Lets take a quick overview of where we are...
sp'60min
sp'daily5
VIX'daily
Summary
The smaller 15/60min' cycles on all the indexes are fully reset, and are arguably exhausted on the bullish side. The previous FOUR trading days saw many attempts by the bulls to rally, but all such moves have failed to hold.
The daily cycle is absolutely clear, the bears need a break under the Sept'3rd low of 1397.Bulls need a close in the mid 1430s, which would open a challenge of the QE3 spike high of 1474.
The VIX daily sure looks like a bull flag, with a very natural target of 20/21. Only if the indexes break secondary rising support @ 1375, can I see any hope of the more exciting secondary target zone of VIX 24/26.
Turn the machines back on!
It will be good to have everything up and running tomorrow, but for those bears looking for a significant red close, it will probably be a disappointing day.
We are due econ-data in the morning - Chicago PMI. Market is expecting 51.0 against a previous 49.7. So, anything still sub'50 would count as a real disappointment. All those who believe the US will slip into recession in either Q4, or early 2013 are going to need to see a PMI <50.
A few other issues to consider.
Yes, volume will be lighter in some respects due to some institutions being offline still, but it is the end of the month, and so there will surely be some counter aspect to seeing at least some trading activity as some square off their trading books.
Doubtless the cheer leading maniacs on the clown networks of CNBC and Bloomberg will be jumping up and down with their pom poms at 9.30am. On this occasion, I think I will almost be able to tolerate their exuberance.
Lets turn those machines back on!
Goodnight from London