Thursday, 4 October 2012

Volatility down again

With the SP' breaking above the important trend line of 1455, the VIX slipped lower by over 5% to close in the 14s.




So, another failed move for the bears. With the sp' close in the low 1460s, we're barely 1% from the QE spike high from 3 weeks ago. New index highs now seem likely within days, if not tomorrow.

If Mr Market likes the jobs data, then a challenge of 1474 is viable tomorrow, and then the big 1500 next week.

In terms of VIX, we could be looking at 11, even single digits. This all assumes no 'upset', and it has to be is after all...October.

More later

Closing Brief

Another day in market land where the bulls took control, held on tight, and again laughed into the faces of those few still resolutely holding short. New index highs are seemingly now very likely across the next few days.





A pretty clear victory for the bulls, the only issue is that the Rus'2000 is lagging behind. The transports of course remains in a world of its own, trading almost back at the equivalent of the June sp'1266 low.

For those holding short into Friday, they had better hope the jobs data comes in much lower than expected, otherwise we'll very likely test the QE3 spike high of sp'1474.

More later

2pm update - bulls holding onto their gains

The bulls are doing well, and we're comfortably still above the breakout zone of 1450/55. With the VIX a little lower, and the clown networks touting 'Factory orders are fine' - when they were -5%, the mainstream delusion is back in force.

Everything is going to be just fine, right? Hell, if Romney wins, we're all be billionnaires next year, even the permabears, yes?




The daily chart is very clear, its a breakout from the bullish pennant (pink).

I suppose the doomers could count this as still a bear flag - which it is, but considering the trend - we're now day'6 UP, it's looking bad for anyone still on the short side.

New index highs are viable tomorrow, if Mr Market decides that 50-125k job gains a month counts as 'economic growth/recovery'.

back after the close....probably.

12pm update - daily trend battling higher

The bulls have achieved a victory this morning, with the gap over the upper trend of 1455. There is no question about it, its a clear break. Only the Rus'2000 and the Dow are yet to confirm it.

The VIX is a touch lower, but it remains all noise.

sp'60min, H/S


IWM, 60min


Despite factory orders data coming in lousy, Mr Market is holding onto the gains reasonably well. It looks a bit spiky on the daily chart, but with the underlying momentum battling (see daily MACD cycle) higher, bulls are in control.

Baring a latter day reversal, and at least a 'generally' flat close, bulls have broken upward, with new index highs very likely within the next few days.

Those hopes of 1420 are just about all faded away, baring that reversal.

Not good. Not good at all.

back at 2pm

10am update - mixed open

Good morning. Moderate opening gains, and for the bulls, we have a clear breakout of the wedge/upper channel on the sp and transports index. VIX is flat, shows no sign of significant upside.

*awaiting factory orders data at 10am




IWM and the Dow are still holding below their upper channel, but SP and the Transports have clear breakouts. Its a bit of a mixed picture, but generally, it has to be said...bullish.

The daily SP' looks pretty much like the bears have failed.

Unless the bears can close somewhere in the low 1440s today, then I'd guess...bulls win again, and we'll see new index highs within a week or two. Urghh !

Another lousy open for HPQ...$10 is a'coming.

back at 12pm.

WTIC Oil - a second red flag

WTIC Oil slumped by almost 4% today to close in the low $88s, and well below my key threshold of $90. It is somewhat surprising that the main market today seemed to ignore this very sizable move. Usually, the market would be down 150/200 dow points on such a drop.

WTIC, daily

WTIC, weekly

WTIC, monthly, rainbow


So, WTIC fails to hold the big $90 level - that I've felt for some weeks was important. First downside target is $80, and then the June low of $76.

If the broader market gets upset this Oct/November - with some serious concerns for early 2013, then my primary target of $60 is very viable. That of course seems a little like 'crazy talk' right now, but with the QE3 announcement out of the way, things are somewhat more clearer.

The deflationary doomers will be seeking a monthly close (see rainbow chart) under $70 early next year. As ever, it is all about which is the bigger force..the deflation..or the inflation. I'm still guessing that with the underlying economy showing very serious weakness (many national PMIs <50 - recessionary) and weak GDP Q2 numbers, that Oil prices will considerably weaken in the weeks and months ahead.

Of course, lower energy prices should be considered a bullish factor for the economy at some later date.

Two red flags, and seeking a third.

With the transports closing September <5000, we now have two red flags for the Autumn. My third remains a weekly closing for the VIX >20.

Today felt tiresome, with the broader market almost breaking above sp'1455. I remain short, and still (somewhat desperately), seeking an exit around 1420/15.

Goodnight from London

Daily Index Cycle update

The broader market closed moderately higher, with the transports leading the way. The daily charts are still sporting large bear flags - now 5 days in duration. If we can break below, there is a fair bit of easy downside available to at least sp'1420.





A bit of a mixed day, and for a few hours, it looks like we might closed much higher as the SP' teasingly tested the upper channel @ 1454/55. That held, although we closed pretty close to it.

Arguably, bulls can still feel pretty confident on a multi-week basis, unlike the bears who are on the verge of seeing new index highs.

The transports lead the way higher, after one airline (I forget which one), had slightly higher passenger numbers. The falling oil prices also helped overall sentiment for the airline sector.

With the VIX closing lower, Mr Market remains extremely complacent, and the algo-bots are still able to meltup this market on what is still very low volume.

A little more later...on WTIC Oil.