Monday 30 April 2012

VIX - daily update

The VIX closed up a mere 5%, but it was arguably an important 5%, lets take a look at a few of the key charts.

VIX, daily, bullish scenario

VIX, daily, bearish scenario

VIX, weekly, 2yr


Even taking a bearish VIX scenario, I am still looking for a move to 24. Whether anything significantly over 24 occurs, that would be impossible to even remotely guess. As noted recently, we've had two major down moves in recent times - both of which were each motivated by a catalyst. In 2010..the Greek 'crisis round'1', in 2011 the 'American Govt might not pay its debt'. Will the market need something to kick it below at least sp'1300 in weeks to come?

The bigger VIX weekly cycle does help put things into perspective, and the VIX is still picking up a little underlying upside momentum. Clearly, a break over 21 will be key in the new month of May.

Closing Brief

A break and close below the 10MA on the hourly cycle! All things considered, today was about as good as the bears could have hoped for. Now, the bears will need follow through to the downside with a red close on Tuesday.  Similarly, the VIX increase - whilst very minor, could be the start of something significant.


SP' closes with almost a back-test of the important 10MA. Its a bear flag, but we sure need some follow through Tuesday into the 1385/80 range to confirm it.


IWM was particularly weak into the close (not sure why), if 'minor wave'2' has been identified correctly, then we're looking for a new wave lower, probably to at least 79/80 within 2-4 days.


VIX closes with a little bull flag, 21 remains the first target...then a break to 24.

Daily Cycles will be covered later in the day.

3pm update - one hour left of April

The 1395 level failed to hold..that's good to see, but we only fell to 1394, not exactly a huge 'snap' lower.A close in the 1380s seems out of range.


*keep an eye on the VIX, so far its up just 5/6%, that's very little. A +8/10% close would bode well for some downward follow through tomorrow.

As ever, how we close is even more important than how we opened ...and everything in between!

Clown channel host talking of 'sell in May and go away'. Ahh yes...we're right back to that mantra again.

More after the close.

2pm update - indexes surprisingly still red

Yeah, the indexes are I guess this is one way to end the month. Certainly, its better than expected from someone with a bearish perspective. VIX momentum is turning back upward on the daily cycle, will look at that after the close.


Must see a close under the 10MA, right now 1394 would be useful to see, you can see a clear baby bear flag on the hourly chart. Yet the MACD (blue bar histogram) cycle is pretty low, and its due to cycle back up. A back-test against the 10MA around 1400 would still be normal this hour..before perhaps a last  hour mini sell-off.

A close in the 1380s would be real 'little' victory for the bears.

1pm update - which way?

Which way will this week close? As detailed across the weekend, both the weekly and monthly cycles are back to their post October low bullish trend. Or could this be a classic bear trap? The problem the bears face is they need big falls..and strong follow through, and that is something that is so often not the case - as we saw last week.

Today the market is actually reflecting the weak econ-data, but..what about Tuesday? We could easily cycle back upward, and even put in a new high of 1406>. Tricky market...good short-stops..remain vital.


*really would prefer a close <1395, a level which has caused some real problems in the past. That would open up a break into the low 1380s Tue/Wed.

SP'monthly cycle - closing red for April ?

We have just 3 trading hours left of April. From the monthly cycle point of view..they are a VERY important 3 hours.

As they say...stay tuned!

12pm update - lunch time chatter

A pretty interesting day so far, I guess you could almost say 'better than expected'. European markets were actually getting sucked lower by the Chicago PMI data before they closed. US markets showing the first sign of weakness after four annoying upward days.


Even if a new down trend is beginning, an intra-day back-test of the 10MA @ sp'1400, would be very natural.

Clearly, 'serious money' shorts would have a short-stop around previous 1405 high..or loose 1410/15.

More across the afternoon.

11am update - could get interesting this week

It is always a constant struggle to not get overly permabearish, but this mornings Chicago PMI number is again a reminder of just how lousy things are. Japan is in a deep recession, various parts of the EU (not least Greece, UK, and now Spain!), and I'm still guessing... the USA will follow. The question is how long until the USA gets infected, six months, or maybe not until 2013? Anyway, that's a very long term issue, but in the meantime, we do have some market weakness to both start the week and end this month.

Sp'daily - bearish outlook

The H/S formation - with the bear flag (pink lines, within the RS) is certainly an interesting possibility. If it is correct, we'll know within a few days. A break under 1357 would arguably still only be a preliminary confirmation. To be confident, bears need SP <1300. First things first though, lets see how we close today.


The break below the 10MA is indeed important, bears will need a daily close under it, preferably in the 1380s - although is probably asking a great deal for today.

More later!

10am update - morning weakness

Well we're off and running, nothing dramatic, but there are certainly some interesting price movements out there, not least in AAPL, BKS, and some weakness in the metals SLV/GLD.

*Chicago PMI 56.2.. vs exp. 62.  A truly atrocious number, market is selling off a little.

I was watching clown channel just earlier..they already today said what I had noted 'to look for' yesterday 'if we get bad jobs data this week, market will rally...due to hopes of QE3'. Sigh.


Finally a break under the 10MA on the hourly, yet only a close below it will be even the slightest 'hope' for the bears. Without question, bears need to see this market back in the 1370s before any kind of justified excitement about potential downside.



I'd still argue though, whilst VIX remains under 20, any 5, 10, even 15% moves are just static/noise. Only with a break over 21 should the bears start to take any down move in the indexes seriously.

*lets also note that its the end of the month, and so the state in which the monthly charts end, will be important. Bears best hope...mid'1380s today, although that honestly seems too bold right now, despite the morning weakness.

More throughout the day.

Pre-Market Brief

Good morning, well here we go again. Another week at the rigged casino table, where the only real winners are the HFT algo-bots in the basement of GS. Futures are currently just a little lower, around -0.2/0.25%  The main econ-data we have today is the Chicago PMI at 9.45am, consensus is looking for a lower figure of 60.8 (62.2 in March). I suppose a figure <60 would give the market an excuse to sell off.


The MACD cycle is clearly showing that underlying momentum continues to wane, but actual index prices of course have still been crawling inexorably higher. It looks like we'll go negative cycle no later than lunchtime, so there 'should' be some weakness this morning, but it'd seem highly unlikely it'll be anything more than -0.5% at the lowest point - before we start to cycle back upward.

Surely, another frustrating day for the bears to come, and perhaps one where the bulls can once again 'buy the dip'.. with a good stop of course!

I think the VIX will merit watching today, if it can jump 5/7% by the close, I might consider any minor index close lower a little more seriously.

*keep an eye on AAPL too, its broken back below $600 in pre-market.

Good wishes for what is..the last day of April!

Sunday Night Futures Wheel - Quiet.

With the Futures Wheel spun up for around 90mins, SP is +2pts so far. It looks like a quiet night lies ahead, there doesn't seem to be anything likely to sway the market one way or the other. So a largely flat Monday open would currently be the best guess.


Sp' daily rainbow chart


The 60min chart which I updated on Friday I hold to, but really, its a real mess from the bearish perspective. The daily, weekly, and monthly cycles are now ALL back to a generally bullish trend. The second (Elder Impulse -'rainbow') chart above is pretty clear. Near term trend is UP, first target would be upper bol' band of 1420, which is of course just 2pts away from the recent 1422 high.

There is key econ-data every day this week, and we end with the big jobs data for April on Friday

So even though Futures are mostly flat, there will likely be some good moves this week. Another lousy jobs number would really knock the market a bit lower, but then...we know the mainstream will be back to touting 'market rallies despite bad jobs data..due to increased hopes of QE3'. Urghh!

Good wishes for Monday..and the trading week ahead!    


Saturday 28 April 2012

Weekend update'2 - Monthly Index Cycles

Those weekly cycles sure didn't look good for the bears, lets now take a look at those bigger and even more important monthly cycles.

IWM (representing the rus'2000 small cap)

IWM is down 0.5% this April, but we are now well outside of the bearish danger zone. This months action is kinda reminiscent of last November/December - early losses, all quickly recouped. From a cycle perspective, the MACD is right back on track, with 4 months of increasing bullish momentum. There is nothing bearish here. Only a break under the 10MA - just a touch under 76, would make me bearish on this index. Bulls only need 1.6pts higher (around 2/3%) to fully confirm the resumption of the post October bullish trend.


The tech' is only -0.7% across the month. Interestingly, it is scraping near the top of the bollinger bands, and further increases will certainly be more difficult than those first few months since last October. General price momentum continues to increase, there is NOTHING bearish here either.


Disturbingly, the Industrials are actually net-positive, just 0.12%, but considering all the problems out there, this is pretty extraordinary.. Near term 'comfortable' upside would be to around 13500. Bears really need to see a break below the 10MA around the 12300 level to have any hope of a broader trend change. Right now, 900pts to the downside looks an awful long way away.


The NYSE comp' - as noted many times, never did surpass the summer 2011 highs, not even close. With just one trading day left of April, this index has lost 0.7%. All the standard indicators remain bullish. There is now no longer any sign of a trend change to the downside. Bulls will need to see a break above 8327 to confirm a resumption of the primary upward trend. Upper target would be around 8850 - around 9% higher.


Looking at the SP' chart, I'm arguably inclined to see this April's action much like March'2011. Does this suggest May 2012 is April'2011..and so forth? Regardless, the upper bol' first target would indeed be a new high of 1435/40 within weeks..if not days. Only a monthly close under the 10MA of 1289 would get me bearish. Even then, just like for April, how we close May will be paramount. Clearly, there is nothing bearish about the SP'500, the post October low trend line still points toward 1550, although bulls will really have to ramp this market up in May if we are to get back on schedule for a re-test of the all time highs.


The Transports are following the lead of the Dow, and are actually even a touch stronger, up almost 0.3% in April. However, the Transports remain absolutely stuck in a narrow range for the past 4 months. As noted in the weekly update, the direction in which the Transports breaks will probably be a decisive sign/warning to all traders in the weeks and months ahead. Arguably, it is the most important index to watch this summer.


So we have the Dow and the Transports already a touch positive for April - pretty incredible. The other 4 are all down, roughly 0.5% or so. In the scheme of things, we can say April will close largely flat.

Bulls should be happy with a flat April, and are now just 1-2% away from breaking new highs on each of the main indexes..which if it occurs, would probably lead to at least a further 5-10% in the early summer.

Bears have got to be pretty devastated with April, not least the past 4 trading days. Despite a truck load of lousy econ-data, a downgrade of Spain, and other world issues, the markets still recovered and closed confidently on Friday.

Whether long or short, the stop-levels are clear

A break over Sp'1422..the 'big money' bears have to abandon all hope, at least for another 2-3 months.
Only with a break back under last weeks lows - Sp'1358, could the bears justifiably get confident of much lower levels in the near term.

April was a difficult month to trade, I'm guessing May won't be any easier.

Goodnight from a rainy London

Weekend update'1 - Weekly Index Cycles

This weekend I will post two main updates, covering the weekly and monthly index cycles. As we now have just one trading day left of April, the monthly chart will likely not change much, so we can start to look ahead into May and across summer 2012.

*I will cover the regular '10 world indexes' next weekend, once we have moved into May. we go....(all charts are 2 year, weekly candles)

IWM (representing Rus'2000 small cap)

We have a bullish engulfing candle, and a close above the 10MA. From a MACD cycle perspective, there is no clear turn back upward yet. I suppose the bears could argue we are just back testing the broken October trend. Only with a break under 78 can the bears regain any degree of confidence, bulls just need a further small move up...a close next week of 84 would be very significant.

NASDAQ Composite

Tech' remains in the post October low channel, and like the Rus'2000, we have a bullish engulfing candle, and a close over the 10MA. MACD cycle is still positive, there is nothing bearish here. First target will be a break over 3128, a mere 59pts away <2%.  That is well within range, and is highly viable within the first few days of next week.


Almost a 200pt gain on the week for the Dow, which is pretty amazing considering Mondays action. However, we are now right back to that problem level of 13300. A break above..and bulls have free air until 13500. However, a fail here..and the oft' touted 'waterfall fail' could occur - first target would be 12200 (a clear 1000pts lower). Bulls will understandably want to get above this level as quickly as possible next week. A mere +73pts gap Monday morning would do it.

Technical indicators are threatening to turn outright bullish again, and if we break above 13300 early next week, the Dow will go + cycle on the MACD, and that will probably be a sign that SP'1422 will be taken out, and a further move at least 2-5% higher within May.

NYSE Comp'

The 'master index' as I like to call it, we've a bullish engulfing candle, and a close over the 10MA, there is nothing bearish here either. I guess bears could again argue this index is also setting up to back test the broken October channel. MACD cycle is still positive, but there is still a hint of weakness in this very broad index.


A bullish engulfing candle, a close over the 10MA, and a MACD cycle that is still +cycle. SP'500 is now a mere 19pts away from breaking new highs. Only a close under the recent low of 1357 would justify any renewed hope/confidence in bear-land. Bulls arguably merely have to hold current levels in the coming week.


What has been the weakest index for many months, remains weak. Transports only gained 0.6% on the week, and the MACD cycle remains negative. There is certainly nothing bullish here..yet.

Its possible we could be in a bullish pennant (although the monthly cycle would argue against this). The direction in which the transports breaks in May will be a critical signal in my view. The range is exceptionally tight, so traders - whether bullish or bearish, can go heavy long or short, with good tight stops.

Only a break above 5400 would clarify the new trend as bullish. Bears will need to see a break below the hugely psychological 5000 level to claim the start of something majorly bearish.


Of the 6 indexes covered, only the Transports is moderately bearish. The other 5 all have strong bullish engulfing candles - such candles that are often reliable indicators of a major trend change to the upside.

Bulls need very little next week, even a flat week to consolidate current gains would probably be enough, and that would set up a bullish May - where we have the Facebook IPO hysteria still to come.

Bears..are in real trouble. A bullish engulfing candle is going to be REALLY difficult to break back below next week. 

The Monthly Cycle update will posted late Saturday.

Friday 27 April 2012

Closing Brief

I'm glad that's over with. Just a quick closing update on those hourly cycles. The SP' almost showing a sign it was going to close under the 10MA..but no. The VIX did manage a slight break higher over the 10MA, as it has now also moved to a positive cycle on the MACD.




I would to think the bulls are almost as surprised at the strength of this post Monday low up-cycle, as the bears are. Is it a fifth, of a C..of a giant bear flag - as seen on the daily charts? Right now, its time to stop...its the weekend.

As usual, I will post updates for both the weekly and monthly index cycles across the weekend, and maybe a few other things too.

Have a good weekend

3pm update - One hour of Crazy left to go

Thank the gods, its almost time to wrap up this pretty disturbing week. I was just updating all the weekly charts (I'll post them later this evening- as part of the weekend coverage), and those weekly charts sure look ugly from the bearish perspective. We even have a few bullish engulfing candles, and those are often a major warning that a new up cycle is beginning.


The VIX is again falling to pieces, looks like VIX will fail to close above the 10MA on the weekly, so that's yet another failure for the bears.

Its almost time to get some tea/coffee, and say farewell to another bizarre market week, in what remains a pretty sick and deluded market*

*AMZN results were a failed mess -this is of course not the general opinion. Mr Market, and those clown channel hosts/cheerleaders were thoroughly delighted with AMZN! I'll delve deep into AMZN at the weekend on the Fair Value Stocks page.

2pm - another hour of pain

Well, there go the 1405 short-stops. Reflecting back to Monday, this week has been a complete disaster for the bears. All that initial excitement Monday morning, a complete reversal...and its still going.

Sp'60min - count'2


*the SP' count'2 is based on a few variations posted over a week ago. There were a few people this past Monday who had suggested it was merely the B' wave low..and that a strong C' wave up was due to break above 1400. I can only imagine how pleased they are this Friday afternoon. 

For the rest though, is it essentially total failure this week, and it now looks like a close above the big SP'1400 level is assured. Baring a truly severe turn around on Monday, both the weekly and monthly cycles are now back within their October'2011 up trend/channels, and April will close out still bullish.

A rough day...a rough week. I'm glad there are just two hours left.

1pm update - did the bell ring yet?

3 hours left in this trading week, I'm almost wishing we'd just close now, since the chance of even a slightly red close seems out of reach.



VIX trying...yet again to break back above the hourly 10MA. The 10MA on the weekly cycle is currently 16.65, a close above that remains essential to any bearish outlook into early May.

Arguably, the big-short money won't be thrown into the market until we are back under SP'1380. Right now, a 23pt decline in the SP - even across 2-3 days next week, seems like a wistful hope.

More later, on what remains a difficult day for those holding short positions.

12pm update - Frustrating Friday

Today is starting to get real frustrating. Lousy econ-data, the Spanish downgrade to 'semi-dirt', and here we are still holding over SP'1400. Is the Bernanke whacking the giant red 'BUY' button on his desk today?



Not much to add, its time for lunch, and as it is, it doesn't look promising for even moderate sell-side action this afternoon.

Bears need (as I've been saying since early Wednesday) to break below the 10MA, now 1397
All the bulls need is a mere flat close, around 1400, that would suffice, and will almost guarantee that both the weekly and monthly cycles remain broadly bullish as April concludes next Monday.

The most disturbing thing of all, we're now only 20 SP' points away from breaking a new high.

I'm getting real tired of this..again. Sigh.

11am update - Battling it out

Yesterday we arguably saw most of the last short-stop levels taken out. There really can't be that many bears left for the algo-bots to kick out. It sure looks like they are battling it out this morning. The bulls are trying to stay above sp'1400/dow 13k, whilst the bears are desperate to at least close today marginally red. Perhaps we can see more heavier volume as the day progresses.

Whilst the market currently churns with only moderate moves up and down, lets look at the daily cycle outlooks.

SP, daily - bearish outlook

SP' daily - bullish outlook


There is no question about it, right now, the bulls ARE in control, but they are at a level where it could quickly fall to pieces. The bearish H/S chart noted above is pretty interesting, and we'll know soon enough if its just another failed outlook.

The bullish outlook indeed seeks at least a moderately higher high above 1422, although it does not necessarily have to be too much. I see plenty of good chartists out there suggesting sp'1450/60/70 as the peak in the next few weeks.

It remains a tricky situation, at what is a very key battle zone of SP'1400..

For the 'serious money', bears short-stop level would be 1405/10...and the bulls 1395/90.

More later...

10am update - will the pain stop soon?

Well we're off and running. I'm going to focus on IWM a little more today, since that is what I personally often trade in anyway. I've a few new charts to post on the Rus'2000 index as we progress through the day.

Opening action looks somewhat weak, but its certainly not to be trusted right now. We've seen plenty of moderate morning declines that flip positive later in the day. IWM's opening minor move higher quickly became a black candle - often a good warning, and within minutes it has indeed turned impressively red.





A very long day ahead, and bears will clearly be desperate for a close at least 0.5% lower across the main indexes. Considering the GDP data, the Spanish downgrade, and end of week 'I don't want to risk holding across the weekend', you'd think we might actually close red today.

More throughout the day!

Pre-Market Brief - GDP disappointment

Good morning, Q1 GDP data came in at 2.2% compared to the consensus expectation of 2.5%. Market is somewhat disappointed, and the 0.25% gains in futures are back to flat.We have a long day ahead. Considering the Spanish downgrade after hours yesterday, it is again somewhat annoying to see the market still recover all the of overnight losses in the futures.


From a MACD cycle perspective, we sure are due a move lower. Presently we have what is a double-up cycle, I've seen plenty of triple cycles in the past few years, so its still viable we go up later today - even if the morning is somewhat lower.

Considering the weak GDP number, its time for the bears to stop this nonsense up-wave!

Good wishes for Friday trading...we now have just 2 trading days left of April!

WTIC - stair stepping upwards

WTIC (West Texas Intermediate Crude) Oil continues to stair step upwards. All the talk of USA increasing drilling is so far amounting to nothing with respect to lower prices.

WTIC, weekly, 5yr

WTIC, monthly, 20yr, historic


It is amazing to look at the twenty year chart for Oil. There sure have been some crazy swings along the way, but the broad trend remains UP. Aside from those who believe in Abiotic oil 'magically appearing in the Earths Crust', Peak Oil is a serious and critical resource problem for the world in the decades ahead.

Considering that 'everything' is supposedly okay right now, the economy is growing - although not that much, and yet Oil prices are still very much holding over $100.

There is also always the threat of 'an event' in the middle east, and across the years ahead, that does seem likely. Whether it is next month, or in 2020, it really doesn't matter in the scheme of things. What does matter is that Oil prices look set to hit much higher levels in the years ahead.

Looking for a break above $115

From a technical/chart perspective, Oil bulls need to see a few consecutive closes over the May'2011 high of $114.83. If we see WTIC hit $115..and hold over, then a re-test of the 2008 commodity peak high of $147 seems very probable.

Were an 'event' to occur...there seems pretty much an agreed outlook that Oil would jump overnight by many tens of dollars, maybe even a direct gap right over $147...and then quickly to $200+. For the world economy, the consequences of such a price, are of course the stuff of nightmares...and 'doomer' movies.
Goodnight from London

NYSE - very uncertain outlook

The NYSE Composite index, weekly and monthly cycles are at a very critical level. A touch higher, and we'll spiral upward, a touch lower...and we could fall a long way across the summer.

NYSE Comp, weekly

NYSE Comp, monthly - bullish outlook


First, the weekly cycle - which from a cycle perspective, has been falling for some 3 months. We did have a very clear break lower 3 weeks ago, and are presently at the important 10MA of 8100.  A back test of the broken trend line could be as high as 8400 - which would interestingly be a new high, and would match up with SP' 1430/40.

The monthly cycle remains bullish, and despite the past few weeks to the downside, we are very much looking to continue what remains a strong up trend since last October. A break over 8330 on the monthly would be very bullish, and open up a target to as high as 10000 later this year - forming a double top from late 2007 ?

Conversely, a break under 7800 would confirm the recent market weakness, and arguably confirm 'great problems' this summer, something in the region equivalent to SP'1150/00.