Friday, 22 May 2015

TVIX, UVXY - new lows, renewed horror

With equities breaking new highs this week, the VIX continued to cool. The 2x lev' bullish VIX instruments of TVIX and UVXY settled lower by a rather horrific -15.4% and -13.1% respectively. Near term outlook is for continued equity upside, with VIX likely to remain subdued at least into mid June.


TVIX ,daily



UVXY, daily



Summary

*first, an update on the VIX, which saw a net weekly decline of -2.0%.


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Relative to the VIX, the 2x lev' instruments saw some rather severe downside.

At some point this summer/autumn the VIX is going to see a new multi-week up wave. Right now, the low 20s look viable primary target.. but typically, such levels won't hold for more than a few days... if hours.

Broadly, long VIX trades via TVIX/UVXY remain inherently pointless for holds much beyond 3-5 trading days.

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*UVXY saw a reverse split recently.

I am bemused as to why Velocityshares have not yet done the same to TVIX, at least on the order of 1 for 20.

Thursday, 21 May 2015

BABA - battling toward $100

Whilst the broader market closed moderately mixed, there was significant strength in Alibaba (BABA), which settled higher by a significant 3.6% @ $94.00. Near term outlook is bullish, with the giant $100 threshold viable before end month.


BABA, daily


Summary

BABA has been a bit of a mess lately.

Just before earnings it broke below the critical $80 floor... but then jumped back above.. and now looks set for the psy' level of $100.

If the broader US (and China market) continue higher for another few months, BABA should be able to not only break >$100, but hold above it.

**some of the equity doomer bears can whine all they like about BABA - not least the 'Chinese aspect' of it, but BABA is a highly profitable company, and looks set to grow for some years.

Wednesday, 20 May 2015

DAL, UAL - airlines encountering turbulence

Whilst the broader market saw a day of minor chop, there was very significant weakness in the Transports. Delta Airlines (DAL) and United Continental (UAL) settled severely lower by -5.6% and -10.2% respectively. Near term outlook is bearish, with Transport stocks performing badly, despite Oil prices remaining relatively low.


DAL, daily



UAL, daily


Summary

From a pure price perspective, we saw some rather signficant technical breaks today, on what was extremely heavy sell side vol'

First, DAL, closing below the 50dma... with an intraday test of the 200dma
Second, UAL, a decisive break of the downward channel... taking out the 200dma.

UAL looks set to fall further, at least to the mid $52s. If correct, that should equate to DAL also losing the 200dma, and declining to $41/40 within the near term.
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*I have long term confidence in both DAL and UAL, but in terms of long term holds, I favour DAL, being far more stable, in terms of price.. and as an overall company.

Tuesday, 19 May 2015

RIG, SDRL - falling with Oil

With WTIC Oil prices settling lower by 3.9% @ $57.99, energy stocks were under pressure. The oil/gas drillers of Transocean (RIG) and Seadrill (SDRL) settled lower by a very significant -5.9% and -3.9% respectively. Near term outlook is bearish.. with Oil set to decline to the 56/54s.


RIG, daily



SDRL, daily


Summary

Energy stocks are closely tied to price action in Oil.

With WTIC having ramped from the March low of $42s to the recent high of $62.58, a retrace of the bounce is very natural. First support is the weekly 10MA... currently around $55.
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*I have high confidence in RIG and SDRL across the longer term, but both look highly vulnerable across the summer/early autumn.

Monday, 18 May 2015

BTU - the shear utter horror

Whilst the broader US equity market broke another pair of new historic index highs, there was notable weakness in the coal miners. Peabody Energy (BTU) closed lower by a rather severe -8.6% @ $3.92, the lowest level since July 2002. Outlook is for continued... horror.


BTU, daily



BTU, monthly



Summary

It is incredible to reflect upon the fact that in early 2014, BTU was a $19 stock.. although that in itself was a huge drop from the 2011 'secondary commodity peak' of $69.76.

Today's new multi-decade low for BTU of $3.86 was a mere 18 cents above the all time low (July 2002) of $3.68.

BTU has a 'fair chance' of surviving across the longer term, but still... the market is not in the least bit confident about the outlook for 2016.

For the moment... trend remains starkly bearish... and BTU looks headed for the $2s later this year.

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A special note on the 'trio of doom'

Arch Coal (ACI), Alpha Natural (ANR), and Walter Energy (WLT) all remain on life support... I doubt any of them are listed much beyond this year.

Clearly, the US Govt's 'war on coal' continues to see great success.

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*on no basis am I interested in being long ANY of the miners (Gold, Silver, Coal.. or even Uranium) until the autumn.. at which point the main market might have seen a sig' correction.