Friday, 23 May 2014

Volatility continues to melt lower

With equities breaking new historic highs, the VIX continued to melt lower, settling -5.6% @ 11.36. Near term outlook is for VIX to remain very low, with a further break to the 10s..or even 9s by mid June - not least if sp'1920s or higher. Across the week, the VIX declined -8.7%





*I thought I'd provide another look at the giant monthly, which really does give some perspective on just how bizarre the last few years have been.

So..I do expect VIX to remain low for a further few weeks. I'm really not expecting any major spike until the next FOMC of June'18. A return to the VIX 20s seems highly probable this summer, and I will most certainly be looking to pick up a large VIX call block...but not....yet.

If the last few years have taught us anything, there is no hurry, right?

more later on the indexes...

Closing Brief

It was another week for the equity bulls, with the sp'500 +8pts @ 1900. The two leaders - Trans/R2K, settled up 0.8% and 1.1% respectively. Near term outlook remains bullish, with further upside likely into into mid June.



*I'm almost reluctant to highlight an hourly chart.. I mean...why get lost in the minor noise? Trend is clearly up, as seen far better on the daily, weekly..or monthly cycles.

The problem the equity bears - and even many bulls, is getting overly wrapped up in minor moves, and losing sight of the broader trend, which remains outright bullish.

Thanks to all those who said hello this week, it is always good to hear from you, especially those who want to share a chart or two.

Have a good (long) weekend everyone

*the usual updates - across the evening, to wrap up the week.

**The weekend post - late Saturday, will be on the US weekly indexes.

3pm update - sleepy end to the week

US indexes are closing the week on a very positive note, and it is possible we'll settle with sp'1900s, dow'16600s, and perhaps..Trans 8000s. Regardless of the exact close, the equity bulls look set for further gains into end May...and the first half of June.



*such an exciting afternoon, I did fall asleep earlier, hence I missed an hourly post...ohh the humanity, refunds for everyone?

Seriously though, in many ways, a very conclusive and nasty way to end the week, at least for those on the bearish side.

There is literally nothing for the bears to tout, with the market showing a rather significant rebound from sp'1868 to 1899..and perhaps 1900s by the close.

 updates into the close...if I can stay awake ;)

In particular...eyes on the VIX..maybe they might be able to whack it lower into the 10s...if sp'1900s.

3.11pm.. VIX 11.44.... sp'1900.....hmm   equity bears burnt to a crisp.

I'd still not be surprised if the VIX is snapped into the 10s in the closing few minutes.

3.23pm.. Notable weakness, coal miners, BTU -1.4%... I'd refer anyone to last evenings post on BTU on my 'fair value' page.

Despite the strong market, the coal sector continues to get the smack down...and a few of the remaining names won't likely survive.

VIX 11.40...... the March low was 11.05....that is the target..

3.45pm...not much to add. It remains highly notable that the R2K/Nasdaq are both outside of their declining trend....and are headed up...probably for at least another 2-3 weeks.

It sure does not look good for those in bear land until at least mid June.

back at the close.

1pm update - reflections on the VIX

US indexes are continuing to melt higher, with the Transports at new highs..and the Dow/SP set to follow. Perhaps most notable though, is the VIX, which looks set to lose the 11s..and fall into the 10s for the first time since Feb'2007 - when the property bubble peaked.



What to note?

Well, the 10s do look a given, with sp'1910/20s.

The only issue is whether single digit VIX is coming in the current multi-week equity wave. If sp'1940/60 zone in June - or more likely July, then VIX 9s will be hit.


*as it is, I have ZERO inclination to pick up a VIX call block until at least mid June. Even though these levels are of course extremely low.

Notable strength: UAL +4.7%

I'm tired....back at 2pm.

2.27pm...ahh...soooooooo exciting afternoon, I fell asleep.

sp' set for a weekly close in the 1900s, with Dow 16600.

12pm update - Transports.. higher and higher

US equities continue to build gains, with new highs in the Transports. The sp/Dow look set to follow with new highs..whether late today..or next week, it really makes no difference. VIX is in melt mode, the next target is to break the March low of 11.05.

Trans, daily


Suffice to say, the strength in the Transports remains extraordinary, best case upside is probably somewhere around 8150/8250.

VIX update from Mr T.

time for lunch

11am update - a weekly close in the 1900s?

With zero downside pressure, the market is once again in algo-bot melt mode, with the VIX similarly on the slide. A weekly close in the sp'1900s is viable, along with VIX in the low 11s. Even the R2K is breaking outside of the descending trend...upside target remains 1170/80.

R2K, daily


*I could say all sorts of things on how I feel about seeing the R2K finally beginning a new climb (having bailed two days ago)..suffice to say....... least I'm not short.

So..all those spike floor candles are indeed...exactly that. They were early warnings that the R2K (and Nasdaq) have completed their wave lower from early March, and we're now in the process of a bounce.

Worse case..we just keep pushing higher across much of the year, but I'm STILL guessing we get stuck, potentially forming a very large H/S for the R2K.

yours....on the sidelines

11.17am.. Transports making a play for the 8000s, along with sp'1900s, and Dow 16600s.

10am update - a new high for the holiday weekend

US equities open a little higher, but that is more than enough for the Transports to break another new  historic high of 7949. Sp'500 looks set for a weekly close well above the danger zone of 1865/60. VIX looks set to melt lower, somewhere in the low 11s.


Summary we trading.

There is ZERO reason why the market will sell lower today, not least since few are around anyway. As ever, such holiday trading tends to favour the bulls...algo-bot low volume the upside. Whether we get a weekly close in the sp'1900s...almost seems inconsequential.

Notable weakness, the shippers, DRYS -4.6%

...which is kinda surprising, considering the transports sector as a whole is broadly strong.

10.15am.. The R2K is breaking out of descending trend.

RS target remains 1170/80...which is 50//60pts higher..and would equate to sp'1920..maybe a little higher.

VIX breaking new low...11.61.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pts, we're set to open at 1894 - a mere 8pts away from breaking a new high. Weekly charts are offering the 1910/15 zone into end May, and by the next FOMC of June'18, the viable upper range will likely be around 1920/30.



We have home sales data at 10am, and once that is out of the way, the rest of the day is set to be very quiet. There will of course be some significant moves in individual stocks, so I will probably focus on that today.

End week chatter from Hunter

Suffice to say, the 'dollar collapse' issue rumbles on. I just don't see why so many are still expecting it. Again, unless you think all paper currencies are going to implode at the same time, then the key issue could the Euro or Yen not implode first?

Anyway....a long weekend ahead....and I think for most equity bears out there, a break is going to be most welcome.

The stuff of bearish dreams

For those in the mood for some true 'doomer bear' outlooks, see deflationland.

Certainly, sp'1950 is a topping level a fair few are now seeking, and I'd will likely not be viable until July - weekly charts will be restrictive before then. As for 'best case downside', I still can't see anything much below the old 2000/2007 double top zone of 1625/1575.

*I will be very content to be entirely on the sidelines until next Tuesday.

9.37am.. VIX is already -2%...set to take out the recent low......10s...aren't that far off now. Perhaps today, if a weekly close in the sp'1900s.

Upside into June

The always slim bearish hopes of a break under sp'1860 have now effectively faded to nothing. Mr Market looks set for continued general upside into June, with sp'1910/20s, which will likely equate to VIX briefly in the 10s.


R2K, weekly'4, rainbow


*The R2K looks particularly bullish for early June, and I'd not be surprised to see 1170/80, which could form a R/S.

So...we look set to close the week with a green candle on the sp'500, and unquestionably...the near term outlook remains in favour of the bulls.

Upper bollinger on the weekly chart will be offering 1912/15 next week, and we do look set to end May with a monthly close in the sp'1900s.

Looking ahead

Friday looks set to be very subdued trading, although there is New Homes Sales data at 10am.

Once we get past 11am, the indexes will probably flat line for the rest of the day.

*next sig' QE-pomo is next Tuesday.

At least I'm not short

Having got stopped out yesterday morning, I remain content on the sidelines for the coming 3 day weekend. As it is, I would consider a small long index position next Tue/Wednesday. Certainly, I can't' short this market, at least until the next FOMC of June'18.

I still consider the weakness in the R2K/Nasdaq as a major early warning of trouble for this summer. So...I'm still on the 'big short' outlook for this summer, but lets see what sort of price action (and structure) we have by mid June.

Ohh, and that storm I was babbling on about early this morning...a

Goodnight from London

Daily Index Cycle update

US indexes climbed for a second consecutive day, sp +4pts @ 1892. The two leaders - Trans/R2K, settled higher by 0.5% and 0.9% respectively. Near term outlook remains bullish, with the sp'1910/20s likely into early June.





*most notable aspect of today, Transports breaking a new historic high of 7938.

It would seem very likely that the Dow and Sp'500 will follow with further new highs in the coming days. As it is, I do not expect new highs for the R2K/Nasdaq this side of the summer.

Closing update from Riley

a little more later...