Friday, 30 August 2013

Mild panic into the weekend?

The main indexes closed moderately higher for a second consecutive day, but there remains some very significant underlying weakness. Primary downside target remains the sp'1570/60 zone, where the 200 day MA is now lurking.


sp'weekly5 - fib levels


So..a second day for the bulls, but the gain of just 3pts on the sp'500 to 1638 does little to negate the bigger weekly down trend.

I'm still holding to the bigger target of the lower weekly bollinger, currently 1564 - and that will be in the low 1570s next week.

Volatility trending back to the 20s.


Since the market peak of sp'1709, the VIX has been battling higher from the 12s, and is now primed to make an attempt to test the big 200 weekly MA..coincidentally at the key VIX 20 threshold. I don't expect a VIX much higher than 21/22 in the current cycle, even if sp'1570/60s are hit next week.

Looking ahead

There is trio of econ-data in the morning to wrap up the month. Personal income/outlays, Chicago PMI, and consumer sentiment.

*there is ZERO QE-pomo, although a new POMO schedule for Sept' is announced at 2pm.

So how might Friday play out? Certainly, the hourly index/VIX charts are primed for the bears, and the daily/weekly charts are similarly still in favour of the bears. It is always hard to fathom how the market might to econ-data, but regardless of that, I'm guessing we see some weakness into the Friday close.

Best 'bear case', sp'1615 late Friday, with the VIX in the 19s.

*I remain short the main market, via LONG VIX, seeking an exit ahead of the long 3 day weekend. I'd settle for anything in the 19s.

Video update from Mr Walker (I think the last of the free postings will be the weekend update - due late Friday)

Goodnight from London