Thursday 28 March 2013

TVIX, UVXY - 70% lower in three months

With the end of the first quarter, its a sideline curiosity to note the decay and destruction seen in the 2x leveraged bullish VIX instruments. TVIX and UVXY both declined over seventy percent in Q1, whilst the VIX itself slipped from 18 to the 12s...a drop of around 30%.

TVIX, daily

UVXY, daily


First, keep in mind the VIX across the last few months...

VIX, weekly

The little spike at the end of 2012 - VIX 23.23, now seems a long time ago. Even the recent spike into the 19s was ever so brief, and we're now back in the lowly 12s. So..what next?

Best guess

The index count is highly suggestive of a retracement to at least the sp'1470s in April/May. The big issue is what would that mean for the VIX ?

Can the VIX at least make a brief spike into the 20s ? I am very uncertain of this. Its very possible that if the indexes are very slow to decline, even if the market can slip to the 1470s, the VIX might only reach the high teens again.

As for TVIX and UVXY, they certainly look exhausted on the downside - with a market arguably very close to a top, they won't likely fall much further.

Yet, as I noted at the start, the declines across the past 3 months are indeed the greatest reminder that these leveraged instruments are for short term holds only.

But then..everyone knows that...right?

Wednesday 27 March 2013

AAPL - backtesting old resistance?

Apple (AAPL) closed just under 2% lower @ $452, and was one of the major depressants in the Nasdaq today. Yet, despite today's decline, AAPL could merely be backtesting the old resistance/channel line. So long as AAPL can hold the 450s by the Thursday close, trend is up.

AAPL, daily


Suffice to say, AAPL is on the edge, but it is still successfully holding above the key declining resistance from the Sept high.

Underlying MACD (blue bar histogram) cycle is ticking lower, and is certainly on the high side, so this is most definitely not the best of buying levels.

With increasing attention on Blackberry (BBRY), AAPL is going to need to step up a little to keep its huge global customer following intact.

Its going to be a really interesting stock to watch in the coming weeks and into the summer.

Tuesday 26 March 2013

TVIX, UVXY - another five percent lopped off

With the sp' closing @ 1563, the VIX slipped 7% lower, and this was naturally bad for both the leading 2x bullish VIX instruments of TVIX and UVXY, which declined by 5.5 and 5.1% respectively. Near term looks weak for the VIX, with a new up cycle starting next week.

TVIX, daily

UVXY, daily


First, keep in mind the latest action in the VIX


On any basis, the VIX looks like its going to slip lower into the extended 3 day Easter weekend. There is no reason why the bears will be able to whack this market significantly lower in the near term.

My best guess is that the indexes max out by next Tue/Wed, and by such time, the VIX might be in the 11s.

If that is the case, then TVIX and UVXY will be a further 5-10% lower.

Another reverse split looms

I'm unaware of any planned reverse split for either TVIX or UVXY, but with the current prices so low, another 1 for 5 or even 1 for 10 RS seems likely within the next month or so.

As with all leveraged instruments, such things have inherent..and 'terminal' decay, and are for short term holds ONLY ! Anyone holding these for more than 2-3 weeks at a time needs to have their trading screen taken away.

Monday 25 March 2013

FB - remains...overvalued junk

Facebook (FB) closed -2.3% @ $25.13, and this continues a rather significant decline from the recent high in the $32s in January. Near term trend looks particularly weak, with the next soft level of support around $24. The big $20 level looks very viable in late April/early May

FB, daily


Suffice to say, I remain no fan of the FB. It remains shrouded in media hysteria and trades in a market that continues to completely mis-price it.

If the market does see some degree of multi-week down cycle across April/May, then my primary target would be the 20/18 support zone.

Clearly, FB is not going out of business any time soon, it does a have huge user/client base, but the advertising revenue business model is entirely unreliable..and lets be clear...

FB is a website...and sooner or later..someone - whether European, American, or Asian, is going to come up with a superior version of an online social network..and FB will then likely be toast...

...just like Geocities, and Myspace.

Friday 22 March 2013

GDX - a little higher in the near term

Whilst the main equity indexes saw some moderate gains to close the week, the Gold miners ETF of GDX slipped 0.5% to close @ $38.23. Near term trend is still moderately higher, but its probably a bear flag, and further significant declines seem likely across the spring.

GDX, daily

GDX, monthly


The daily chart is offering a bear flag/wedge, with a near term target of 40/41 where there is significant declining resistance.

It would seem very unlikely that GDX will be trading in the 42s or higher for some considerable time.

However, as is always the case, the miners will be very susceptible to further weakness in the precious metals - although the GLD/SLV weekly charts are suggestive of at least a little near upside.

The GDX monthly chart is presenting a very severe decline, and although the March candle is a touch positive, its nothing significant yet. Only a monthly close above the 10 MA @ $45, would suggest that the huge wave lower that started in summer 2011 is finally complete.

Thursday 21 March 2013

RIG - bear flag, to be confirmed

With the main indexes on the slide, Transocean (RIG) closed -2.2% @ $51.81. It appears RIG is about to continue lower, and confirm what is arguably a large multi week bear flag. First target is the $50/49 zone, where the 200 day MA will likely offer significant support.

RIG, daily


RIG remains one of the big leaders in the Oil service sector, and is a great barometer for the wider sector.

Near term trend is indeed weak, a further 2-3 dollar fall seems likely. A daily close under the 200 day of $48, would be very bearish, and be suggestive of much deeper declines, all the way down from where it began - the 45/44 zone - where there is also a gap to be filled.

RIG is a good company, but that bear flag will surely be confirmed within a matter of days.

Wednesday 20 March 2013

AAPL - major failure..sub $400 looms

Whilst the rest of the equity market continues to climb, Apple (APPL) closed lower for the second day, -0.6% @ $451. AAPL is at key declining resistance, and so far..its failing. If it doesn't break into the $460s by the Friday close, it bodes very badly for the spring.

AAPL, daily


Lets be clear, relative to a great deal of the other 'junk' out there, AAPL is one of the better companies out there. Yet, it has a truck load of money in the bank, and management seems utterly incapable of deciding what to do with it.

Near term MACD (blue bar histogram) cycle is still ticking higher, but its looking very much like a rollover is going to begin within the next few trading days.

A weekly close in the 440s should be decisive enough to confirm yet another fail to clear key resistance.

AAPL sub $400 looks viable within a few weeks...and then the only issue is just where in the 300s it level out.

Tuesday 19 March 2013

ANR, BTU - coal miners on the slide again

Whilst the main market is still very close to record levels, the coal sector saw some significant declines today. Alpha Natural Resources (ANR) and Peabody Energy (BTU) declined by 4.7 and 3.9% respectively. Near term trend looks weak.

ANR, daily

BTU, daily


Some rather clear breaks from what are probably bear flags for both ANR and BTU today.

Near term trend looks weak, and if the main indexes do rollover across April/May, then these stocks will probably take out their lows from summer 2012.

Underlying MACD (blue bar histogram) is now starting to tick lower, and there is plenty of downside potential across the next few days..and weeks.

Monday 18 March 2013

AAPL - challenging key resistance

Apple (AAPL) closed +2.85% @ $456, and is now just a few dollars from challenging declining resistance that has held down AAPL since the peak last September. A fail to put in a few daily closes in the 460s this week would be a major problem, and open up the $300s

AAPL, daily


It is indeed a very important week for AAPL.

Now, if I am correct about the broader market index cycle - maxing out in the next 2-3 days, then AAPL will not be able to clear and hold above resistance.

Underlying MACD (blue bar histogram) cycle is getting somewhat high, and equity bears should look for it to rollover by Thurs/Friday.

Lets be clear, AAPL remains a remarkable company, with a huge consumer following, a cash pile big enough to buy almost any company it wants...yet....the primary trend IS still currently down.

One to watch, especially at the time of the FOMC annoucement this Wednesday afternoon.

Saturday 16 March 2013

TVIX, UVXY - almost time

The VIX closed Friday flat, but dropped a very significant 10% across the week. For the 2x bullish VIX instruments of TVIX and UVXY, they declined by 5 and 10% respectively. With the VIX almost in the 10s, and the indexes look set to max out this week,.the time for TVIX/UVXY is almost here.

TVIX, daily

UVXY, daily


Most noticeable for both TVIX and UVXY is the soaring volume. Now, that is at least 'significantly' due to the falling price. After all, you can now buy many more shares for the same money, as a result of the near incessant decay.

However, some of the volume ramp is surely attributable to real buying interest. With the VIX now in the 11s, there is very considerable upside, and arguably..only minimal downside.

A brief reminder on how the VIX closed this week...

VIX, weekly

Another 10% knocked off the volatility index, and we're now at levels not seen since Feb'2007. VIX in the 10s looks 'briefly' likely this week. The only issue is whether we'll briefly see a spike into the 9s..if only for mere minutes.

I do not expect VIX to stay at these levels for more than another week or two. My index outlook remains for the sp' to max out in the sp'1560/80 zone, before a retracement lower to at least the sp'1470s, no later than mid May.

If that is the case, I would have to think VIX has the opportunity to break the key 20 threshold. The only issue then will be, can the VIX break the 2012 high of 27 ?

As is the case with all leveraged instruments, TVIX and UVXY are for very short term holds only. The typical VIX up cycle generally doesn't last more than a week or two. Even when the VIX has exploded in the past few years, the trend is always burnt out after a month.

Thursday 14 March 2013

GDX - miners clawing higher

The mining sector remains a real mess, now in its sixth consecutive monthly decline. GDX managed to close +1% @ $37.25. Near term price action could easily be setting up a bear flag, with further considerable downside into the spring..even breaking under GDX 30.

GDX, daily

GDX, monthly


I'm very concerned that both both the miners - and the precious metals are merely building bear flags into the tail end of March..that will be confirmed with further significant snap-declines in April/May.

GDX needs to clear back above declining resistance @ $42. Yet, the 50 day MA will prove stiff resistance in the 41s.

The monthly chart offers NO sign of a turn/levelling phase yet.

What is clear, if the precious metals fail to break above their own declining resistance (daily cycle), then the GDX/miners are similarly likely to fail - even if the main equity market holds together.

Wednesday 13 March 2013

SCCO - aiming for the 200 day MA

Southern Copper (SCCO) closed -2.4% @ $37.00. This was a rather significant drop and comes close to confirming what is a probably three week long bear flag. Next target is the 200 day MA in the $33.50s. Near term trend looks weak..long term, still looks strong.

SCCO, daily


From a pure chart perspective, I suppose you could count 4 broad waves lower from the January high of $41s. Might we be merely looking at a small fifth wave lower somewhere around the 200 day?

Underlying MACD (blue bar histogram) cycle is looking weak, and is now starting to tick lower, and will go negative cycle at the Thursday open.

Near term, SCCO looks set to fall..but unless the market falls to pieces across the spring - sub sp'1400, it'd be surprising if SCCO doesn't just level out around the 34/33 area, and then begin a new multi-month wave higher across the summer.

Monday 11 March 2013

F - steps up a gear

Ford Motor (F) closed significantly higher, and is leading the main indexes. Ford closed +2.8% @ $13.34. Near term trend is strongly bullish, and a test of the recent high in the low 14s looks a given.

Ford, daily


Todays strong move in Ford is indicative of the disturbingly strong equity market. There is now the immediate prospect of Ford retaking the 14s..and breaking the old high.

A few daily closes in the mid 14s should open up the Jan 2011 high in the low 18s.

Yes, the main market is due to cycle low into April/May, but it does look like Ford will get the opportunity to challenge the post 2009 lows this spring/summer.

In terms of the MACD (blue bar histogram) cycle, we're certainly starting to get on the high side, but there is no sign of levelling yet.

Thursday 7 March 2013

FCX, SCCO - miners trying to climb up

The mining sector is still in the process of trying to build a price floor, after six months of huge declines. The leading copper miners Freeport McMoran (FCX) and Southern Copper (SCCO) are both set to see underlying momentum go positive across the next few days.


SCCO, daily


Suffice to say, despite the main market at historic post 2009 highs, the mining sector stocks are still really struggling.

FCX had its third positive day, whilst SCCO again slipped back.

Underlying MACD (blue bar histogram) is set to go positive cycle within the next day or two, and that is suggestive there should be at least a little near term upside yet to come.

Both FCX and SCCO are absolutely huge, with market caps of around 40bn, both have very impressive profit margins, and relative to the main market, are not over-priced.

The problem both face is that if the main market does turn lower this spring - and commodities fail to hold above key thresholds (such as copper $3.50)..then the miners may still have a considerable way to yet fall.

Wednesday 6 March 2013

XLF - still battling higher

The financial sector is still battling higher as winter starts to fade. XLF closed +0.7% @ $18.06. This is the highest level since the financial crisis of Oct'2008. Near term trend is still upward, but the trend is arguably in real trouble of rolling over in the next 3-5 days.

XLF, daily, 9mth


Underlying MACD (blue bar histogram) is now positive cycle, and there is no question that the trend is still upward.

From a count perspective, this is very possibly the fifth minor wave higher, as part of a larger up wave that began at the post election lows of Nov' 2012.

The big picture issue will be, when the market does rollover, just how big of a retracement will the financials...and the broader market have?

The 200 day MA on XLF is currently $15.60...that will likely be VERY strong support. By late March/early April..we're probably looking at $16....which would equate to sp'1425/00.

Tuesday 5 March 2013

F - breaks above the bull flag

Ford (F) closed +1% to settle @ $12.87. This was broadly in line with the continued rally in the main indexes. Near tern trend looks bullish, with the first target being the 50 day MA @ 13.10. A challenge of the previous high of 14.25 looks very feasible.

Ford, daily


Suffice to say, Ford makes a second close above the large bull flag, and a move into the 14s looks very reasonable..not least if sp'1550/60 in the next few weeks.

For the serious money, very simple stops at the recent low in the 12s..or 11.75.

Monday 4 March 2013

HL, GDX - miners still digging

Hecla Mining (HL) collapsed 12% to close in the low $4s, after announcing it is purchasing Canadian silver miner 'Aurizon'. The mining sector as a whole also saw very significant declines of around 3%. With precious metals in danger of breaking the floor, miners remain in serious trouble.

HL, daily

GDX, monthly


With the purchase of another silver miner, HL really saw its stock price continue to spiral lower..and at an accelerated rate.

In the closing hour there were clear signs of 'bargain hunters' buying at the $4.00 level, but near term trend still looks weak.
The broader mining sector ETF of GDX is now lower for the sixth consecutive month.

It has to be asked, where will GDX be, if Silver breaks under <$20, and Gold $1200 ? We'd surely be looking at GDX 30, if not 25/20.

Friday 1 March 2013

ANR, BTU - coal miners still digging deeper

Whilst the main market closed a touch higher, the mining sector again saw further significant declines. The coal sector was especially weak, with Alpha Natural Resources (ANR) and Peabody Energy (BTU), seeing falls of 3.8 and 4.6% respectively. Near term trend looks weak.

ANR, daily

BTU, daily


The miners remain the sector I have the most respect for. The extract useful and important resources, which the world - with an ever increasing population, increasingly needs.

Yet, they are without doubt the worse performers in market land.

Lets not forget that in 2008, many of the miners lost 90% in stock value. Despite the main market rising - and close to recent highs, many miners are generally -30/40% from the highs in late 2011 - which was just a few months after commodities made their highs.

Both ANR and BTU are surely going to be okay for the longer term, but they are seriously suffering in the weak western economies, and both are currently making losses.

As things are, there is still stock price weakness in the near term, and if the lows from last summer are taken out, many of the mining stocks will see their 2008 lows challenged, even those that are currently able to make a profit.