TVIX, UVXY - near term floor?

Whilst the indexes closed Friday broadly flat, the VIX managed to hold onto gains of around 5%. Both the 2x leveraged bullish VIX instruments TVIX and UVXY responded, with gains of 1.0 and 3.5% respectively.


TVIX, daily

UVXY, daily

VIX, weekly

Summary

Is this it? The much awaited 'major wave higher' in the VIX, breaking 20? With a corresponding fall in the indexes, taking out the recent low of sp'1343 ?

If so, then both TVIX and UVXY will see massive increases in the week ahead.

However, as is ALWAYS the case, VIX gains are usually brief, and all gains in TVIX/UVXY are eventually outweighed by the statistical decay inherent in all such leveraged derivatives.
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Certainly, TVIX and UVXY are to be watched next week, especially in terms of trading volume. It could be an indication that some of the bigger trading houses are protecting against perceived downside risks.

TZA - ready to battle back higher

With the main indexes closing higher again, the 3x leveraged bear ETF 'TZA' closed 3.5% lower @ 15.12. This is the 8th out of 9 days lower, and its getting real close to flooring on any basis. The current wave lower would indeed correlate to a very natural 'wave'2 index bounce'.


TZA, daily

Summary

The Rus'2000 small cap was higher by around 1.15%, and indeed, TZA is acting exactly as it is meant to.

From a price perspective, TZA needs to show some sign of levelling out in the next day or two, or it will be in real danger of taking out the $15.00 low from earlier this month.

If my broad outlook on the indexes is correct - with a new index wave lower into Dec/January 2013, then TZA should show a decisive turn higher, but as ever...good stops will be important, in case the bull maniacs somehow manage to hold the market together.
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Clearly, the ultimate stop level for TZA is the QE low @ 13.35, although that is a good 15% lower from the current price.

FAZ - closing within a bear flag

With the main indexes seeing a very sharp intra-day reversal from the morning declines, the financials similarly recovered, with the financial bear ETF - FAZ closing the day poorly. The daily chart is presenting a very clear 4 day bear flag, and looks set for at least another one or two days lower.


FAZ, daily

Summary

The 3x leveraged short ETF, the 'FAZ' closed 1.3% lower @ 17.39, after earlier hitting 18.25.

This sort of swing is not that extreme, but for anyone who was happily long FAZ this morning, the closing level today has to be seen as a major disappointment.

*if my index outlook is correct, with the sp' maxing out around sp'1425 within the next day or two, FAZ should hold just above the recent October lows. We will soon find out if I'm right.

MMR - having problems with Davy Jones

McMoran Exploration (MMR) is having serious problems with one of its major investments, the 'Davy Jones' natural gas well. Its almost a 1 billion dollar investment, and the disappointing news has really upset the market, with MMR shares losing a further 15%, to close @ $8.17, although that's almost a full dollar above the morning lows.


MMR, daily

Summary

So, a pretty wild and crazy two days trading, and its effectively impossible to guess where this stock will go as the week progresses. Perhaps the near term low has been put in this morning, but that really would be a completely unreliable guess.

There will be clear gap resistance from the drop around $9 to $9.50.

It would be very surprising if MMR can claw its way back into double digits before next year.


Losing money..by the day

see key stats, via Yahoo! finance

With its lack of profitability, MMR is arguably one to watch from the sidelines, and marvel at those 'knife catching' traders who believe they can pick up a bargain.

FB - close to a breakout

Facebook (FB) climbed 8% to close @ $26, the highest close since the collapse wave in late July. The near term trend remains strongly higher, and we're now approaching gap resistance in the low 27s. A close in the 27s would be suggestive of a move to $30, if not 33/34.


FB, daily

Summary

FB has certainly seen a very strong base develop since the summer lows. Today's move - based on yet another bullish 'expert analyst' (where were they on IPO day?), is close to a clear breakout.

If FB can get a few consecutive closes in the low 27s within the next week or two, then it does suggest the big $30 level will be tested, and that would most likely not be the ceiling.

On any basis, fair value remains $4, but for the moment, the 'experts' out there are getting all hyper over this stock again.

So, immediate trend is upward, but I can't imagine FB not moving into single digits by the latter part of 2013.

All those looking to short this nonsense should arguably be patiently waiting.

*If I'm right about the indexes maxing out around sp'1425 later this week, then FB will likely NOT break into the 27s.

TVIX, UVXY - a nasty holiday break

With the wave'2 bounce in the indexes continuing, and the market on very low trading volume, the algo-bots were in full control, and with further declines in volatility, both TVIX and UVXY saw further declines of around 8%


TVIX, daily

UVXY, daily

VIX, weekly

Summary

Starting with the VIX itself, which declined around 7% on the week, and thus confirming last weeks decline of 12%. We're now stuck in the low teens, and there is no sign of things levelling out yet.
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As for TVIX and UVXY, what more can be said, other than 'urghh. .the decay...the pain'.

The recent support level from the QE announcement in mid September was breached a few days ago, and there really is nothing but empty air below.

Both TVIX and UVXY will doubtless turn higher at some point, but for the moment, they are clearly best left alone..and to be quietly watched.

FAZ - a touch lower

With the main indexes closing slightly higher, the 3x short financial ETF (FAZ) slipped another 0.5% lower. Despite the last few days though, FAZ remains above the important recent low in the $16s. A few daily closes over $20 would be a very natural 'chase it higher' level.


FAZ, daily

Summary

Its been a long time since I really looked at the 3x ETFs, and an even longer time since I personally traded them.

The infamous FAZ - by Direxion, was launched in Nov'2008 - ironically, at the very height of the financial crisis. Its been all downhill since then.

Indeed, Nov'20'th 2008, FAZ was $8650.    Today's close was $17.63

You will never find a better example of the statistical decay inherent in such leveraged derivative instruments.


FAZ @ Christmas

There are two very clear price levels to be aware of. A break into the 15s would be the last stop level for the longs, and the $20 level would be the line in the sand for those who are bullish financials - and thus short FAZ.

If my bearish outlook for the indexes is correct, then we should see FAZ break above $20 in December.

In the immediate term, if the indexes climb to around sp'1410/25 next week, FAZ is likely to slip a further 4-6%, to around 17.25/16.75. That would of course, take it kinda close to the recent lows.

HPQ - as I said..an embarrassment

Hewlett-Packard (HPQ) collapsed a further 12% lower, closing @ $11.70, after disappointing Q3 earnings, and a massive write down of its recent 'Autonomy' purchase. Primary target remains $10, and an eventual de-listing from the Dow'30 in second half of 2013.


HPQ, daily

Summary

From a price/chart perspective, you can see it bounced almost perfectly on the lower channel line. It doesn't get much better than that. Volume was naturally huge, and there is nothing good across the mid-term into late 2013.


Still profitable, but...

Certainly, the company is still making a great deal of money, and revenue is reasonable, but the general trends are not great. There remain severe underlying structural problems with HPQ.

The CEO remains out of her mind, in denial, and is leading a group of directors - all of which should have been fired today.

Can you imagine being a shareholder of HPQ ? Urghh. I can only imagine the horror and dismay that the 'average 401k joe' will be thinking as he sees yet another lousy piece of news about what used to be one of Americas finest companies.

A great shame, but...to be expected, not least whilst they keep that kind of incompetent leadership.

AAPL - bouncing back to the low 600s

Apple (AAPL) confirmed the turn on Friday, and closed 7% higher @ $565. Target zone is 590/610 within the next 3-5 trading days.


AAPL, daily

AAPL, monthly

Summary

With the main indexes rising around 2%, AAPL soared, partly a classic short-squeeze, but no doubt a lot of people chasing the market higher on hopes of..Santa..or should that be 'fiscal cliff resolution' ?

Seriously though, this sort of  major bounce is to be expected. It won't last, and I expect AAPL to break <500 in the next wave lower, which could begin as early as next week.

TVIX, UVXY - failure to detonate

Despite the indexes falling around 1.5% on the week, the VIX slipped lower by 11%. Both TVIX and UVXY suffered as a result, and closed the week in a very disappointing manner. The one consolation is that the TVIX/UVXY lows from October were not taken out.


TVIX, daily

UVXY, daily

VIX, weekly

Summary

A very bearish week in the markets, yet the VIX itself declined a very bizarre 11% on the week. This market remains almost entirely fearless in the immediate term. It is important to recognise that VIX futures in the further out months are still holding up in the mid 20s.

As has been the case since the VIX floored in early August @ 13.30, the doomer bears are seeking an explosion in volatility.

Despite the index decline from sp'1474 to sp1343 (this Friday's low), the VIX has surprisingly failed to break above the key 20 level.


Waiting to chase @ 20.

In many ways, the smarter - and arguably more patient traders, will be waiting to chase TVIX/UVXY higher, once the VIX breaks back over the important 20 threshold

My best guess is that VIX 20s will be seen in early December, whether we can spike into the 30s..and beyond, that IS the ultimate question right now.

TZA - small caps still falling

With the main market still in a multi-day decline, the Russell small cap (3x leveraged) bearish ETF TZA climbed a further 1.5%, and closed @ 18.63. This is the fourth close above the important $17 level, with the next key level being around $20.


TZA, daily

Summary

TZA floored the day after the Bernanke announced QE3, and has been generally climbing ever since, from the lowly level of $13.35.

Next target is $20, although..since TZA is a leveraged instrument, charting such things is rife with inherent issues.

Regardless, the general  trend remains UP, and even though today's candle was a slightly fat doji - often signalling a top, a reasonable stop level would be the daily 10MA @ 16.88, which will rise to the low 17s at the Friday open.

FB - another stupid bounce

Facebook (FB) saw a major bounce as a combination of factors synced together, with FB closing 12% higher @ 22.28. Just like the stupid 25% gain of Oct'24th, this gain won't likely hold either.


FB, daily

Summary

So, another 1.3 billion shares of FB are now unlocked, and there will be a lot of major institutions now in the process of trying to dump their trash to a willing idiot, ASAP.

Tomorrows price action in FB will be interesting to watch. If FB closes red, then FB back in the teens looks very feasible within days. However, it might take 3-5 trading days for the underlying MACD (blue bar histogram) momentum cycle to level out.

For those looking to re-short the FB, a little patience, would be useful.


Original downside targets, still on track

First target remains a break of the multi-month support @ 17.55. A break of that level should open up a very swift decline to 15, and then 12/10.

That is still viable by year end.
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FB remains laughably overhyped by the media, and overvalued by the algo-bots.

Fair value remains $4, and I would still not be a buyer, even at $1.25 (yes, that's one dollar, and 25 cents).

HPQ - an embarressment

Hewlett Packard (HPQ) slipped a further 2% to close @ $13.15 today. The trend is inexorably downward, and the next target remains the big psychological level of $10.00


HPQ, daily

HPQ, weekly

Summary

The underlying problems are known to many, and I will not be going into those today.

What is clear is that the price action remains downward. I've no doubt $10 will be hit, and there seems the very real possibility of a return to the $7 to $5 levels last seen almost twenty years ago. Incredible.


HPQ removal from the Dow in 2013

One issue I've not heard anyone yet suggest, is whether HPQ will remain a Dow constituent in 2013? At the current rate of decline, it will almost certainly be removed from the Dow in the second half of 2013. I suppose a natural replacement would be with AAPL, or even GOOG. There is no reason why either could not be in a slightly re-calculated Dow'30 index.

Now that's a prediction you should keep in mind for next year.

JCP - in serious trouble

JC Penney (JCP) closed -13% @ $17.92, breaking key support, and looks to be headed even lower in the days and weeks ahead.


JCP, daily

JCP, weekly, 20yr

Summary

JCP continues to see massive sell side action, its taken out key support of $19, the next key levels are $15, $10, and then the 2000 low of $7.50s.

It is viable that JCP will implode to new historic lows in 2013.

As many recognise, JCP is trying to rationalise, but this is an extremely costly process, and if its customer base is not happy, its money being burnt for nothing.

Tough sector, and online retailers are continuing to take away much of their business.

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*The price action in JCP is something that holders of SHLD and AMZN are going to see eventually. The only issue is when...not if.

TVIX, UVXY - ready to (briefly) explode

With the main indexes again showing some considerable weakness this Friday afternoon, the two main VIX trading instruments are still poised to explode higher. Both TVIX and UVXY are comfortably holding above their recent baby bull flags, and look set to jump higher early next week.


TVIX, daily

UVXY, daily

VIX, weekly

Summary

My general outlook for the market is to hit sp'1345/40 within the next few trading days. That should in theory kick the VIX to at least 20/21, possibly 24/26 on a brief spike. Certainly, the VIX is bizarrely low, and a brief spike higher seems very likely.

A VIX around 21 should equate to at least 15% on both TVIX/UVXY. A mid 20s VIX, would probably see TVIX/UVXY briefly surge as much as 35/45%.


Broader outlook

So, I'm seeking a brief market decline to the sp'1340s, but then a strong surge to 1400. It would certainly be pretty disastrous for TVIX/UVXY holders to ride out that kind of 50/60pt bounce.

As ever, the 2x leveraged VIX instruments are very much for short term holds only. That much, I think just about everyone can agree on, not least when you look at a chart covering the last 3-6 months.

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One anomaly just yesterday was the VIX which closed red, despite the indexes closing lower by 1%. I'm still not sure what to make of that, but regardless, the underlying VIX weekly cycle is somewhat to the upside.

AAPL - freefalling to the big $500

Apple (AAPL) closed a further 3.7% lower @ $537, and is now down almost 10% so far this month! There is no sign yet - of what is a multi-month collapse wave, coming to an end any time soon.


AAPL, daily

AAPL, monthly

Summary

The daily declines do seem to be accelerating, and there is no sign of any floor yet.

The bigger monthly chart suggest the $500-480 range as a very strong floor.

There are plenty of posters/commentators out there who are touting low $400s, although most of them suggests that target for spring 2013, certainly not within the next few days!
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The long term 'doomer' outlook, is probably something to ignore, but...from a chart perspective, the $300...would be a natural target sometime in late 2013.

All those people who were touting AAPL $1000...or even higher - some as recently as a few weeks ago, they all appear to have moved to a radio-silent.status.

MS - a big financial in trouble

Morgan Stanley (MS) saw a massive 8.5% decline to close @ $16.64. The drop was the biggest of the year, and with the main indexes looking dire for the next few days, further downside is expected.


MS, daily

Summary

Next key support is the old July/August peak of $15...which is a clear 10% lower than today's close.

MS is a huge financial monster, there are all sorts of very crazy rumours surrounding it, and if $15 fails to hold, then a test of the important $12 level will be viable.

HL - another loss making miner

Hecla Mining (HL) reported lousy Q3 earnings, with a loss of around $0.9 million, on much lower revenue of $55 million. Like many miners, HL is suffering from falling commodity prices, which is certainly ironic considering the continued action of the central banks.


HL, daily

Summary

I am massive fan of the miners. They are one of the few decent sectors for whom I have genuine great respect. A damn hard job, real work, a real product, that has a real utility, a real benefit to mankind. Its something that is a stark contrast to the paper pushing/gambling maniacs in wall street.

Yet, with silver prices well below their 2011 highs, the little miners are suffering with lower margins, and in some cases, no margins at all!

HL lost just under 1 million, on revenue of 55 million. Its certainly not a disaster, but it sure is not good either. If they are having difficulty with making a profit whilst Silver is still in the 25/35 range, then they sure better hope silver does not break back <25 next year.

see: Hecla - the streak is broken

Today's price action was very appropriate, the obvious downside target in the days and weeks ahead is the big $5-00 level, where a rising 200 day MA also lurks.

HL is unquestionably a great company, but it is a loss making one, and today's price action certainly indicates 'stay away', at least until we see if the big $5 support level can hold.

If Mr Deflation does appear in 2013, with falling metal prices, then I'd guess the May low of $3.68 will be taken out, opening up the $3 to $2.50 zone.

HL remains a highly speculative little miner, but is one to watch..for the longer term.

GDX - miners looking weak

Whilst the main indexes closed a touch higher, the miners were again showing weakness today, which is now into its sixth week - since those QE3 spike highs. The long term outlook is most certainly bearish, assuming the global economy continues to weaken.


GDX, daily

GDX, monthly

Summary

What is paramount for GDX is that it holds at least over 47 in the days and weeks ahead.

Any break <47, and the next level/target would be the summer low of 39/40.
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My primary target of $40 was indeed hit this past summer, and I do expect my secondary target of 35/30 to be hit within the next 3-9 months.

GDX @ $30 would surely be a great buying level sometime in 2013.

AAPL - major failure to hold the 200 day MA

Apple (AAPL) closed 3% lower @ $576, and is continuing its decline from the Sept'21st high of $705. With the Friday close under the 200day MA, the bull maniacs have something to think about over this weekend.


AAPL, daily

AAPL, monthly

Summary

With the first close below the big 200day MA, bears should seek confirmation early next week with at least a few more closes in the 570s or lower. We could drop for a few more days, and even back-test the 200 day MA on any bounce into mid-November.


The bigger target

The monthly chart includes a somewhat recklessly highlighted 'doomer' outlook. Primary target would indeed be the big $500 level - where the 20MA is lurking near.

I can't imagine AAPL trading <500 within the next few months. However, with global economic weakness, I'd certainly seek further downside in the latter half of 2013.

The doomer scenario outlined assumes a great deal, but its just something to keep in mind.

As I highlighted recently, what will be important for the bears is to eventually put in a lower monthly high...just as we did in mid 2008. We all know what came next.

AAPL remains a highly profitable company, but there are continued rumblings of trouble out there.

TVIX, UVXY - the nightmare resumes

After a very promising eight days, the 2x leveraged (bullish) VIX instruments of TVIX and UVXY were again feeling the pain today. With declines of 10-15%, the closing action bodes for further pain this Friday.


TVIX, daily

UVXY, daily

Summary

With the VIX closing lower by around 10%, both the 2x VIX instruments closed significantly lower. Again, it remains the case that those playing these casino-esque derivatives, should be using at least some level of stop.

The daily candle looks bad, and it ruins what was a very reasonable bull flag.
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*it remains surprising TVIX has not yet seen a 1 for 20 reverse split to kick the price back.upward.