Wednesday 11 May 2016

VIX climbs into the close

It was a mixed day for volatility as the VIX opened a touch higher, but then briefly printing 13.29, before climbing across the afternoon, settling +7.8% @ 14.69. Near term outlook remains borderline, as equity price action remains pretty choppy.


VIX'60min



VIX'daily3


Summary

Suffice to add... the VIX still remains pretty subdued.

Even if the market unravels to the sp'2000/1990s before next opex (May 20th), the VIX will still struggle to clear the key 20 threshold

Sustained price action above the 20 threshold looks out of range until late May/early June.

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more later... on the indexes

Closing Brief

US equity indexes closed significantly lower, sp -19pts @ 2064. The two leaders - Trans/R2K, settled lower by -1.5% and -1.2% respectively. Near term outlook remains borderline, as until the Friday low of 2039 is taken out, price action still remains pretty choppy... with a broadly subdued VIX.


sp'60min



Summary

*closing hour action: a minor rally attempt.. but failing.. breaking a new intra low.
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Yesterday was pure nonsense.. and its somewhat good to see much of it negated today.

However, equity bears can't be remotely pleased until the Friday low of 2039 is taken out, and then downward to the 2000/1990s.

Even if we do reach that zone.. another bounce of 2-3% then seems due.

The first realistic chance of sustained/significant downside seems viable no earlier than end May/early June.

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more later... on the VIX

3pm update - weakness into the close

US equities continue to weaken, as price momentum is now moderately favouring the bears. Even a daily close in the sp'2065/60 zone - with VIX 15s, will only negate around half of the gains from the Friday low of 2039. Meanwhile, Oil is holding powerful gains, +3.2% in the $46s.


sp'60min



USO, daily2


Summary

re: oil, double top in the WTIC $46s?    If so.. first soft target is the $40 threshold.. and that is 15% lower.
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As for equities.. short term price action should see new lows into the close.. with viable downside across at least some of tomorrow, at least to 2055/50... with VIX 15s.
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notable weakness: NFLX, daily


... unable to hold the $90s. The uber-doomer downside target is $50/45... but that would require at least the sp'1600s.
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back at the close....

2pm update - sunshine between the showers

US equities remain moderately weak, as the hourly equity and VIX cycles see respective bearish and bullish crosses. In theory, the market should see increasing weakness into the close.. and stretching across to the Thursday open. For now, VIX remains broadly subdued in the low 14s.


sp'60min



VIX'60min


Summary

Little to add.

So... lets see if we can close in the 2065/60 zone.. as still seems viable. That might just about equate to a little VIX push into the 15s... but clearly.. the 15s ain't nothing to get excited about.

notable weakness: Seagate (STX), -2.3% in the $18.80s... the 12/10 zone really doesn't look that difficult... given another 3-5 months.

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Meanwhile... here in London city...



Between the heavy showers, its actually pretty good. The metropolis is soon to reach peak green in the eco-system (not the AAPL one!), which is unquestionably bullish for the UK tourist industry.

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stay tuned

1pm update - awaiting a bearish cross

US equities remain moderately weak, despite Oil which is holding strong gains of around 3% in the $45s. Increasing equity weakness looks due this afternoon, with a probable daily close in the sp'2065/60 zone. Broadly though, equity bears should be seeking an eventual break <2039.


sp'60min



VIX'60min



Summary

*it is notable for now, the VIX remains extremely subdued. A daily close >14.60 would make for something interesting.
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Hourly equity MACD (blue bar historgram) cycle is set to turn negative by 2pm. In theory.. market should break a new low this afternoon, with increasing weakness into the close... and continuing at the Thursday open.
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time for some sun... after the rain.

12pm update - break of rising trend

With some renewed weakness, there has been a marginal break of the rising trend that stretches back to the Fri' low of sp'2039. Oil has built sig' gains of 2.8% in the $45s.. as some are again touting the big $50. Metals are cooling from earlier highs, Gold +$6, with Silver +1.4%.


sp'60min



USO'daily2



Summary

*at the current rate of decline, the hourly MACD cycle will see a bearish cross no later than 2pm.

In theory... the market should increasingly weaken, a daily close in the 2065/60 zone seems probable.
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re: Oil - a break into the WTIC $47s would be an important new high.. and bode for further upside to the big $50 threshold.

If we're going to see the main market break the sp'2039 low, oil must not go much higher.
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time to see what the cheerleaders are saying on clown finance TV...... 

11am update - oil causing problems for the bears

With a net inventory draw of -3.4 million barrels, Oil has surged upward, and that has naturally dragged much of the main market with it. With the USD -0.5% in the DXY 93.70s, the metals are holding sig' gains, Gold +$11, with Silver +2.2%.


USO' daily2



sp'60min



Summary

*equity bears just need a daily close <2085 to break short term rising trend.
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Little to add... as the market is battling it out.

Cyclically, we're still set to increasingly weaken as the day proceeds.. especially into the close/early Thursday.

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notable weakness, NFLX, daily


Continues to broadly struggle, if the main market does eventually unravel, first target is $70, then 50/45. The latter of course is a long way down.. but even at that level, the stock would still be 'generously priced'.
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time to cook

10am update - opening weakness

US equities open moderately lower, with the sp'500 set to see increasing weakness across today.. and possibly.. for the rest of the week. What will be mission critical to the equity bears in this new hourly down wave.. to break the Friday low of 2039... and that will not be easy.


sp'60min



VIX'60min


Summary

Most notable... the VIX, still utterly stuck in the low teens. For the moment, the market has ZERO concern about anything. Even if sp'2039 is broken under, VIX 16s, if 2000/1990 - VIX 19/21 zone.. 'briefly', before yet another bounce.
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Big movers....

DIS, daily


Clear break of trend. Price structure.. double top.. arguably a H/S formation... if so, downside target is (122, 86... -36...:  $50, and yes, I fully recognise $50 is utter crazy talk right now.

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M, daily


Lousy outlook...  as 'old retail' continues to decline in the western world. Next key support is the 22/20 zone, back to the lows from late 2011.
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stay tuned!

Pre-Market Brief

Good morning. US equity futures are moderately lower, sp -5pts, we're set to open at 2079. USD is a little weak, -0.3% in the DXY 94.00s. Metals are strongly higher, Gold +$11, with Silver +2.4%. Oil is +0.3% in the $44s.. ahead of the EIA report.


sp'60min


Summary

From a pure cyclical perspective, we're clearly due a down wave that should (in theory) span across today, and continue into tomorrow.

Now its a case of whether we can break the Friday low of 2039... or put in a higher low.

Considering yesterday afternoon's break of trend (>2080)...  falling back into the 2030s will be damn tough. We shall see

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early movers...

DIS -5% in the $101s, after a slight EPS/rev miss. Broadly, the numbers are still good, but Mr Market is very intolerant of even fractional misses.

GDX +2.5%.. as the precious metals continue to climb.. the weaker USD is surely helping this morning.

JCP -4%
M (Macys) -8%, cuts earnings guidance

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Brief update from Mr C.



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Doomer chat.. Hunter with Ms. Fitts.



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Overnight action

Japan: cooling from early gains, +0.1% @ 16579
China: minor chop, +0.2% @ 2837
Germany: increasingly weak, currently -0.8% @ 9962.... as the equity bulls lose the 10K threshold once more.
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Have a good Wednesday

Mr Dollar continues to claw upward

Since making a new multi-month low of DXY 91.88, the USD has managed six consecutive days of gains, settling today +0.1% at DXY 94.26. It remains highly notable that King Dollar is a mere 6% from breaking the double top at the massive psy' level of DXY 100.


USD, daily



USD, weekly


Summary

Despite what some of the dollar doomers continue to proclaim (Mr Schiff included), the USD remains broadly strong, merely trading sideways since spring 2015.

There is a clear double top at the DXY 100 threshold, and it should be obvious that any break above it would bode for much higher levels in the USD.. at least to the 120s.

.. and if we see the 120s.. that would cause all sorts of problems.


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Looking ahead

Wed' will see the latest EIA report and the US treasury budget (2pm).. although its largely the case that few in the mainstream have any care about govt' spending/revenue data these days.
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As for the US equity market...

sp'weekly6


Despite the current net weekly gains, the current candle remains blue. Equity bears need to hold under the sp'2100 threshold... or it really is too damn close to breaking a new historic high. Equity bears should be seeking monthly close under the 2K threshold, but that is some 4% lower, and in this twisted market.. that may as well be 40%.

Goodnight from London

Daily Index Cycle update

US equity indexes closed broadly higher for a third consecutive day, sp +25pts @ 2084. The two leaders - Trans/R2K, settled higher by 1.2% and 0.9% respectively. Near term outlook is extremely borderline, but clearly.. leaning bullish, as the 2100 threshold is within striking distance.


sp'daily



Dow



Summary

sp'500: the best day for the sp' since March 11th, breaking the short term downward trend from 2111. Equity bulls just need to break back into the 2100s to open the door to new historic highs this summer.

Dow: settling +222pts (1.3%) at 17928, with the cheerleaders on clown finance TV getting excited about a viable weekly close above the 18K threshold.

Equity bulls just need another 2% or so to break the May'2015 high of 18351.

Meanwhile, equity bears can't really have any confidence until a break under the key 17K threshold.

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a little more later...