Monday, 23 July 2012

Volatility least for the open

With European worries back on the minds of many, the VIX soared at the open, up 26% in the opening half hour. Yet the VIX closed up just 14% in the mid 18s.

This remains a very complacent level under any situation, and further increases are expected by the end of this week, perhaps as high as 25.



VIX, weekly


An interesting day in the markets, with opening index declines of dow -239, but with a significant recovery as the day proceeded, to close dow-101.

From a MACD cycle perspective, the momentum cycle could still take some hours to reset. Another 2-4 hours seems very reasonable to expect.

A Tuesday early morning decline of -5% or more,  to around VIX 18.. maybe even 17.50 is briefly possible. I would expect some significant higher highs to come by late Wednesday/Thursday.

VIX primary target for August/early September remains 35/40. That seems a very viable objective for the next wave higher - and equates to at least sp'1225/00, possibly 1170/50.

More later

Closing Brief

A good day in bear land...despite the latter day ramp, but I'm fine with that.  It just makes for higher prices to re-short from tomorrow ;)

The closing hourly cycles...





With the VIX closing 14% higher...bears still had a fairly good close to the day.

I will re-short tomorrow, preferably around 1355/60....before the Tuesday close.

Much more later in the evening.

3pm update - melt up into the close?

A good day, and I will not complicate things by adding to new positions before the close.

Bulls will be seeking a close  back over the 10MA of 1352.. that won't be easy!



I will sit it out until tomorrow.
High chance of sp'1355/60 in early Tuesday trading.

More after the close :)

2pm update - the good a patient bear

I was short a day early last week..which was of course annoying. Today's exit made for a great gain to begin the week. Now..its back to the 'how long can I wait until I start whacking buttons' game?

It looks like the sp' will hit the declining 10MA - currently 1354 by the close. That sure will be a tempting place to re-short.




VIX is massively lower than the opening gap higher. I'd certainly not see this as a problem, its kinda normal for the VIX to collapse back almost all of its initial jump higher. What is a good thing is that we did at least hit..and break over VIX'20 this morning. The next threshold to break will be 24/25, I'm pretty confident we'll be around that level by the end of this week.

So..right now I'm just watching. It is very possible I'll sit it out until tomorrow.

With the MACD on the hourly cycle still resetting itself higher, this could last into much of tomorrow.

Under ANY circumstance, I will be short again no later that the Tuesday close.

1pm update - how high do we bounce?

The bounce is probably starting to really annoy those bears who did not exit this morning. The question now though high do we go?

Bears MUST at least see a lower, somewhere <1380.

Personally, I do NOT wanna see anything over 1355/60 late today/tomorrow, or its a problem in my view.




The hourly MACD cycle (blue bar histogram) is so very low on the cycle. We could easily spend the rest of today and indeed tomorrow just crawling higher.

Right now...I am NOT going to hit any more buttons. Sp'1355 - near the close sure would be extremely  tempting.

*we still have AAPL earnings at the Tuesday close, and that might be an excuse for Mr Market to claw a little higher tomorrow - putting in a lower high.

I am trying to keep an open mind, but as it is, shorting anywhere over 1350 seems like a pretty safe trade on a 3-4 day outlook. Sp'1310/00 by Friday is still a very reasonable target.
More later.

12pm update - patiently waiting

The bounce is going broadly as expected. We'll likely hit the declining 10MA - currnetly 1358





The VIX has cooled off very significantly from the earliy 26% gain. I'm looking for VIX 18.50/18.00..somewhere in that range for the next low later today.

Bears should be seeking VIX in the mid 20s by the end of this week, although if Mr Market gets spooked again..that could come as early as tomorrow.

I remain looking for a re-short sometime after 2pm...around sp'1350.

What matters most, the daily cycle, is now showing a conclusive rollover, so bears should have a good chance of at least a test of the 1310/00 support zone.

Stay tuned!

11am update - bounce underway

As expected, the hourly trend floor of 1335 did hold.

I'm now looking for a move to around 1347/ around 2pm.




VIX also cooling expected.

Good re-short later today :)

10am update - super bearish!

What a great start to the week! The opening gap of dow -200pts is the stuff bear dreams are made of.

With the VIX soaring +26%, this is a very clear indication that the up trend of wave'2 is surely over. Yes, there will be significant bounces along the way, but this sure is starting to smell like the very first move of a wave'3.



VIX, daily


I think the hourly chart is pretty clear, I don't expect a move under 1335 this morning, a bounce back to the hourly 10MA is very likely, but the end of today that will be around 1350 or so.

*I exited just after the open, am VERY pleased with my exit..and will merely look for a re-short later in the day at the top of the next 15min cycle..whenever that might come.

A great start to the trading week

UPDATE 10.20am


A bounce to the 1350s seems very viable by around 2pm or so.

I'll likely re-short around there.

Target for end week is around 1310/00

Pre-Market Brief - we have follow through!

Good morning! Bears have a superb start to the week. Futures are showing sp-14pts, we're set to open around 1349 right now.

This opening move lower is very welcome, and is almost removing what was arguably a small chance for one more final wave higher into the 1390s.




What is VERY exciting is that we are set to break the lower channel on the daily cycle again  If we can indeed open in the 1340s, that is good confirmed follow through to the downside.

*VIX will probably open up around 10%, maybe as  high as the low 18s. That still remains a bizarrely low number, and as ever..we'd get an intra-day pullback - probably to the hourly the low 17s.

Whats my plan?

Well, I plan to exit early this morning, and look for a re-short later in the day. Both smaller 15/60min cycles are very low already, and there remains a high probability of an intra-day bounce, which could be as much as 10pts on the SP.

Its an important week for the bears, we really need sp'1310/00 by the end of July to keep the weekly/monthly cycles still in a bearish trend/formation. So, with 7 trading days left of July..lets see what Mr Market can do today.

Good wishes for the trading week ahead!

UPDATE 8.41am

Dow -200, now the open is set for 1342 - which is close to the lower channel on the hourly chart. VIX 'should' open in the mid 18s

I'm still looking for an early exit, but would look to re-short a little later in the day.

Primary daily trend is now most definately down.