Wednesday 13 May 2015

VIX fractionally lower

With the broader equity market seeing a day of minor chop, the VIX was naturally mostly flat, settling -0.7% @ 13.76 (intra low 13.06). Near term outlook still offers the sp'2130/40s, which should keep the VIX subdued for another week or two.


VIX'60min



VIX'daily3


Summary

*note the bollinger bands on the daily cycle, now rather tight at 15/11.
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So.. VIX saw a fractional net daily decline, but is trading within a tight range. Underlying MACD (blue bar histogram) is a touch on the high side, and it bodes moderately in favour of the equity bulls attaining new historic highs in at least some indexes.

Right now, the big 20 threshold remains unlikely until the next FOMC of June 17th.

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more later... on the indexes

Closing Brief

US equities closed broadly flat, sp -0.6pts @ 2098 (intra high 2110). The two leaders - Trans/R2K, settled lower by -1.0% and -0.1% respectively. Near term outlook still slightly favours new highs in some indexes, but certainly not all. Increasingly, the market looks like it is setting up for a summer retrace/correction.


sp'60min



Summary

*earnings due from CSCO, JCP, and SHAK
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... and another day comes to a close in the twisted casino.

For yours truly, it not the best of days, but hey.. at least the sun was shining. Thursday is set for rainy gloom, although that is arguably good weather for bears.

*I remain short GLD, seeking an exit in 2-3 days... after the next hourly down cycle.

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the usual bits and pieces to wrap up the day... across the evening

3pm update - Transports really struggling

The broader equity market remains in minor chop mode. However, there remains notable weakness in the Transports, -0.9%... and so far completely unable to re-take the 200dma. USD is attempting to claw off the lows, -1.0%. Metals look set for a second day of gains, Gold +$20.


Trans, daily



GLD, daily


Summary

*I remain short GLD, and its starting to get moderately annoying. I sure don't want to see any daily closes above the 200dma in the 117s.
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So, broadly a day of chop, but with the 'old leader' - Trans, struggling, equity bulls should be somewhat concerned as the bigger picture continues to slowly turn toward the bears this summer.

Increasingly, it looks pretty much assured we'll see a major wave lower this summer... lead (as it should be) by the Trans.
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notable strength: oil/gas drillers, RIG +5.4%, SDRL +3.3%
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3.34pm... Trans starting to slide again... -1.2%.... as USD continues to attempt a rebound, -0.9%


3.40pm... equity bears just need a close of sp'2094 to break soft rising trend....  Hmmm

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back at the close :)

2pm update - a funfair, a drill rig, and a permabear

US equities are battling to build minor gains, sp +3pts @ 2102. USD remains broadly weak, -1.0% @ DXY 93.50s. The precious metals are holding very significant gains, Gold +$22, with Silver +3.8%. Oil is holding moderate gains of 0.8%, in the WTIC $60s.


Meanwhile... in the world's financial capital of rehypothecation






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*the drill rig is not actually for Oil, but preliminary housing development. Yes... London clearly needs more housing, as 13,870 people per square mile (2013 data) is not high enough.
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As for the markets, there is little to add.

It would still seem we'll tag the upper bollinger on the weekly cycle.. which is in the sp'2140s. From there.. things might finally turn in favour of the bears.

notable strength: GDX +2.5%, not surprising, considering the gains in the metals.
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back at 3pm

1pm update - bullish chop?

US equities are broadly flat, with the sp'500 stuck around the 2100 threshold. Hourly equity cycles are offering better opportunity for upside tomorrow. There is notable weakness in the Transports, -0.9% in the 8500s. Metals are holding sig' gains, Gold +$22.


sp'60min


Trans


Summary

*the borderline significant weakness in the 'old leader' - Trans, remains a real problem, and is arguably indicative that a sig' retrace is going to occur at some point this summer.
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It would seem after the Tuesday swings, the market wants a day of chop/consolidation before the next sig' move.

All things considered, there still looks to be further upside due into end month.. if not early June. The weak USD.. along with higher Oil, are really helping negate what down cycles there are.
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notable weakness, Discovery (DISCA) -2.4% @ $31.25. Seen on the bigger monthly cycle.. DISCA has a multi-month bear flag, and looks headed for $25/22 zone by late summer.

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back at 2pm

12pm update - underlying upward pressure

It sure has been a choppy morning, but the underlying upward pressure should be clear to most. First soft target for the bull maniacs is sp'2117, which is easily within range before the weekend. With the USD -1.1% in the DXY 93.50s, the metals are holding strong gains, Gold +$21, with Silver +3.7%  


sp'daily5


GLD, daily



Summary

*Gold is clearly making a play to break multiple resistance, greatly helped by a very weak USD. If GLD can break/hold the 117s.. it'd bode for at least 120/21. As things are.. I'm still short... with eyes on the bigger picture for Gold $1000. I realise the gold bugs out there will roll their eyes at that target.
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So... a bit of a messy morning.. but still... we looked headed for new historic highs of sp'2130/40s.

Clearly though... there is some notable weakness in the 'old leader' - Transports, and until we see a weekly close in the 9300s, hyper-upside targets (10K +).. are doubtful before some sig' retrace.

notable strength: oil/gas drillers, RIG +2.9%, SDRL +3.9%... no doubt helped with Oil +1.1%.  See 'fair value' post for more on those two.
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VIX update from Mr T. 


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time for lunch, wine, and a Valium?

11am update - shaky gains

US equities are increasingly mixed, with the sp'500 having slipped from an early high of 2110, back to effectively flat at 2100/2099. Metals remain significantly higher, Gold +$18, as the USD remains broadly weak. Despite a net weekly inventory draw, Oil is starting to cool.


sp'60min


Trans, daily


Summary

*notable weakness in the Transports...  if the decline continue just a little further, it would be a problem for the equity bulls.
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It is arguably pretty important for the bulls to achieve some net daily equity gains, although unlike yesterday, the market didn't even open lower.

Best guess....we battle upward into the sp'2135/45 zone... but clearly, the bulls are having a difficult time.

*EIA report, net draw of -2.2 million barrels, which was certainly much better than most expected.

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The metals are battling to achieve a major breakout, but as ever... its very difficult...

GLD,60min


We have a spiky hourly candle.. and that is probably the high of the day, unless the USD sees another wave lower.
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stay tuned.

10am update - opening gains

Good morning. US equities are pushing upward, with the sp' set to make a higher high (>2117).. to backup the higher low of 2085. USD breaks a new multi-month low, -0.7% in the DXY 93.80s, and that is helping the metals continue to bounce, Gold +$16


sp'60min


UUP, weekly


Summary

*the cooling in the USD has really helped prop up the broader market, and the rate of decline is even faster than I had originally expected.

To be clear, under NO reasonable outlook do I see the USD sustainably trading under the secondary bearish target of DXY 90/89. The 120s look due.. which will have major implications later this year/2016.
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Anyway.. I woke up early... but fell asleep... hence missing the first update of the day. Urghh.

Gold has opened sharply higher, and its getting real close to major resistance. Another day or two higher, and the broader bearish H/S formation will be negated.

GLD, daily


I remain short for now, and it ain't such a great start to the day. No doubt, many of the Gold bugs will be getting overly excited with Gold back above the $1200 threshold. Right now... its clearly a borderline situation.
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notable strength, oil/gas drillers, SDRL +2.3%... as Oil climbs another 1.6%.

*awaiting EIA report (due 10.30am)... we'll probably see a net weekly surplus of 2-3 million barrels.... as based on the API. Oil still looks set for 65/67... maybe it'll max out there.

Bond yields maxed?

It was a particularly interesting morning in US bond land, with TLT starting the day with a classic reversal candle (intra low $118.82), and settling +0.2% @ $119.81. The daily, weekly, and monthly cycles are offering a grander top of 140/150 in the late summer/early autumn. From there.. things could get real interesting.


TLT, 60min



TLT, daily



TLT, monthly2, with outlook


Summary

*one particularly bizarre aspect is how the market can see something differently.. given some time. For instance, last October.. as yields dropped - with bond prices soaring, the equity market was upset... flooring Oct'15th.

Today, bond prices opened lower.. as yields rose... but then a turn, bond prices rose, with equities recovering into the afternoon.

Yes, there are a great many other variables, but still... it is the case that Mr Market will choose to perceive something as bad in one time frame, only to see it as good some months later.
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As for equities, the sp'500 weekly 'rainbow' candle remains blue.


Upper weekly bollinger is still offering the 2140s this month, with 2160/70s by mid June.
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Looking ahead

Wed' will see retail sales, import/export prices, bus' inventories, along with the latest EIA report.

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Goodnight from London

Daily Index Cycle update

US equities closed moderately weak, sp -6pts @ 2099 (intra low 2085). The two leaders - Trans/R2K, settled lower by -1.2% and -0.2% respectively. Near term outlook is for renewed upside, with the sp'2120/30s by end week. There looks to be viable upside into the 2160/70 zone by the FOMC of June 17th.


sp'daily5



Dow



Trans


Summary

*Transports continues to struggle, arguably because of renewed upside in Oil prices.
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So, a day of opening weakness, but with a rather typical latter day recovery. Despite the second consecutive net daily decline, the daily candles (on some indexes) are offering a spike floor.

Now, its a case of whether retail sales disappoint, and if Bond yields resume higher.

Best guess... new historic highs in the sp'500, Dow, and NYSE comp'.

The two leaders - Trans/R2K, are problematic for the bulls, even if sp'2140s by end May.

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a little more later...