Friday 14 August 2015

VIX melts into the weekend

With equities settling the week on a moderately positive note, the VIX melted lower into the weekend, settling -4.9% @ 12.83. Near term outlook is for renewed equity weakness.. to the sp'2040s, which (in theory) should equate to VIX 17s. The big 20 threshold looks out of range in the near term.


VIX'daily3



VIX'weekly



Summary

*a net weekly VIX decline of -4.2%
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The weekly candle was a reversal candle... similar to the one seen in mid July 2014.

Certainly, VIX looks set to break into the 20s.. but that seems far more likely in September, than by end August.

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more later... on the indexes

Closing Brief

US equities ended the week on a moderately positive note, sp +8pts @ 2091. The two leaders - Trans/R2K, both settled higher by 0.6%. Near term outlook remains unchanged, with renewed weakness, ideally to the sp'2040s, with Dow 17000, and that should equate to VIX in the 17s.


sp'60min



Summary

... and another week comes to close.

First, I realise some will be moderately spooked at today's net daily gains, but really... I can't take it seriously.  Across all indexes since May, its been a series of lower highs.. and lower lows... as especially seen on the bigger weekly cycles.

No doubt some will be calling for broader upside into September... good luck with that.
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*I hold long-VIX across the weekend, and have little concern, seeking an exit in the 17s next Tue/Wed.
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Have a good weekend
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*the usual bits and pieces across the evening to wrap up the day.

3pm update - chop into the weekend

US equities remain holding moderate gains, sp +5pts @ 2088, with VIX -1.8% in the 13.20s. As things are, the bull maniacs are set for a minor net weekly gain. With the USD +0.1% in the DXY 96.50s, metals and oil remain a little weak.


sp'60min


sp'weekly1b


Summary

Little to add.

A very subdued end to what was a pretty dynamic week.

In many ways.. EVERYONE is getting the opportunity to reposition. There can be no whining or excuses next Monday.. if the market is breaking >2100.. or on the way to new cycle lows.
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back at the close.

2pm update - increasingly vulnerable

US equities are holding minor gains, but look increasingly vulnerable into the close. A weekly close above declining resistance @ 2099 looks well out of range. The equity bears have continued to hold the market in a series of lower highs.. and lower lows.


sp'60min



sp'weekly1b


Summary

As things are.. the market looks set to close in the sp'2085/75 zone.

*Last weeks close was sp'2077... so.. a fractional net weekly decline is just about possible, with two hours to go.
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back at 3pm

1pm update - weak equity chop

US equity indexes are moderately mixed.. and remain set for some underlying increasing weakness into the weekly close. VIX remains subdued in the 13.50s, a close above the Thursday high of 14.33 would make for a bullish engulfing candle, and that would be suggestive of equity downside next Monday.


sp'60min



VIX'daily3



Summary

Still... little to add.

Hourly cycle is offering increasing weakness into the close.. with the sp'2040s next week.

*as things are, I've little concern about holding long-VIX across the weekend. The 15/16s look within range by late Mon/Tuesday.

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back at 2pm

12pm update - commodities under pressure

With the USD turning positive - currently, +0.2% in the DXY 96.60s, commodities are under particular downward pressure. Metals have turned negative, Gold -$2, whilst oil is +0.3% in the $42s.


GLD, daily



Summary

Little to add... on what is a day of minor equity churn to wrap up the week.

notable weakness, miners, GDX -1.6%.. having opened up around 2%. Not exactly a surprise.

GDX, daily


Broader trend for the Gold/Silver miners remains very weak, as Gold is set to lose the $1100 threshold.

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VIX update from Mr T.



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time for tea :)

11am update - leaning lower

US equities are starting to lean on the downside, with likely increasing downside into the weekly close.  Metals are holding moderate gains, Gold +$3. Oil is in bounce mode, +0.3% in the $42s, but looks highly vulnerable to losing the $40s in the immediate term.


sp'60min



VIX'daily2



Summary

Little to add.

Clearly, if the sp'2040s are coming, they sure aren't viable today.. or even early Monday.

As things are.. the setup favours the bears into early next week. The only issue that would provisionally negate such an outlook would be a Friday close above declining resistance of sp'2099... and I sure don't expect that.

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time for a slightly early lunch...


11.12am.... With the USD turning positive... commodities under pressure...

Gold turns red... taking the miners lower.

10am update - opening chop

US equities open with some minor chop, with the sp +3pts @ 2087. VIX remains subdued in the mid 13s. Equity bears should be seeking a break <sp'2070.. with VIX 15s... which will offer renewed clarity that the sp'2040s are coming.. with VIX 17s.


sp'60min



VIX'daily2


Summary

*the fourth consecutive green candle on the VIX chart... a break back above 14.50 will be a key signal.
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A pretty dull open... now its case of whether today turns into a holding pattern day... or building weakness into the weekend.. with follow through downside next Mon/Tuesday to sp'2040s.

Best guess... well, I'm long-VIX.. so you know what I'm seeking.
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time to cook...


10.06am  Consumer sent'  92.9....  a little lower, but still... on the high side since late 2014.

Eyes on TLT, currently a touch lower in the $123.50s....   equity bears are going to need 125s to see new cycle lows.. and clearly.. that now looks out of range until next week.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -6pts, we're set to open at 2077. The hourly equity cycle is offering the 2060s today.. and that should equate to VIX in the 15s. USD remains a little weak, -0.2% in the DXY 96.20s. Metals are bouncing, Gold +$4, whilst Oil is largely flat in the low $42s.


sp'60min



VIX'daily2



Summary

*eyes on the VIX today... a break back >15 would bode for a break (whether late today.. or Monday) of the Wed' low of sp'2052.
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Well, its the end of the week... and I'll be glad for the weekend.

The setup on ALL cycles favours the bears today. If we can see a few of the rats 'bail into the weekend', then things could spiral lower across the day.

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Overnight China action: moderate chop... the Shanghai comp' touched 4000.. and FAILED, settling +0.3% @ 3965. The 3200/3000 zone looks on track next month. How the Chinese leadership will react to new lows... now that will be interesting to watch.
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*I remain long-VIX, I would prefer to close out into the weekend..  15s would be a moderately acceptable exit... 16s would be great.
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Have a good Friday.
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8.00am... notable early strength, US bonds... TLT +0.5% in the $124.30s.

TLT, weekly


For those seeking another sig' equity down wave... look for TLT in the 125s.. whether late today.. or Monday. I'm with Armstrong on bonds... upside into early Oct'... and then we might see a multi-decade turn.
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8.31am.. Producer prices, m/m +0.2%.. a touch above market exp'...

sp holding -6pts @ 2077.   A break <2070 before 11am would be useful.
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9.37am.. Despite the minor opening chop... the threat of a weekly close >sp'2100 looks well out of range.

It would seem to be just a case of when the market breaks into the 2060s.. and keeps on going.

notable weakness: AAPL, -0.4%.. a fair way to reach the $100 threshold.

Not the best of days

With one trading day left of the week, the sp'500 is currently net higher by 5pts (0.3%) at 2083. A weekly close <2070 would really help maintain the mid term bearish outlook... along with VIX in the 15/16s. Tomorrow will unquestionably be rather important.


sp'weekly1b



VIX'weekly2


Summary

re: VIX... the more significant upside does not look likely for at least another 2-3 weeks. Once the key 20 threshold is broken above though... the only issue is how high might we spike. The mid 20s look a reasonable target by next FOMC of Sept'17th.
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As for the indexes, bears really should be seeking a weekly close in the 2070s.. or preferably 2060s.. along with VIX 15/16s.

Considering recent price action, there looks to be a fair chance of a marginally lower low <sp'2052 (with VIX >16.28). The setup for Friday looks rather promising for the bears, and if the week does close on a particularly negative note, it certainly keeps in play the mid term bearish outlook across Sept/early Oct.

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Looking ahead

Friday will see Producer prices, indust' prod', consumer sent'. That should be plenty enough to give the market a kick... one way or another.
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Not the best of days

For yours truly it was not a particularly great day. It had started well, good breakfast, a haircut, a visit to the bank. I posted my pre-market brief at 7am, and I even got one of my (usually intentionally provocative tweets) mentioned on Bloomberg. A storm front hit London city around 8am EST... thunder, heavy rains, 62f... not exactly a great summers day.

Who doesn't want to get highlighted on clown finance TV?

As the rains continued into the afternoon, then I get news my housing move had fallen through.. as the other side of the move had cancelled on me. Frankly, I'm pretty devastated.. it was a home in a place I had dearly wanted to be living before end summer.

The market had naturally weakened into late morning, with VIX battling into the 14s. From there of course... VIX melted to the low 13s. That sure wasn't great to see... although I can be rather patient when it comes to VIX trades. At least my entry is in the 14s and not the upper teens.. or even 20s.

In the late afternoon, a loud crash outside... as yet another set of vehicles collided a mere 20ft from my desk. For some hours thereafter it was then a case of 20/25 emergency crew cutting vehicles open.  I've no idea if they were pulled out dead or alive, and in many ways, I'd rather not think about it. Living next to an urban freeway is rarely subdued, and its one reason I want out of the city.

The closing hour of the trading day was at least something for the equity bears, and the setup - especially on the hourly cycle, bodes rather bearish into the weekly close.

As for the housing issue, I hope I'll eventually arrange to leave London city, but right now... it seems like I'll not get out (or should that be 'escape'?) until at least next spring.

On that depressing note of resignation...

Goodnight from London

Daily Index Cycle update

US equities settled moderately mixed, with some distinct weakness in the closing hour, sp -2pts @ 2083 (intra high 2092). The two leaders - Trans/R2K, settled lower by -0.1% and -0.3% respectively. Near term outlook is for renewed weakness to the sp'2040s, which should equate to VIX 17s.. before churn/moderate upside into opex.


sp'daily5


Dow


Summary

Little to add.

Market looks set for lower levels across Friday.. and perhaps into Monday.
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Closing update from Riley


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a little more later..