1/12 Morningline: Volatility gaps up, bear signs on oil and dollar/yen

Volatility (VIX), the fear index, gaps up by 6% after seven days of decline.

Blue chips (SPY) gap down a bit and bounce off of the day-before-yesterday's opening. The macd, stochastic, money flow index remain bullish. The price withdraws from the upper Bollinger band.

Treasury long bonds (TLT) gaps up by 1.5% and shows a potential pps bull signal, unconfirmed by the macd, stochastic, trend, mfi. The third pps signal in six days.

Oil (USO) shows a potential pps bear signal, as the stochastic dips below the 80-line. The 20-day moving average bumps up toward a cross of the ma50 -- a bullish sign -- and the macd and mfi remain in bull territory.

The yen-per-dollar currency pair (USD/JPY) whipsaws, with a pps bear signal on a decline of about 1%, after the second test of a top. The macd crosses below the zero-line, and the stochastic is plunging headlong toward the 20-line. This morning's decline pierces the Bollinger band middle line. All bearish for the U.S. dollar. See Bloomberg's trade deficit report. This is the third pps signal in six days with mainly sideways price movement.

The dollars-per-euro pair (EUR/USD) opens at the top of yesterday's range and stays put.

Among holdings: A pps bear signal on MRVL and VALE, both bull positions. MRVL remains above support, and VALE gapped down past very near term support.

The numbers . . .

Indicators:

• Blue chips (SPY) open at 113.97, entered bull mode at close on Jan. 4 (at 113.33)
• Fear index (VIX) 17.95, bear (bullish for stocks), Jan.5 (19.35)
• Treasury long bonds (TLT) 88.99, bear, Jan. 6 (89.18)
• Corporate junk bonds (JNK) 40.02, bull, Jan. 4 (39.32)
• Gold (GLD) 112.38, bull, Jan. 4 (109.08)
• Oil (USO) 40.07, bull, Dec. 16, (36.74)

Currency pairs:

• Dollars per euro (EUR/USD) 1.4511, bear, Dec. 4 (1.49)
• Yen per dollar (USD/JPY) 92.06, bull, Jan. 7 (93.36)

Holdings, January expiry:

• KO, iron condor (p50/-p52.5/-c57.5/c60) 56.09, bear, Dec. 29 (57.74)
• LVS, covered call (-c16) 18.37, bull, Jan. 4 (16.62)
  
• SBUX, bull put spread (p22.5/-p24) 22.90, bear, Dec. 30 (23.31)
  

Holdings, February expiry:

• CVS, iron condor (p29/-p31/-c34/c36) 33.86, bull, Jan. 5 (32.85)
  
• MRVL, bull put spread (p20/-p22.5) 21.28, bull, Nov. 25 (15.90)
  
• VALE, bull put spread (p30/-p32) 30.63, bull, Dec. 24 (28.93)

Trader's Bookshelf

Topics S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs Coca-Cola, Las Vegas Sands, gambling, resort, Starbucks, coffee, Marvell Technology, Vale, Brazil, Mining.