas is around 2% higher.



So...err..I guess some of you are wondering 'what the hell is this madness?'

Frankly...it appears the market is ramping on 'words of Putin'...as the mainstream believe he is soffening his approach to the Ukraine.

For those on short side..this is effectively a disaster, and we're a mere 5pts shy of breaking a new high.

Are you loving the day to day volatility yet?

9.25am..well, lets see whether the gains will hold into late morning.

*yesterdays black candle on the VIX was indeed a warning to the bears. They are rarely to be dismissed.

Primary trend remains to the upside

Despite a Monday decline for the US and most world markets, the bigger weekly/monthly index cycles remain broadly bullish. Indeed, the price action remains bizarrely strong - considering the continuing threat of a war between the Ukraine and Russia.


sp'monthly2 - Bollinger/Keltner


Okay..I'm tired..so I'll merely higher the key issues...

weekly8'.. note the lower bollinger now, up to 1750. By end March, equity bears are going to find it tough just to get into the 1820/00 zone. A break <1737..looks very unlikely any time soon.

monthly'2. note the upper bollinger, now close to the 1930s..which is a viable target for the bull maniacs by late March/early April.

As it is..my best guess is that we'll have a real opportunity at maxing out at the next FOMC of March'19.

Clown finance TV wheel on a doomer bear

With the market 1.2% below last Fridays high of sp'1867, it seems it was time for one of the old school doomer bears to make an appearance, here is Harry Dent...

There was a time when I'd have been on board with Dent's outlook. Yet...no longer

For the record, his obsession with demographics being a major macro-economic inhibitor is a very valid issue. Yet, there are - in my view, multiple far more powerful issues, not least world capital flows. If you also believe that the cyclical bond market rally from the 1980s is complete, then the only place (for most) to park their money is in equities. 

As it is, I don't think we'll see Dow 17k this side of summer 2014, but neither do I see Dow 6k as viable anymore - whether next year, 2016..or beyond.

*Best case downside for the Dow this summer looks to be 14/13k, before the next hyper-wave into late 2015/early 2016.

Looking ahead

There isn't anything significant due tomorrow, market will have the opportunity to give its full attention on the Ukraine situation, and also look towards the monthly jobs data due this Friday.

*next sig' Qe-pomo is not until Wednesday

Goodnight from London

Daily Index Cycle update

US indexes saw something of a latter day recovery, with the sp -13pts @ 1845  (intraday low 1834). The two leaders - Trans/R2K, both settled -0.6%. Near term outlook is somewhat uncertain, but the broader trend remains clearly to the upside.





We saw some interesting declines today, but really..the primary trend remains higher for most of the indexes

Yes, the old leader - transports, is lagging, but with the R2K, sp'500, and Nasdaq recently breaking new highs, I think many are lacking an overall perspective.

With a black-fail candle on the daily VIX chart, equity bears have some real problems this week.

Closing update from Mr Riley

a little more later...