Thursday, 31 May 2012

Volatility..holding firm

The VIX had a rather restrained day. The morning low of dow -100pts only resulted in the VIX +5% - not exactly a big move! With the market ramping (briefly) in the closing hour, VIX dropped 5%, the brief 20mins post index-close...VIX recovered those losses, and closed effectively flat.

VIX, 60min

VIX, daily, bullish outlook

VIX, weekly


All VIX cycles remains bullish. First target remains somewhere in the 27/29 range. A brief spike into the low 30s is viable if the market gets spooked! If the job data tomorrow comes in under 100k, then perhaps we can see a VIX +20% day, taking VIX to 28/29.

More later, looking at the daily index cycles.

Closing Brief - last hour 'kick the bear'

An ugly closing hour for the bears. Sure, the sp'500 still closed down moderately, but we were 1298 earlier. The bears can feel justifiably upset at how today ended. With the VIX closing red, this is not the best of days for those short, yet I guess it could have been worse.

Lets look at how those hourly cycles closed...





I'm guessing those nasty algo-bots did a stop-sweep in the last hour...kick as many bears out as possible, before allowing the market to drop quickly back into the closing bell.

The daily cycles certainly still bearish though..but today is yet another reminder of just how annoying this market can be for those who try to short it.

..and thus...May trading comes to an end.    More later...

3pm update - falling into the close?

Its that time of day we see a mini ramp..or fall into the close? The 15min cycle is maxed..and offers good downside, but the hourly cycle is somewhat problematic. With a red VIX, bears have a problem right now.

Lets see how many of those bullish rats get twitchy, and decide to bail ahead of the jobs report tomorrow.




Bear targets for the close...
a close under the 10MA - currently 1309/10 least marginally green, preferably 24.75/25.25

More after the close...

2pm update - fail..confirmed

Market bounce appears concluded on the 15min cycle...we have a possible confirmed fail at the hourly 10MA




So...bears need a good close under the hourly 10MA on the indexes, and a green VIX, preferably in the 25s.

Friday we have the monthly jobless data, who wants to risk holding long overnight? I didn't think so.

1pm update - need a fail at the hourly 10MA

We've seen a bounce - to be expected, and it probably scared a few of the weak bear hands out of their short positions.

As noted earlier, what especially matters today is we see the indexes put in a fail at the hourly 10MA...we're there right the next hour or two will be real important.


Sp, daily, bearish outlook, count'2


I'm starting to like the daily count - noted above. If this is still a wave'5 (of main'1), then this down move will end tomorrow or early Monday. A quick VIX spike to 27/29 would help to confirm that.

Bears would much prefer - myself included, to close under 1300, and that makes a move to 1285/80 tomorrow morning relatively easy.

Keep eyes on the VIX, bears should still look for a close in the 25s.

12pm update - lunch time churn

With the market selling off to successfully break under sp'1300 - to the surprise of some, we've already seen a little bounce off the lows. What will be paramount for the bears later today is a fail for the indexes to break/hold over the hourly 10AM.

It remains important for the VIX to at least close moderately up today, a close in the 25s will be the target.


Time for lunch!

11am update - look to the VIX

Weak market, Mr VIX is warning of significantly higher levels - 29/30, as early as tomorrow, which would equate to at least sp'1285.

VIX, daily, bullish outlook

SP'daily, bearish outlook

Transports, daily


I've seen enough to confirm this market is headed down at least to sp'1285.

The tranny is below 5k...its broken the bear my view, its confirming that SP' will be breaking the recent 1291 low within the next trading day or two.

VIX is strong, bears need to see a new high in the 26s later today..and that opens up a further 10% rise tomorrow.

10am update - bears need to break sp'1300

With the poor econ-data, market is starting to struggle in this first trading hour. I'm looking for a latter day sell off - not least due to concerns about how bad tomorrows jobless numbers will be.

Chicago PMI: 52.7  (56.2 April) - lowest since autumn 2009. Clearly, more great news confirming our great economic recovery.




Bears really need to build on yesterdays losses. Keep an eye on the VIX, bears will want to see 26s, which would be suggestive that a break to new lows (<1291) is coming.

First target..1300. That will open up a challenge of 1291...and then 1280/70 -  that could occur as early as tomorrow.

*I added some more index puts at the open...looking for sp'1280 within 2-4 trading days.

More later!

Pre-Market Brief - Weak Economic Data

Futures have lost their 0.25/0.5% gains...we're now flirting with minor red/flat. All the econ-data today was weak. There was no recovery..there will be NO recovery.

Weekly jobs: 383k - lousy
GDP (Q1, revised): 1.9 (2,2 first 'guess') - WEAK
ADP jobs: 133k (private sector) - not exactly green shoots of recovery

*Chicago PMI at 9.45am...which will be a market mover.



With the lousy econ-data just released, it will be important for the bears to capitalise on yesterdays swift move lower, and at least close today moderately red.

Good wishes for Thursday trading!

Euro/Dollar - target 1.20/19

Another lousy day for the Euro currency, the close of 1.2366 was very decisive, and its just a matter of days before the next target of 1.20/19 is hit.

Euro, daily

Euro, weekly


So, the Euro/Dollar will soon be down to 1.20/19. The issue is can it hold that level? If we break into the 1.18s, I'd assume there is a chance of a fast and dirty move to around 1.15/13. There is of course talk of 'parity'. The majority view is that will happen...but not until at least 2013. I suppose if the Greeks fail to form a government on their second election attempt, then parity may even come this summer - which would probably equate to sp'1100..if not sub'1000. Yet neither the Bernanke, nor the EU would be content to tolerate that sort of move this summer.

The bears should watch the Euro closely, if we get stuck/floor in the 1.20 zone, - and if Sp'1280...that would probably be a good area to close all short positions.

Support the site....tell your other trader friends!

Goodnight from London

Daily Cycle Update - Bearish days ahead!

The market fell away into the close, and with the VIX giving good confirmation (+14%), it looks like both tomorrow and Friday will be in the hands of the bears.

IWM, bearish outlook

SP' bearish outlook, count'3

Dow, daily

Transports, daily


I think the above 4 charts make the near term outlook very clear. We have the bear flags on the indexes already starting to get confirmed with today's move lower.

We will know for sure that a new bearish down cycle is underway when we break Sp'1300 - which could come as early as tomorrow. A new high for the VIX in the 26s would be added confirmation.

So...a good day for the bears, and I will say that its always good to see the bear flags play out. The issue now is whether we fall to the lows from last December..or November. If its December, that's around 600pts lower for the dow, around 60pts from the we're looking at 1260 - as the completion of the first major wave lower.

It will be important to keep a close eye on the VIX in the coming days. Especially, look for a VIX spike day- or even a opening VIX gap up - which turns into a black doom/fail candle - warning of a VIX peak - and conversely...the market indexes flooring.