Tuesday, 31 July 2012

Volatility holds onto moderate gains

With the indexes closing at their lows of the day, the VIX similarly closed at its high of the day.


VIX'60min



VIX, daily, rainbow



VIX, weekly


Summary

The daily rainbow chart again put in another green candle. With the upper bollinger at 20, that would be the natural first target for bears tomorrow, if the FOMC disappoint.

VIX remains low..there is an awful long way up just to hit the mid 20s - which is traditionally the zone where only 'moderate market declines' take the VIX.

For the bears looking for a major new wave lower, look to see VIX break 21, if we see 21.25/50 at any time, then it could get interesting. Yet, at the same time, I still think any index decline are not to be trusted until we're back under sp'1325.
--
In the bigger picture, I remain looking for VIX 35/40 in August

Closing Brief

The close below the 1380 level should be seen as a tiny victory for the bears, but the hourly charts ALL now have bull flags, and the MACD cycle is fully reset.


IWM



Dow



Sp


Summary

Yes, we closed at the low of the day, but its minor noise, and can't be taken seriously. You can see bull flags (pink) on the hourly cycle charts, we could easily gap out of that at the open tomorrow ,or battle our way to 1395/1400 if the market likes what the fed has to say.

As ever, high risk holding into a Fed day. Urghh

More later

3pm update - Closing hour churn

Well, the 1380 level is holding up pretty well. A close above it looks more likely than not.


sp'60min, rainbow



vix'60min



Summary

Mr Market is merely in a holding pattern until tomorrow, awaiting the results of the FOMC jury. Urghh

* the hourly MACD cycle could easily be flooring at these levels, and as others out there note, a move into the 1390/1400s is viable. Whether that makes for a final wave'5...no idea.

All I am sure of right now, all declines until 1325..not to be taken seriously.

More after the close

2pm update - still relatively quiet

A brief print under 1380 of 1379.80, maybe that was the low of the day. In the bigger picture, its all noise of course. Besides, tomorrow is a fed day, who wants to take new positions ahead of what those crazy printing maniacs might do?

A close under 1380 would be a small prize for the bears, but it sure isn't much considering we were in the 1330s last Tuesday.


Sp'60min, rainbow


sp'daily5


Summary

A flat close, a touch above 1380 looks most likely.

MACD cycle on the daily still cruising higher...doesn't look like we'll get a fourth smaller tower after all.

Q. Whats up with AAPL today? +2.6%, $15 to 610..  algo-bots chasing the momo stocks again?

1pm update - awaiting first break

Mr Market trying to hold the 1380 level, its not looking like it'll hold much longer. VIX still only +3.7%, so the bears can't take any of this seriously..yet.

Bears should clearly be seeking a close <1380.


sp'60min, rainbow



Summary

Any break of 1380 would - in theory, open the door to a move to 1360. Yet, even if that was hit tomorrow, that could just make for a brief retracement before a launch higher.

Only with a close under 1325 can ANY declines be taken seriously.

FB getting some attention today.... -6% @ 21.76..... shame.

12pm update - churning sideways into Fed day

With the econ-data inline, Mr Market is now content to trade sideways for the rest of today. Another doji candle perhaps?

I suppose if Mr Market wants to set a few of the bulls on edge, a close of 1379/77, but that looks kinda unlikely. We've already seen the 1380 level hold well.


sp'60min, rainbow



Summary

quiet day...nothing much to add.

FB declining into the 21s is somewhat amusing though..well on the way to the low teens. I would only considering buying it @ $1.25   Thats not a typo...one dollar....25 cents, then I'll...consider it.



11am update - flat top, daily cycle?

With a few pieces of econ-data coming in slightly better than expected, the marginal declines are erased back to evens. VIX remains a touch higher, but that could easily flip red later today.


sp,daily5


Summary

Nothing much to add right now. Looks like market will flatline for rest of the day.

However, its possible we are developing a multi-day flat on the daily cycle, and as many say 'flat tops..equal market drops'. The stop levels for those taking on new positions are clear... 1392 short-stop....1380..long-side.

10am update - bored already

Somehow the Chicago PMI comes in better at 53.7, so Mr Market is again pleased with everything. Yet, who wants to be going long at these levels?


sp'60min


Summary

Well, seems like Tuesday might be boring after all.

VIX is barely up..and could easily flip red later this morning.

So...its looking like its a waste of time watching this casino until after the FOMC annoucement tomorrow.
--

Notable stock moves.. AAPL +2%..to 605. 
COH, coach (bag maker)..-20%

Pre-Market Brief

Good morning. Well, its Tuesday, and today should be a lot more active than yesterday. We have no less than 6 pieces of econ-data across this morning. Futures are currently marginally higher, sp is +2pts, and is set to open around 1387 - which is still 4pts below yesterdays high.

With all the econ-data we could easily swing +/- 0.5% or so before we finally open.


sp'60min



sp'daily5


Summary

Even though we do have a lot of econ-data, the market will most definitely be focused on the FOMC meeting which begins today - the announcement is tomorrow (2.15pm EST). So there will be more talk on the clown networks about the 'coming QE' and how the Bernanke will prevent the market from losing any of its recent gains.

There is also the ECB on Thursday, and we have another lousy jobs number to look forward to on Friday.

Today is the last trading day of July, which as I noted last night, is without question a disappointing month for the bears. Perhaps today, we can at least close moderately lower.

The critical 1325 level looks an awfully long way down right now for the bears, it sure won't be easy getting down that far.

*look to the Chicago PMI @9.45am to get the market motivated..one way or the other. Considering the wider economy in late Q2, this number could really suck, so it is possible we'll be down 1% by mid-morning.

Good wishes for Tuesday trading!

July - a disappointing month for the bears

With just one trading day left of the month, it has to be said, July was a very disappointing month for the bears. There were many (myself included) who were looking for a move to 1365 and then a swift fail. The target was indeed hit, and we did see a turn back lower, but we've seen subsequent further up waves, each putting in slightly higher highs.

In some ways the strength in July should not be too surprising though. After all, June closed extremely strongly, and we have indeed seen some follow though - although its only 1.7%


sp, monthly


Summary

It does look like July will close at least marginally higher. I suppose if the market can close 10/15pts lower tomorrow (probably wishful thinking), that'd be something for the longer term bearish traders to help in looking forward to August.


As for Tuesday...

We do have some econ-data in the morning, but the market will be firmly fixated on the FOMC meeting which begins tomorrow, with an announcement on Wednesday. I certainly don't expect QE to be announced, but they sure could overtly hint at it, and that might be enough for the market to resume the recent 2 day hyper-ramp.

One thing is for sure, Tuesday will be more dynamic than today was.

Bears need to see a break below sp'1325 (with VIX +21) to have any confidence right now, whilst the bulls merely need to consolidate sideways a little - after last weeks major turn higher.

Goodnight from London

Monday, 30 July 2012

Volatility turning higher

Whilst the indexes closed largely flat, the VIX actually closed up a moderate amount. Sure, the VIX remains at a very low level, but bigger weekly cycle is starting to tick higher again.

Whether bullish or bearish, traders should be mindful of the weekly VIX cycle, which is again starting to turn upward on the MACD cycle.


VIX'60min



VIX, daily, rainbow


Somewhat surprisingly, we did actually get a green candle to close the day on the rainbow chart.


VIX, weekly


Summary

Almost a 8% close higher for the VIX, yet we're still only around 18. Even a further 10% jump will barely get us to 20, and that is barely borderline 'interesting' for the bears.

As noted many times before, look to the VIX weekly as one of the prime early warnings for any major down cycle. For anyone who believes 'big doom down wave' coming soon, now would doubtless be the time to start going long volatility.

A little more later.

Closing Brief

Mr Market had a somewhat flat and dull Monday, largely as expected.

The hourly closing index cycles...


IWM



Dow



Sp


Summary

As expected essentially a flat close. Tuesday will be much more dynamic. A move as deep as the low 1360s is viable

Notable move of the day, VIX +7%. I suppose that is something for the bears, and might be the very early beginning of a major VIX leap over the recent high of 21
--

On what is a sleepy Monday..here is something to close the trading day... (a little..fun from RT TV)


1pm update - afternoon slumber

Market back to churning sideways again. The algo-bots might easily wish a close just a over 1380.


sp'60min



VIX,60min


Even 18.50 looks out of range right now for todays close


Summary

I'm still not expecting anything, a flat close would make for a perfect doji candle..and sets up tomorrow for the first opportunity to see something significant. As noted earlier though, even sp'1360 would be a normal retracement in what is currently a strong up trend.

12pm update - so far..its still noise

A minor cool down after the nonsense of Thursday and Friday. Yet..so far, its all irrelevant noise. Even a move to 1360 would make for just a normal retracement.

Any doomer bear out there needs to see a weekly close <1325 to get justifiably excited, and right now..that provisional sell-signal level is a long way down.


sp'60min, rainbow



sp'daily5


Summary

Bears should seek a close under the hourly 10MA of 1380, even that won't be easy though, since we'll more than likely level out in the next hour or so.
--
No significant down moves to be expected until Tuesday at the very earliest.

11am update - RSI 76..kinda high

The hourly index charts are very high on the RSI. This is obviously not the best of times to be adding to existing long positions.


sp'60min






Summary

Look to the left on the hourly chart..the last time we were above RSI 70...see what happened across the subsequent 5 days - a fall of 50pts from 1375 to 1325.

Tuesday will be the start of more dynamic action. Today...we look set to close flat..look for a nice doji candle on the daily charts!


10am update - is it Tuesday yet?

I'm tired of Monday already, can we just move straight onto Tuesday please? However, it is a good day for anyone who wishes to reposition. Whether adding longs or shorts. A day like today offers everyone a good opportunity to be ready.

We do have a lot of econ-data starting tomorrow, so today is indeed the day to get organised.


sp'60min, rainbow



VIX'60min


Summary

Not much to add. Although a little interesting to see the VIX up - even as the indexes went green too.

Stock of the day so far... SHAW, +55/60%, very poor profitability, but a truck load of cash, and its been bought out.

More later

Pre-Market Brief

Good morning, welcome to another week in crazy market land!

Futures are marginally lower, sp -2pts, we're set to open around 1383 or so. There is no econ-data today, so I'd really not expect any big moves from today. Of course, after two giant up days, there is a much higher probability of at least minor upside, than even a moderate fall by the close.

It does seem like most out there, are agreed - we're due a further slight move higher into the 1390s/1400s. Even those who are still clamouring for a huge wave lower seem agreed on that.


sp'60min


sp'daily5


Summary

First, lets be clear about this...there is no sign of the current up-trend levelling, no sign of ANY turn.

The doomers could hope we are putting in a fourth - and again, smaller tower on the MACD (blue bar histogram). I suppose we might see another rollover later this week, but right now, it remains a distant and arguably weak hope.

Last week opened dramatically lower for the bears...it sure didn't end that way. We have the FOMC on Wednesday. A few are actually looking for QE to be announced this week, I don't think so..not until Thursday Sept' 13th. We have the monthly jobs data on Friday, some are looking for a negative print, clearly the summer of recovery 2012 is continuing.


Thresholds

If there is one thing that I believe is now most important of all. Until we break <1325, any decline is not to be taken seriously. Bears have been teased over and over for the past 2 months since the early June low. Only with a break under 1325 is there a chance of something major occurring. Until then, the broader up trend should be said to be continuing.  For the bulls, sp'1422 is of course key, any move over that, and most of the bears will again throw in the towel - although there really aren't that many left now anyway.

Good wishes for a week that will doubtless end more dynamic than the way it is currently starting.

Saturday, 28 July 2012

Weekend Update - Weekly Index Cycles

After yet another insane week in market land, its a little difficult to know what to add. Much has already been covered elsewhere, and I'm certainly not confident any longer of the much touted 'big wave lower'. Maybe that is a good contrary sign of a capitulation top?

Anyway..here are the weekly index cycles...


IWM (representing the Rus'2000 small cap)


The curious thing about the Rus'2000 index, it has lost its leadership. Its still pretty volatile, but its again lagged the dow/sp this past week. You can see we did put in yet another lower high and a lower low on this index.

For the doomer bears out there, this remains (along with the transports) the index to watch for any signs of renewed weakness in the broader market.


Nasdaq composite



NYSE composite


The master index is approaching the big 8k level. A few closes over this, and bulls can begin a fierce charge to break the ultimate 8718 peak from May 2011.


Dow


The dow'30 saw a 550pt swing this past week, a pretty big move! The two day hyper ramp of Thur/Friday has now taken the dow to the key 13k level, and we're just 270pts or so from the May'1st peak. If QE3 is announced -or even 'overtly hinted' at this coming Wednesday, the dow could break/hold over 13400...and then a challenge to new all time highs IS viable.

For the bears, until we see a break under dow 12400, confidence must surely remain low. The doomer bears should still be targeting 11k in the next down cycle - however the monthly cycle is now outright bullish.


Sp


We're now just 36pts shy of the April 1422 peak. For the bears, the close of 1385 wrecks the monthly bear outlook - its now outright bullish. The weekly cycle is now outright bullish too  Sure, there is divergence on a few aspects, but the trend IS up.

Only with a move under 1325 can the bears start to take any declines seriously.


Transports


A weekly close over 5300 would be extremely bullish. Bears need a close under 4900 to get confident, and a monthly close under 5000 - which now looks somewhat unlikely by this coming Tuesday.


Summary

Without question, this past week ended strongly bullish. Contrary to what a lot of 'them' are saying out there, we have seen the monthly sp and dow turn outright bullish. This trend change is a severe warning to the bears. It could be a brief fake-out, but..if it is, it sure better flip back lower within a week or two.


Thinking the unthinkable   - Dow 13400 & Sp'1423

The near term trend IS up. Lets get that agreed on first of all. We've seen a strong bounce from the early June low of 1266. We're now 120pts above the low. Even more bullish is the fact we keep bouncing strongly whenever we do manage to sell off. Mondays opening decline was very significant (not least with the VIX +26%)..but it failed after just 20 minutes, and we closed Friday 3.5% higher  than those lows.

The bulls ARE in control right now. If I can see it, it bemuses me how so many others out there seem in complete denial.

If QE3 is announced this Wednesday, the indexes will surely break to new highs..and we'll likely push up to sp'1500/1600 by the year end. Now THAT is a viable scenario, even though it is completely contrary to how the economic fundamentals are trending. But then, its not like the market hasn't ignored the 'facts' many times before, is it?


Looking ahead to the next Fed day

So, lets see what the FOMC decide this Wednesday. At the very least we can expect a statement of somewhat 'suggestive' of future QE, and that could easily lead to a continuation of the current up cycle. What should also be a very depressing realisation to the bears is that even if nothing of substance is announced this week, then the market will probably immediately start looking towards the next FOMC of Thursday Sept'13th.

Unless the market can break below sp'1325 & dow 12400, ALL declines are not to be taken seriously.

*for the record, I'm still short, but I sure am not confident of a decent exit in the coming week.

Back on Monday.

Friday, 27 July 2012

Monthly Index Cycles - flipping bullish

Once again, we have a very sick and twisted market, from the Monday opening morning decline of dow -239...to the Friday close of dow +187, which is a huge 550pt swing.

On any basis, a dire end to the week for the bears..and the bulls can now start to dream of sp'1500/1600 by the year end - if they get a big enough QE3 fix within the next 7 weeks.


sp, monthly, rainbow (Elder impulse)


*ignore the projection on the chart. Right now..the trend is back to UP.
--

Summary

The monthly cycle...is now outright bullish. The July trading month still has two days left, but baring a significant turn around (with declines) by the Tuesday close, we will close July..bullish.

Yes, not all the indexes are as bullish as this. The Rus'2000, Transports, NYSE Composite, and the Nasdaq Composite are now back to neutral. Yet, the bullish SP'500 and Dow'30 are hugely important, and they are currently warning of a major trend change to the upside.

Right now..that's all that needs to be said.

Goodnight from London

Closing Brief

For bears..a truly dire end to the week, and an outright horrific letdown after what was a superb opening Monday morning. For the bulls, they can revel in the fact that the central bankers can happy-talk the market to new index highs.

*the monthly cycles have now flipped to outright bullish for the SP'500 and Dow'30. There are still two trading days left of the month, but..its looking like we'll close outright bullish.

Only the Rus'2000 small cap and the Transports are still suggestive of mid-term weakness.

As things are, the entire bearish outlook will need to be thrown out next Tuesday.
---

The closing hourly index charts...


IWM



Dow



SP


Summary

Very little needs to be added. We all know how sick and stupid this is..yet we ARE closing with the weekly cycles at what are now borderline outright bullish.

If we're still at these levels by the Tuesday close..then its all over for the bears, and all those touting sp'1500/1600 by year end..can start to smile.

3pm update - a lousy end to the week

Whilst the sporting (and financial re-hypothecated) capital of the world is preparing to begin the opening ceremony - for which it can't actually afford without more deficit spending, we still have one more hour left of this trading week.

We will doubtless close at a level which is borderline breaking the weekly cycles - since the April rollover.

*As we've seen in the past hour..a lot of big money bear short-stops have already bailed out.


sp'60min



sp'weekly


Summary

Monday morning...seems like so very long ago.
--

A little more after the close.

2pm update - there go all the 1380/85 stops

With the algo-bots managing to push the market just over 1380/81...a truck load of bear short-stops just get triggered, causing a reverse-cascade up. Its turning into something of a horror story to end the week.


sp'60min



sp'daily5


Summary

Its starting to get to bear apocolypse levels now. Way worse than even the deluded bull maniacs could have hoped for. Dow, Sp' new cycle highs. All thats missing is a new cycle low on the VIX, and index highs on the Transports and Rus'2000.

If we are around these levels by next Tuesday, the broader bearish case is...out. With the action as it is, it seems highly unlikely we'll get any kind of reversal until after the next FOMC.

If Bernanke wants sp'1500 pre-election...all he has to do is s small QE3 next Wednesday.

--
A lot of trading accounts are going up in flames today....


1pm update - dow 13000...just great.

Whilst the Sp' is holding still under the 1380 high..the dow is now well above. The consolation is that Rus'2000 and Transports are still well below their 1380 equivalent highs.

VIX is trying to floor, but..nothing definitive yet.


dow'60min



iwm'60min



vix'60min


Summary

Nothing much to add..other than...Gold/Silver are two weak signs for those inflationists/QE3 believers out there.


GLD, daily





More later