TVIX, UVXY - just a little higher

Whilst equities saw some swings this week, the VIX remained broadly subdued. The 2x lev' bullish instruments of TVIX and UVXY settled net higher for the week by 0.5% and 1.0% respectively. Near term outlook offers a touch of upside on Mon/Tuesday, but broadly... the relentless decay will continue.


TVIX, daily

UVXY, daily

Summary

*first, an update on the VIX, which saw a net weekly gain of 8.1%

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As for TVIX and UVXY, most notable this week... new historic lows early Thursday, a major reversal (due to a spooky Deutsche Bank news story), but then renewed cooling into the weekend.

The underlying problem of statistical decay should remain clear.

For the more adept day-traders out there, such instruments can be used, but holding overnight, or across multiple weeks.... that almost always ends badly.

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Yours truly continues to see the VIX-long trade as dead... with zero intention of being long volatility until at least late spring 2017. That view only changes if the market breaks below sp'2050, which really doesn't look likely.

RIG - drilling out of the down trend

Whilst the main market settled broadly weak, there was notable strength in energy stocks, as oil/gas prices continued to climb. The oil/gas driller of Transocean (RIG) settled significantly higher for a second consecutive day, +6.1% @ $10.63. Next big upside target is the $13 threshold, after that... the $18/20 zone.


RIG, daily

RIG, monthly

Summary

The second sig' daily gain, and perhaps more notably.. the fifth gain of the past 7 trading days, since the Sept' 20th low of $8.68.

RIG is starting to look provisionally strong again, as the downward trend from July 13th ($13.03) has decisively concluded.

Now its merely a case of whether RIG can break above the key $13 threshold before year end, and then hit the 18/20 zone by late spring 2017.

My outlook on oil/gas is bullish into next spring. If that turns out to be correct, most energy stocks - such as KMI, APA, APC, CHK, and RIG, should broadly climb in the months ahead.


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Here in London city...

A few drill rigs have appeared...

... but I'd guess they ain't drilling for Oil  :)

FCX - rising with Copper

Whilst the broader equity market closed moderately higher, there was notable strength in Freeport McMoran, which settled +6.8% @ $10.90. First target is the $14 threshold. Any daily closes above that would bode for upside into spring 2017 to the $20 threshold.


FCX, daily

FCX, monthly

Summary

*price structure on the monthly chart is offering a multi-month bull flag.
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Suffice to add... eyes on Copper. If Copper >$2.40 before year end, it will break a 5 year downward trend, and that will bode for mid term upside in FCX to $20.

GDX - miners cooling with the metals

Whilst the broader market saw moderate gains, there was notable weakness in the precious metals. The miner ETF of GDX settled significantly lower, -1.8% @ $26.29. Price structure is threatening a bearish pennant, with further downside to the $22s, where the 200dma is lurking.


GDX, daily

GDX, monthly

Summary

With Gold settling -$9 around $1330, there was natural weakness in the related gold/silver mining stocks.

Gold held rising trend last week, which was pretty significant. Further, broader price structure in gold/silver is a viable multi-month bull flag. By definition, that bodes bullish for the mining stocks.

Its interesting though that price structure in the miners is not at all bullish.

For provisional bearish clarity, will need a daily close in the $25s, and then the Sept' low of $25.17.

DB - a new historic low

Whilst most world markets - including the US, started the week on a broadly weak note, there was very significant weakness in Deutsche Bank (DB), which settled -7.1% @ $11.85. Near/mid/long term outlook is bearish. Next soft psy' level support is $10.


DB, daily

DB, monthly

Summary

*there was an intraday 'flash print' low of $11.23, but that does not appear on all charts/trading software.
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Suffice to add, it remains somewhat amusing to see Germany's Merkel talk about how there won't be a bailout for DB. Such talk is to be expected though.

DB is unquestionably... one to watch!

TVIX, UVXY - rough week for the VIX instruments

With equities net higher for the week, the VIX significantly cooled. The 2x lev' bullish VIX instruments of TVIX and UVXY, settled net lower by a severe -25.1% and -25.3% respectively. Near term outlook offers higher equities, with VIX in the low/sub-teens.


TVIX, daily

UVXY, daily

Summary

First, an update on the VIX, which saw a net weekly decline of -20.0%.

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As for TVIX and UVXY, with the FOMC deciding to refrain (not surprisingly) raising rates, a large amount of uncertainty has been removed, and thus the VIX instruments have been crushed lower.

There is of course the underlying problem of statistical decay. Even if the market can't break significantly higher in the near term to the sp'2200s.. neither does it look liable to break significantly lower. 

For the moment, the VIX-long trade remains dead.

DIS - a second daily gain

With the main market closing broadly higher for a second consecutive day, there was similar strength in Disney (DIS), which settled +1.1% @ $93.41. Declining resistance is currently in the $95s. A break above the psy' level of $100 looks a given before year end.


DIS, daily

DIS, monthly

Summary

*it is notable DIS is currently net lower for a fifth consecutive month.
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DIS continues to lag the main market, but it won't take much of a multi-week up wave to break above a few key aspects of resistance.

A challenge of the May 2016 high of $105.98 looks extremely probable before year end.

Next earnings are due in early Nov'... just before the US election.

NFLX - broadly struggling

Whilst the broader market closed significantly higher, there was significant weakness in Netflix (NFLX), which settled -3.4% @ $94.88, the worse level in a month. Relative to the main market, NFLX is really struggling. First big support is the 85-83 zone. If that fails, the $70 threshold.


NFLX, daily

NFLX, monthly

Summary

The story that spooked the market... see here: Forbes

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From a pure price perspective, NFLX is in trouble. The psy' level of $100 is powerful resistance, as especially seen on the bigger monthly chart.

Indeed, price structure could be argued is just a giant bear flag, that stretches back to the Feb' low of $79.95. Under that... its empty air all the way to around $50, which is a rather important level.
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Yours truly is one of the biggest fans of NFLX shows - not least the various Marvel related ones like Jessica Jones or Daredevil. Yet, on a pure valuation basis, NFLX would still appear somewhat pricey at $50, and that is barely half of the current valuation.

DB - breaks a new historic low

Whilst the broader market saw a day of minor chop, there was continued weakness in Deutsche Bank (DB), settling -4.3% @ $12.41. With the break below the July/Aug' double floor of $12.50/48, the door is now open to the psy' level of $10.00, before year end. Is the ECB watching?


DB, daily

DB, monthly, 20yr (linear scale)

Summary

From a pure price perspective, today saw a rather critical short, mid, and long term failure.

Where might the buyers appear?  The $10 psy' level is an obvious level.

Would single digit DB be possible without anything 'bad' happening? Absolutely.. although it would arguably indicate underlying systemic problems.

It should be clear... the market isn't pricing DB at new historic lows for 'no good reason'.

DB - close to breaking a new low

Whilst the broader market saw a few moderate swings across the day, there was notable weakness in the financial monster that is Deutsche Bank (DB), which settled -3.3% @ $12.94. A break below the July/Aug' double low of 12.50/48, would be a major problem.


DB, daily

DB, monthly

Summary

Without going over what is regularly stated in literally thousands of postings across the financial blogosphere each month, Deutsche Bank continues to broadly struggle.

The ultimate issue remains the mountain of derivatives held by DB. Estimates typically range around $70 trn. Even a 1% 'problem' on such a number would amount to a massive shock to the EU, and to a lesser extent, the world financial system.

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From a pure price perspective...  the July/August low is now at serious threat of being taken out. If so... next support is not until the psy' level of $10, which is currently around 25% lower.

If DB slips into single digits... it would merit as a serious alarm bell for the EU financial system.

DB is unquestionably one very important stock/institution to monitor... regardless of whichever side of the Atlantic ocean you might reside.

TVIX, UVXY - cooling a little

Whilst the headline VIX saw a net weekly decline, the 2x lev' bullish instruments of TVIX and UVXY held broadly flat, with net weekly declines of -4.6% and -1.5% respectively. Once the fed is out of the way, equities will likely resume higher, and that would seem VIX - and the related instruments, rapidly decaying once more.


TVIX, daily

UVXY, daily

Summary

First, an update on the VIX, which saw a net weekly decline of -12.2%.

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As for TVIX and UVXY, all things considered, they held together relatively well. This is no doubt because of the genuine uncertainly about next week's Fed decision.

Once that is out of the way... assuming no rate change, the VIX will be crushed sub-teens, and that will see considerable decay in TVIX/UVXY.. and even VXX.

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Yours truly remains holding the view that the VIX-long trade is dead. That view only changes if the market declines to the sp'2050s or lower.

AAPL - the chasers keep on chasing

Whilst the main market closed broadly higher, there was particular strength in Apple (AAPL), which settled significantly higher for a fourth consecutive day, +3.3% @ $115.47 - the best four day run since 2009. Next resistance is the price cluster zone of 118/121.


AAPL, daily

AAPL, monthly

Summary

Today we saw AAPL attain a daily MACD bullish cross.

The monthly candle now looks very bullish indeed. At the current rate of incline, we'll see a bullish MACD cross on the monthly cycle in late Oct/early November.

Its been an interesting few days, and based on broader price structure - a giant bullish wedge, there are many... further months of upside to come.

New highs (>131) by early spring 2017, now look extremely probable.

AAPL - now the chasers are appearing

Whilst the broader settled moderately mixed, there was further powerful strength in Apple (AAPL), which settled significantly higher for a third consecutive day, +3.6% @ $111.80 (intra high 113.03). The break above the April high, has opened up next target of the price cluster zone of 118/121.


AAPL, daily

AAPL, monthly

Summary

Whilst many in the mainstream seem confused and lost in moderate bearish hysteria, one of the most important stocks is powering upward.

I was expecting some upside.. but its coming much faster than expected - certainly relative to the main market.

With increasing media/trader attention, the 'chasers' are appearing... as AAPL has broken multiple aspects of resistance.

A move to the $120 threshold now looks extremely likely by late October.
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For those of the view that the sp'2300s are due.. whether late year.. or by spring 2017, new historic highs (>131) can be sought in AAPL.

AAPL - a second big push higher

Whilst the broader market took another swing to the downside, there was extremely notable resilience and underlying upside power in Apple (AAPL), which settled higher by a very significant 2.4% @ $108.02. Next target remains the 110/112 zone.


AAPL, daily

AAPL, monthly

Summary

AAPL sure did stand out today against the main market.

Broadly, AAPL remains on the cyclically low side, and there is a very viable 3-4 weeks of comfortable upside... into Q3 earnings.

So long as the main market holds together... aka... no price action <sp'2050, the outlook remains bullish.

In theory, AAPL to $120s by year end looks an easy target.. with new historic highs (>131) more viable in late spring/early summer 2017.

AAPL - big daily reversal

The market opened moderately weak, with Apple (AAPL) breaking a new cycle low of $102.45, but then powerfully rebounded, settling +2.2% @ $105.45. Near term outlook threatens a touch of cooling back to the 104s, but broadly, the 110/112 zone looks due into Q3 earnings in October.


AAPL, daily

AAPL, monthly

Summary

Suffice to add... a very notable daily bullish engulfing candle for AAPL, which is highly suggestive the weakness that began in early August has concluded.

Broader price structure is a giant bullish wedge.. which was provisionally confirmed in August.

New historic highs in 2017 look probable. That view is only negated if sp <2050.

TVIX, UVXY - net weekly gains

With US equities unravelling into the weekend, the VIX soared, and that saw the 2x lev' bullish VIX instruments of TVIX and UVXY settling with net weekly gains of 22.6% and 22.7% respectively. With the breakout level of sp'2134 failing to hold, near term outlook offers at least a little further upside in volatility.


TVIX, daily

UVXY, daily

Summary

First, an update on the VIX, which saw a powerful net weekly gain of 46.1%

After the Friday surge to VIX 17.50, The VIX 20 threshold is now within range. Underlying MACD (blue bar histogram) cycle is positive for the first time since early July.

Upper weekly bollinger is offering the 21/22s next week... which would likely require sp' <2100.

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As for TVIX and UVXY, rather powerful net weekly gains, although its somewhat ironic that today's gains only bring the instruments back to levels from last week.

The statistical decay remains a near relentless problem. As ever.. mid/long term holds do not end well.

APA, APC, CHK - energy stocks surging upward

Energy stocks continue to hold rather powerful underlying strength. Apache (APA), Anadarko (APC), and Chesapeake (CHK) settled higher by 7.2%, 3.2%, and 13.7% respectively. Near/mid term outlook is very bullish, not least as WTIC oil looks set to re-take the psy' level of $50.


APA, daily

APC, daily

CHK, daily

Summary

APA: follow through after yesterday's 'discovery' gains.

APC: breaking up and away. First target is a monthly close >$60, with $70 probable before year end.

CHK: continuing to climb.. as the bullish chasers are increasingly interested. Next level is $10.... with $12 very viable in spring 2017.
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*CHK is of course highly speculative. APA and APC are both far more stable and financially sound.

As it is.. I prefer KMI, which broke 'up and away' a few months ago... and is leading the pack higher.

APA - new discoveries

Whilst the main market closed moderately mixed, there was very significant strength in Apache (APC), which settled higher by 6.7% @ $55.12. There is clear resistance in the $58/59s, but a monthly close >$60 looks due. From there, next key threshold/target is $70.


APA, daily

APA, monthly

Summary

It was indeed a rather bullish day for Apache, as they announced a significant new oil/gas discovery in Texas.

The daily candle was a very large black-fail candle. Normally that would be bearish, and the upper spike is a clear failed attempt to break resistance of 58/59s.

However, seen on the bigger monthly chart, we have a core spike low of $31.90.. and since then, we've seen APA - along with many other mid/low tier energy stocks, effectively double in value.

Mid term trend is unquestionably bullish, not least as energy prices appear to have stabilised.


*Special note on the USD...

It remains very important for energy bulls to see the USD remain under the DXY 100 threshold. Clearly, the actions of the Fed in terms of rate policy will be a key variable in whether the current rally will continue all the way into spring 2017.

CHK - still battling toward the $7s

Whilst the main market settled moderately higher, there was notable strength in some of the energy stocks. Chesapeake Energy (CHK) settled higher by a significant 3.0% @ $6.80. Next target remains the $7s. Any monthly close above the April high of $7.59 will give clarity that the 10/12 zone will be hit.


CHK, daily

CHK, monthly

Summary

Suffice to add...  relative to the recent oil weakness, CHK held up very well.

Current price action is especially strong, and the $7s are clearly within range in the immediate term.

Things get really interesting on any monthly close >$7.59.. as that would bode for a continued run to the psy' level of $10. Considering the speculative nature of the stock, a move to the $10s before year end seems very possible, as more bullish chasers will appear.

Something to reflect upon.... in summer 2014.. CHK was trading in the $29s.

TVIX, UVXY - normal service resumes

With US equity indexes seeing net weekly gains (if moderate), the VIX was back in cooling mode, and that saw the 2x lev' bullish VIX instruments see net weekly declines of -12.2% and -11.9% respectively. Near term outlook offers continued decay, as equities look comfortable into October.


TVIX, daily

UVXY, daily

Summary

First, an update on the VIX, which saw a net weekly decline of -12.2%

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As for TVIX/UVXY, as noted last week, sporadic net weekly gains are to be expected within a broader downward trend.

For the moment, the VIX-long trade remains dead.
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yours... with zero intention of being long VIX for the remainder of the year. That would only change if sp' falls under the monthly 10MA... currently in the 2070s.... and that really does seem unlikely.

GDX - bouncing into a new month

Whilst the main indexes closed moderately mixed, there was notable strength in the gold/silver mining stocks, with the ETF of GDX settling +3.6% @ $26.42. Near term outlook is very uncertain though, as the broader upward trend from the Jan' low has been broken.


GDX, daily

GDX, monthly

Summary

The miners were lower by around -1% in pre-market, but with some early main market weakness, and a moderate gold bounce, GDX swung strongly higher.

Part of the reason appears to be a giant options trade... 60,000 of the Sept' $30 calls. With the price of $0.15... that works out at roughly a $900,000 trade, and it reeks of something a retail amateur might try. Those calls only have 10 trading days left on the detonator clock.

On any basis, that is an extremely risky trade, as the $30 threshold is a good 15% or so higher.
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Anyway... the miners will be one to watch.