Thursday 18 April 2013

Daily Index Cycle update

The market continues to twist and turn, with today seeing significant closing declines of around 1.5% for most indexes. The near term hourly count is suggestive of moderate upside into Friday opex, with a break under the key sp'1538 level later next week.


IWM



Sp'daily5



Trans


Summary

Today was a really interesting one to be part of.

I exited early in the morning, - largely due to my Tuesday entry being not so great. Anyway, a gain is a gain, and I even took a minor Long Oil (via USO) position around lunch time - which I'm holding overnight.

It does look like we can now say this...

1. sp'1597 was the multi-month cyclical high
2. We've now seen an initial wave'1 down, which comprised 5 waves.
3. We're due a small wave'2 UP, which will probably take 2-3 days.

Where it gets exciting is considering what will happen when we break below the key low of sp'1538.

I think there is 'free money' of 60pts to the downside, taking us on a VERY swift and fierce move down to the 1480/70 zone - where there is very significant support. Considering the action of the VIX in the past few days, I believe the sp'1480s would probably equate to VIX in the mid/upper 20s.

There is a 'small chance' of flashing to much lower index levels.

A little more later...on that rather interesting scenario.