Wednesday, 12 December 2012

Volatility manages to close green

A Fed day is usually a choppy trading day, and today saw earlier index gains fail, with a major swing back to the downside, although the market as such only closed broadly flat. The VIX saw opening gains, then minor declines, but closed moderately higher, +2.4% to settle @ 15.95




VIX 20' remains the first key target of a multi-week explosive move, with a rough broader target in the 30s - assuming my index target of the low sp'1200s is viable in early 2013.

In the immediate term, VIX 17.50 - the recent high, is important to exceed, and that will open up 18/19. Whether we can break 20 this side of Christmas, that still appears a tall order though.

It is far more likely after Santa has been and gone.

More later, on the indexes.

Closing Brief

With Bernanke sailing off into the sunset..for Christmas, the market now returns to normal service, on thoughts of the fiscal cliff, and other economic concerns. A number of the indexes have just broken their ascending channels, the first sign of a turn.





The market rallied moderately on the FOMC announcement, but the gains never looked strong, and once the Bernanke conference began, the weakness started to re-appear.

With the VIX closing higher, and the $ recovering across the afternoon, everything is starting to turn back towards the bears.

Lets be clear, the first target is to break the recent 1398 low, until thats done, the bears can't be confident that this 'stupid wave'2 bounce' is complete.

More later.

3pm update - closing hour slump?

With the last FOMC out of the way, the market is now faced with the issue - just like mid September 'what now?' Once Bernanke fades into the sunset this afternoon, we could see the first wave of weakness in six trading days. Eyes to the VIX, and the dollar.




We're off the highs,  but..not by much.

From a MACD (blue bar histogram) on the hourly index charts, we're about 1-2 trading hours from going negative cycle. So...there is a significant chance we'll be trading 1% lower by tomorrow morning.

Bears really need a close <1430, preferably 1425. Even then, I'd frankly not have any confidence in my bigger picture outlook until we take out the recent 1398 low.

Only when we are back under 1400, can the bears start to get confident that this multi-week over.

VIX still red... USD.. 79.80, -0.26.  A close in the 80s looks out of range.

I remain short..and still holding to my original bearish outlook from early October.

UPDATE 3.15pm.. indexes on the slide..and starting to break the channels..


One down...sp' to follow

UPDATE 3.30pm... and there goes another index, just about to break the up channel.


*USD 79.89..and still recovering, with VIX green

back after the close

2pm update - now its time for Bernanke

Its the last press conference of the year for the Bernanke @ 2.15pm EST. The market will be desperately seeking more 'comfortable' words from King Printer, otherwise, a swift reversal, with red indexes at the close is still a viable outcome. Mr $ is off the lows, and a close in the USD 80s would be important to recognise.




So..85bn a month...1 trillion a year..and we have a stalling US economy, a heavily indebted Govt, with both the EU..and (once again) Japan in recession.

Thats all bullish though, right?

Doomer bears should be seeking a close <1427, preferably 1420, with VIX 16.50>. The latter two targets will be...difficult.

GLD, metals looking weak, the snap level is 165.00

Gold bugs gonna be real mad if red close.

UPDATE 2.30pm There is a touch of weakness, whilst the Bernanke is now answering questions...

Only a red close, < 1425 would please me though, that still seems difficult, with just 90mins left of the day.

1pm update - post FOMC reaction

The FOMC annoucement was exactly as they stated at the mid-September FOMC. So, no surprises. The indexes are moderately higher, but so hyper ramp. After all, we're up 90pts since the recent sp'1343 low, the easy money has already been made on the upside.




Algo-bots triggering the 1434 short-stops.

The next few hours will likely remain choppy.

Suffice to say, we could close up...could close down. Every Fed day is always a bit of a real mess, and the real direction, might not be discernable for some days..even weeks - as was the case at the September FOMC.

Metals showing a little strength, but nothing dramatic..yet.
*Bernanke press conference @ 2.15pm EST.

UPDATE , regarding Gold...

lets get this clear, the Fed is now doing 1 trillion a year QE..and Gold is still under $2000, a level that the gold bugs have been screaming about since 2009/10.

GLD, is getting a bounce, but I would be surprised if it can break above the 50 day MA 167

UPDATE 1.30pm, choppy metals, seeking GLD <165, for a clear break

GLD, 60min

12pm update - its that time again

The FOMC annoucement is due at 12.30, and lets see if they follow through with their original intent of 45bn t-bond buying - as stated at the September FOMC.In addition to the 40bn of MBS, this would make a monthly 85bn, starting next month, 1 trillion a year.....without end.



Its time for lunch...but also time to see what the paper printing maniacs have decided.

As ever, the initial reaction will NOT be reliable, and as we saw in retrospect, it took some days to realise that mid-September was actually the cycle peak.

-- necessary !

UPDATE 12.33pm. no surprises..45bn t-bond ALREADY announced in mid-September.

I find it amusing the fed said 'initially 45bn'. Yeah..have NO doubt, the Fed will be buying ALL the t-bonds within a year., so..that 45bn will ramp to 100bn eventually..., thats not including the 40bn of MBS.

UPDATE 12.42pm.. the algo-bots are triggering the 1434 stops.

Kick em' all out..before the real the downside later ?


A close <1420 is very viable by the close.

*don't forget, benny does a press chat @ 2.15pm

11am update - waiting for the Fed

A quiet expected. Boehner spoke earlier, and seemed in a real bad mood. That was pleasing to see. Let them all get into a real bad mood, and fail to agree to delay ALL of the fiscal cliff measures. VIX is on the move..and we do have a minor breakout so far today.




key levels...

VIX 17.50s
Sp'<1427 - by the close.

A close of sp <1420s would be...useful..and decisively break the 6 day up trend..

10am update - morning tedium

A dull opening, and the next few hours will likely be micro-churn around sp'1430. Bears need a break <1427 by the close to break out of the ascending channel. A move sub' 1420s would be clear confirmation that the six day up cycle is likely complete.




Nothing to add right now, its simply painful tedium.

Things should get interesting at 12.30pm.

Story of the morning. the BDI drops 8% overnight, see Zerohedge.  , but that's a new green shoot of recovery, right?

Where are the VIX 18/19s?

Considering the 'issues' out there, it remains truly bizarre that the VIX remains in the low teens.


Underlying momentum trying to turn back positive, but really, its to be ignored until after FOMC, and even then, give it a few hours to find a true direction.

I won't take ANY index decline seriously until VIX takes out the recent 17.50s high.

Pre-Market Brief

Good morning. Today is a big day. The last big econ/news event of the year, with the FOMC announcement at 12.30pm, and a Bernanke press conference around 2.15pm. How the market reacts today, will likely shape how we close the year..and move into 2013.




Futures are a touch higher, sp +2pts, we're set to open around 1429/30.

As is usually the case, the first market reaction is not often the one that will be the eventual outcome.

We could easily ramp dow 100pts on the news, only to close -150pts. Similarly, we could initially drop 100pts, but close 200pts higher.

There will very likely be some wild swings this afternoon, and those initial moves..are not to be relied upon.

Good wishes for what will be an important day.

Still back testing the old broken support?

Today's moderate index gains were really hard to stomach, not least with the brief break into the 1430s - level we've not seen since the post election snap lower. It remains very possible we are still in the process of back testing the (now broken) rising support from the Oct'2011 lows.

sp'daily3 - news to come

sp'weekly2, rainbow

sp'monthly3, rainbow


The Sp' closed @ 1427, although it did trade as high as 1434. I was occasionally checking the monthly rainbow (Elder Impulse) charts through today, and despite the gains, they held their provisional warnings, via blue candles.

So, despite the latest mini ramp from sp'1398, we have still not lost the weakness as indicated on most of the monthly rainbow index charts.Yet, any bear out there really should still be seeking a monthly close under the 10MA, which today is sp'1396.


Tomorrow's FOMC announcement will be the last scheduled major econ/news event of the year.

I will note..(for probably the thousandth time)...the 45bn of t-bond buying - which some are still touting as 'QE4', was already announced at the September FOMC, and I'm sure the Bernanke will follow through with his original statement of intent. at January 2013, op-twist will have ended (due to lack of short term bonds to sell), and the Fed will be printing out of thin air..85bn a month. 40bn for MBS, and 45bn for US Govt. t-bonds. That works out at a big 1 trillion per year.

Unless I'm mistaken, didn't the clown finance TV cheer leaders all proclaim the 'summer of recovery' in 2009? In which case, why is the Fed now about to ramp printing to an annual 1 trillion?

Oh that's right, the cheer leaders were lying..or were plain delusional. I hope its merely the latter.

Goodnight from a foggy*..and very icy London

*that's a bullish buy signal...right?

Daily Index Cycle update

The main market closed moderately higher. The opening gap over the recent sp'1423 high was very damaging to all near term bearish outlooks. Despite late day weakness, the closing gains are yet more salt in the wounds of those bears who have been re-shorting across the past few weeks.






Clearly, it was a rough day in the bear bunker. The opening gap right over the sp'1423 high (from last Monday) was always a threat, and once that occurred, then the algo-bots were merely able to melt everything higher into the mid 1430s.

Lets get this clear, there is NO sign of a turn lower, or even levelling out yet.

The hourly charts held within their ascending channels, and thus no one - not least yours truly, can claim the immediate trend is anything other than UP.

The FOMC announcement is tomorrow at 12.30pm, with the Bernanke due to hold a press conference around 2.15pm. How the market reacts to both of these, will very likely shape how we trade into early 2013.

A little more later