TVIX, UVXY - year end massacre

With the VIX closing down 20%, the 2x leveraged bullish VIX instruments got nuked. TVIX and UVXY declined by 24% and 25% respectively, which were the largest declines since late March, on very heavy volume.


TVIX, daily

UVXY, daily

VIX, daily

Summary

As is always the case, when the VIX gets toppy, when it does start to fall, the smack down can be beyond fierce. Today was nothing less than a massacre.

For those not using good stops, today was a truly awful way to end the year.

Both instruments today lost around two thirds of the gains that took 7 trading days to build.
--

If I'm right about the indexes declining to the low sp'1200s in early 2013 - with VIX 35/45, then both of these instruments will see amazing gains..but such gains..will not hold for long.

The inherent decay in such leveraged ETNs will easily see to that.

DD - sliding with the main market

Dupont (DD) slipped 0.8%, to close Friday at $44.71. DD is generally trading in sync with the main market, although it remains especially vulnerable to renewed general market weakness after its major snap lower in late October.


DD, daily

Summary

Dupont is a true heavy industrial, and no doubt, a company that will be around for a very long time to come. It remains profitable, with net margins of around 7%, which is reasonable considering 'everything' going on with the global economy.

*see key stats - Yahoo! finance

We have seen a very clear bear wedge since the mid November lows, and it appears to breaking lower, having maxed out in the low 45s.

A test and break of the November lows @ $41.67 seems likely, and will open the primary target of $40. If the main market slips into the low sp'1200s, then a move to 38/36 seems very likely.

HPQ - on a journey to break under $10

Hewlett Packard (HPQ) closed lower - along with the main indexes, slipping 2.6%, to settle @ $13.68. Primary downside remains the huge psychological level of $10.


HPQ, daily

Summary

The near term trend is again back to the downside after a few weeks where HPQ almost looked like it was attempting to break out of the long term down trend.

Yet, the underlying structural problems remain in HPQ. Nothing has changed, and whilst the current CEO Whitman remains - along with the board that elected her, the company lacks the leadership and vision it desperately needs.


A lousy 2013 to come

The big $10 level looks set to be hit within the next 2-5 months. Whether it bounces from that level seems somewhat irrelevant.

HPQ looks set to be delisted from the Dow'30 in the second half of 2013. That will be a real marker point in its history. It'd be a little ironic, and somewhat tragic, if its replaced by AAPL or GOOG.

TVIX, UVXY - near term trend remains upward

With an afternoon political comment pushing the indexes back higher, the VIX flipped back to negative, and both the 2x leveraged bullish VIX instruments of TVIX and UVXY lost almost all of their significant earlier gains.


TVIX, daily

UVXY, daily

Summary

Many TVIX/UVXY holders can understandably feel dismayed at the late day fall back.

However, if we are to see VIX in the 30s..even 40s, then crazy moves in the VIX/Indexes - just as we saw this afternoon, are to be entirely expected.

The near term trend for both TVIX and UVXY most definitely remains to the upside.

The ultimate bearish aspect of today was of course the VIX breaking the key 20 threshold


VIX, weekly

The 30s and 40s...are indeed a long way up, but we're way overdue a few weeks of 'spiky' upside. Best guess remains the VIX maxing out somewhere between 35-45 in mid January.

CVX, XOM - death crosses coming soon

Whilst the main indexes slipped a little lower this Christmas Eve, the two big energy stocks Chevron (CVX) and Exxon (XOM), also saw continued weakness. Baring a major new ramp in the indexes, both of these energy sector stocks look set for a death cross in early 2013


CVX, daily

XOM, daily

Summary

This is the first time (I think) I've highlighted either of these corporate monsters. Monsters, not for what they do, but for their shear size.

CVX has a market cap of roughly $200bn, with XOM valued around $400bn.

'Black Gold' indeed remains where the big money still is, and with the entire modern economy still based around this resource, CVX and XOM will doubtless be making profits for decades to come.


Death Crosses..due

We are seeing some distinct weakness in the energy sector. No doubt this is due to three key factors. First, the fiscal cliff concerns. Second, the weakening global economy. Third, the issue of WTIC Oil below $100.

Both CVX and XOM look set to see their 50 day MA break under the 200 day MA. This could occur as early as January if the market slips back under sp<1400.


Jan-March 2013 - Price targets

CVX is already close to taking out what is a large bear flag - from the November low. Once we see 106s, then 100 will be the preliminary target, and then the June low in the mid 90s.

XOM has already broken the bear flag, and is now just 2% from taking out the November low. First target will then be $80, and then the mid 70s.

So, XOM appears to be the leader right now, with CVX  following closely behind.

--
Regardless of any of the myriad issues out there, both will likely be great buys 'if' the market reaches my bold target of the low sp'1200s in early 2013.

TVIX, UVXY - a third day higher

Despite the main volatility index closing a mere 1% higher, the 2x leveraged bullish volatility instruments TVIX and UVXY closed Friday around 13% higher. This was the third consecutive daily close to the upside. Volume was also markedly higher.


TVIX, daily

UVXY, daily

Summary

I just wanted to just do a quick update on these two crazy instruments.

First, its notable that TVIX has finally seen a much needed reverse split of 1 for 10. This gets TVIX back into the 10s, and will certainly make the instrument more tradeable, not least in terms of the bid/ask spread.

Friday trading volume was significantly higher than normal, especially for TVIX, although part of the reason is no doubt due to it being quadruple witching (December option expiration).

The VIX itself rose for a fourth consecutive week, and with still no agreement on delaying (partly..or fully) the looming tax rises/spending cuts, it is not surprising that volatility is creeping higher.

Yet, as noted by many, the key VIX 20 threshold is yet to be broken.

--
Special note, it appears both TVIX and UVXY declined by 3% in Friday AH trading, although that is still a net gain for the day of 10%, which considering the main VIX was only 1% higher, is pretty notable.

FB - breaking back under old resistance

Facebook (FB) closed significantly lower by 4%, and settled @ $26.26. This was important from a technical point of view, and the door is now open to somewhat lower levels. First downside target is the 50 day MA, lurking around 23.50. After that, the 22/20 zone would probably provide some strong support.


FB, daily

Summary

FB has been trading in a rather tight trading range for almost a full month. Yet today's weekly close in the low 26s is suggestive of weakness for the next week or two. The decline will very likely get stuck around 22/20 though.

It is difficult to guess if FB will manage to hold the key $20 level, even if the market breaks into the sp'1200s.

What is clear, FB remains insanely overvalued, continues to be surrounded by hype, and the longer term fair value target remains $4. That very low target seems unlikely until late 2013 though.

TVIX, UVXY - two consecutive up days

Whilst the main indexes closed moderately higher, the VIX still managed a slightly higher close in the high 17s. Both of the 2x leveraged bullish VIX instruments TVIX and UVXY closed higher by 5.4 and 3.7% respectively.


TVIX, daily

UVXY, daily

 VIX, weekly

Summary

It says something about the recent level of volatility that two consecutive higher closes merits a post.

The VIX almost broke the 18 level today, but comfortably closed in the upper 17s. The key threshold remains the big 20. A few daily closes >20, and we should see some major explosive moves to the upside.
--

Short term hyper-spike in 2013..but long term decay.

Even if my original bearish outlook for equities (low sp'1200s) comes to pass - whether its early January, or a few months further out. the VIX will very likely spike into the 30s..or 40s.

Both TVIX and UVXY would probably double..or even triple up, but the long term trend of course is the same...relentless statistical decay.

As ever..such instruments are for short term trading only.

GE - snaps lower, confirming a wave'2

General Electric (GE) snapped lower today, confirming a giant bear flag - which is arguably the wave'2 that I had been suggesting on the main indexes. GE closed 3% lower @ $21.02. There is likely to be some follow through to the downside in the days ahead.


GE, daily

Summary

The GE chart is a very clean chart in terms of waves. It is trading very much in line with the main market, but today displayed some particular weakness.

The snap lower confirms what is surely a giant bear flag, aka, a wave'2. A stronger wave'3 to the downside should take out the recent low of $19.87.

First target would be $19, and then 18. It will be difficult to go much below 17, without the sp' in the very low 1200s - which right now is a considerable way down.

HPQ - due another major wave lower

Whilst the main indexes claw above the recent FOMC highs, HPQ did manage to claw higher after yesterdays 4% decline. HPQ closed 2.25% higher to settle @ $14.53. The mid-term trend remains starkly downward though.


HPQ, daily

Summary

HPQ has seen a very significant bounce from the recent $11.50 lows. Yet, the mid term trend remains downward.

Only if we see a few daily closes in the mid 18s - where the 200 day MA is also lurking. Indeed, the big 200 day MA will prove formidable resistance for HPQ to overcome.
--

With the primary target of $15 already hit, I remain seeking a hit of my secondary target - the big $10.00 level. That still seems very viable in the first half of next year - regardless of how the main market trades.

As many recognise, HPQ has serious underlying structural issues, and the stock price has of course already priced a great deal of that in.

ANR, BTU - coal sector digging deeper

Whilst the main indexes clawed 1% higher today, the coal sector took a major hit. Both Alpha Natural Resources (ANR) and Peabody Energy (BTU) declined by 2.2% and 3.8% respectively.


ANR, daily

BTU, daily

Summary

On a day when the indexes were trying to breakout, the typical retail holders of ANR and BTU will likely be confused, if not outright annoyed.

Yet, the coal sector remains one of the sectors that will be hardest hit in any general economic downturn.

BTU remains superior to ANR in most respects, but both will generally trade in the same manner.

In price terms, ANR has a very significant chance of retracing back to the soft rising support @ $7.50. BTU could easily slip to $25.00 within a few days.

What happens at those rising support trends will be important, and if support does fail, it could be a further provisional sign of trouble for the broader market.

FB - flat top..set to drop?

Facebook (FB) declined by a significant 5% today, to close the week @ $26.83. Is the latest little round of hysteria over with? It will only take one further daily decline to confirm the recent two trading weeks have become a strong wall of resistance.


FB, daily

Summary

The over hyped and grossly over-valued FB saw one of the biggest declines since late September. The break into the 27s certainly opened up the big $30, but..FB just couldn't make it. Despite ten days of trying, it looks like FB is exhausted, and is now beginning a down cycle.


Targets?

First target is the 50 day MA, a touch under $23. If I am correct about the indexes - with sp' low 1200s in early January, then FB in the 22/20 zone seems very viable.

Only with a break above the recent 27/28 highs, could I again consider FB breaking into the 30s. After today's decline, that just doesn't look likely this side of Christmas.

Fair value remains $4, but as things are in this crazy market, that now seems unlikely until the tail end of 2013.

I remain short FB, and seeking an exit around $22/20 in January.

UAL - rallying on more lousy data

United Continental (UAL) posted November airline data, and frankly, its just not good enough. Yet, Mr Market found it acceptable, and the stock closed 7.7% higher to settle @ $23.06 - the highest close since July. The current 8 day ramp is going to be very hard to sustain, not least if the main market peaked at yesterdays FOMC.


UAL, daily

Summary

The airlines remain a treacherous sector to meddle in, and UAL remains one of the most volatile stocks out there.

Todays news: UAL Nov' operational performance


Lousy margins, still a loss maker

Like many airlines, UAL is finding it difficult to make a profit on the average airline passenger. Despite its best efforts - and with WTIC Oil <$100, UAL is still losing money.

Key Stats - Yahoo! finance
--

From a price perspective, I find it difficult to imagine UAL will remain in the $20s for more than a few weeks. Certainly, if the indexes break <sp'1300, then UAL will probably be right back where it started in early August in the $17s.

Even the Cramer from the clown finance TV network always steers clear of the airlines.

TVIX, UVXY - trying to fight back

With the FOMC deciding to follow through with another 45bn of t-bond buying, the indexes displayed weakness, and the VIX flipped back to green. Both the 2x leveraged bullish VIX instruments closed moderately higher.


TVIX, daily

UVXY, daily

Summary

The sp' hit 1438 today, very close to the border where my original bearish outlook would have to get thrown into the trash.

The close @ 1428 was welcome, and it was especially pleasing to see the VIX closing in the green, by 2%, although it remains in the lowly 15/16 zone.


Did the indexes max out again at an FOMC ?

It took a few weeks before many realised the market had ironically maxed out at the FOMC of mid September. It has to be asked, did the indexes just peak again, at this December FOMC ?

If the indexes have peaked, with a decline to the low 1200s in early 2013, then the VIX is set for a major explosion higher.

VIX 20' is the first key warning, but that's a clear 25% higher.

If we see a few daily closes of VIX'20, then we're probably headed for 24/26 quickly, and then the only issue is whether my general index target will be hit.

My best guess, if sp' low 1200s, then VIX mid 30s...minimum.

That would probably equate to gains of around 125/150% for both TVIX and UVXY, although the style in which the VIX climbs would really affect the % gains.
--

As ever though, as with all leveraged derivative instruments, the statistical decay means holding for more than a few weeks, usually ends...badly.

BTU - multi month H/S formation ?

Peabody Energy Group (BTU) was higher in the morning, but failed to hold the gains, closing 0.75% lower @ $27.09. There is a very viable large H/S formation that stretches from the low in late July. If there is renewed weakness in the main indexes in early 2013, then a break back <$20 seems likely.


BTU, daily

Summary

A break under rising support - into the $22s, would be the first major warning, and open up a test of the July $19 low.

There remains a distinct chance of a hit of the 2008 low, more likely in the latter half of next year. That of course would only occur if a broadly deflationary outcome occurred, and considering the printing of the central banks...that is somewhat hard to imagine.

BTU, as a company is one of the best coal miners out there...

see key stats @  Yahoo! finance

On any basis, $15 would be appear a very good entry for long term buyers, although right now, that is some 40% lower from the current level.

MCP, REE - another round of hysteria

The rare earth stocks Molycorp (MCP) and Rare Element Resources (REE) saw huge gains of around 20% and 12% respectively today. Yet, the trend across 2012 has been dire, and both stocks are still down by around 80% this year.


MCP, daily

REE, daily

Summary

There is an immense amount of hysteria surrounding the rare earth stocks. There will doubtless be a lot of stock pump/dump sites now touting both of these two pieces of...garbage as a 'bargain buy'. After all, they are still 'cheap' relative to what they used to be priced at. Well, thats the nonsense that will be all around the murky corners of the financial net-sphere this week.

Just consider that REE used to be in the low 20s..and MCP was once in the 70s.

The hysteria surrounding both stocks evaporated, and both collapsed across all of this year.
--

Check out the basic financial stats..
MCP - Yahoo! finance
REE - Yahoo! fiannce

MCP is a loss making mess. As for REE..its arguably nothing less than a shell company.

Motley Fool - 'why molycorp shares popped'


To be ignored

On any basis, both are lousy companies, surrounded by a lot of hysteria - as today's price moves suggests.

I won't even bother stating a fair value for either.

Neither of them deserve it.

AAPL - rough end to the week

Apple (AAPL) saw another wild swing, this time it was back to the downside. All those knife catching bullish maniacs who were jumping on board yesterday, just got scorched. AAPL closed lower by 2.6% @ $532. AAPL will see a death cross at the Monday open, even if it opens higher.


AAPL, daily

AAPL, monthly

Summary

A pretty wild and crazy week in AAPL, and the Friday close should not inspire further traders to catch the proverbial falling knife.

AAPL looks set to break the big $500 level in the very near term - regardless of how the main indexes trade.

An increasing number of commentators/analysts are touting AAPL in the mid 400s, a few ...even the low 300s.



As I started a few months ago, the 'doomer' outlook would be AAPL flooring in late 2013..somewhere around $300. Right now, that is 45% lower than current levels.

TVIX, UVXY - trying to claw higher

Whilst the main indexes are barely 0.5% from the recent high of sp'1423, the 2x leveraged bullish VIX instruments - TVIX, and UVXY, are trying to form a floor, and managed moderate gains today.


TVIX, daily

UVXY, daily

Summary

So...yet another attempt is being made to form a floor, and begin a rally. We've been here many times before, and the two charts above show a history of endless disappointment. The statistical decay inherent in such leveraged instruments of course means they will inevitably head for zero

Trading volume seems to be drying up lately, this is especially the case for TVIX, where I guess most traders are simply avoiding it because of the low price <$1. The bid/ask spread alone will be a deterrent to trading TVIX.

*I remain surprised that Velocity Shares, have not yet instituted a 1 for 20 split in TVIX.
--


VIX, weekly

The bigger weekly chart is still trying to battle higher. The VIX 20 level will be an absolutely key signal for those seeking a major wave lower in the indexes, with a corresponding massive ramp in both TVIX and UVXY.

So, watch for VIX'20, although considering the relentless - and regular, mini-ramps in the indexes this week, VIX 20 seems unlikely this side of Christmas.

As ever, both TVIX and UVXY are for short-term trading only. Holding TVIX or UVXY for more than a few weeks - even when the VIX is trending higher, always ends....badly. The charts clearly display that.

AAPL - poised to crash under $500

Apple (AAPL) suffered a second consecutive decline, collapsing 6.5%, to close @ $538. Considering the underlying momentum -and still weak main market indexes, AAPL looks set to challenge the recent low, take it out, and break the hugely psychological $500 level.


AAPL, daily

AAPL, monthly

Summary

Frankly, the AAPL chart looks crash-like. We have a black doom candle on Monday, warning of a failed rally, which was confirmed yesterday.

Today's very significant decline is a CRASH warning. Not necessarily of the main indexes, but certainly, for AAPL.

A break <$500 would most definitely give everyone a real scare, and the next level would be somewhere in the mid 400s. So, we could easily be looking at a drop of $75-100 in the coming days.


Technical warning

The fact AAPL is set to get a 'death cross' - where the 50 day MA breaks the 200 day MA, this Friday (or even tomorrow) only adds to the general 'crashy' air that now surrounds this once invincible stock. Amazing.

AAPL - death cross within days

Apple (AAPL) saw a warning candle yesterday, today's decline of 1.8% @ $575 confirmed yesterdays warning. Even worse for AAPL though, the 50 day MA is due to cross the 200 MA within days, such a 'death cross' will be a major sell signal.


AAPL, daily

Summary

AAPL failed to re-take the 200 day MA, and is now on the slide again.

Special note..

Expect the clown channel finance TV media to pick up on the 'AAPL death cross' later this week.
--

Near term targets ?

First target is the gap level 540/30. IF we see AAPL in the 520s, then the big $500 will be back on the menu.

If $500 fails to hold, then mid 400s would seem very viable, and by such time, the main indexes would probably be in the mid sp'1200s.

FB - major intra-day reversal

Facebook (FB) saw a major reversal to start the week. After earlier peaking @ 28.88, FB fell sharply, closing 3.6% lower, to settle @ $27.00. FB closed on soft support, and remains within a very significant rising channel.


FB, daily

Summary

The over hyped..and still grossly overvalued FB had something of a very significant reversal day. Yet there remains a huge amount of hysteria surrounding this stock, and it could just as easily reverse back higher tomorrow.

For the bears, FB needs to close outside of the current channel, and back <$25.50, which will open up the 22/20 zone.

At the moment, considering the indexes are still holding together, it would seem FB will not be trading in the teens any time soon.

The long term fair value of $4 remains unchanged though, and as many recognise, the mobile advertising market is deeply misunderstood by the market. All those expecting multi-billion profits in the mid-term are going to be real disappointed....just like all those who got involved in ZNGA, GRPN...and all such social media nonsense.