Volatility makes the key turn?

Whilst the indexes closed broadly flat, the VIX managed to hold onto moderate gains across the day, closing 5.4% higher to settle @ 15.87


VIX'60min

VIX'daily

VIX'weekly

Summary

If I'm right about the indexes, then the VIX should show some follow through to the upside early next week.

First target is 17/18, and then once again, it'll be yet another attempt to break 20, which we've not seen since late July.

Indeed, a key sign of 'index trouble' will be if we see VIX break into the 20s. That is absolutely something that will be necessary to see, if the indexes are going to break below the recent sp'1343 low.

More later.

Closing Brief

A choppy day to end a V-shaped trading month, where we saw the indexes cycle from the 1430s to 1343, and back into the high 1410s. Frankly, its gone almost exactly as I had expected. What will be more 'interesting' is whether I'm also right about what comes next.


Dow'60min

Sp

Trans

Summary

*It would seem - according to clown network, there was a 3.5bn Morgan Stanley buy order, hence the closing hour ramp.
--

Well, that's November trading complete.

A slightly disappointing end to the day, with the transports failing to break the lower channel.

However, despite the mini-ramp, NONE of the indexes broke above yesterday mornings peak, so..the overall outlook remains on track.

--
*the usual daily bits and pieces across the evening.
There will be a weekend posting, late Saturday, probably on the Monthly US index charts.

Have a good weekend

3pm update - last trading hour of the month

In chartists land, this is the most important hour of the trading month. Will the monthly charts continue to flag provisional warning signs of trouble? So far, it looks like they just about will.


sp'60min

trans'60min

Summary

We have a nice bearish candle on the tranny this hour...its all setting up very nicely.

Seeking closing hour weakness.

A close <1410 would be a real bonus.

VIX holding to moderate 6% gains.
--

UPDATE 3.20pm, tranny bouncing off the lower channel. Hmm. I'd still really want to see a close <5100

2pm update - micro-rallies being sold into

Mr Market is still showing a little residual strength from the wave'2 bounce, yet..every micro-rally is being sold into..it would appear. Certainly, the weakness is very minor, but it is important, and today would make for a very nice turn day. Monday would be important to see confirmation, preferably <sp'1400.


sp'60min

trans'60min

Summary

Its somewhat quiet out there, but the weakness is there, and I'd not be surprised to see a break <1410 before the close. Two hours is plenty of time to see that develop.
--

*Metals are weak...just look at gold on the weekly chart, a clear bear flag...to be shorted into... obvious target is GLD 158, some $80 lower

The Gold bugs are gonna be real mad next week.

UPDATE 2.30pm . Transports showing what might be a micro-wave'2 bear flag on the hourly.

If it is, should be seeking a re-break <5100, quite possibly before the close of today.

1pm update - selling into the weekend?

Still three hours left of the trading month, and I hold to the original outlook that on balance, we'll see some of the bull manaics get twitchy...and sell into the weekend. After all, just who exactly wants to be buying long into next week?

It is notable that many of the daily index charts are now showing clear signs of levelling out, but it'll take until middle of next week to see a conclusive rollover.

*Boehner speaks...and none of his words are pleasing the algo-bots. Selling resumes.


sp'60min

dow'60min

Summary

I've highlighted two key levels on the above hourly charts.

Bears next week should be seeking breaks below sp'1385, and dow'12750 (approx).
--

VIX is holding onto the moderate 6% gains.
-

12pm update - weakness..as expected

We're seeing some fairly broad weakness so far today. Even the VIX is showing some strength. A close <sp'1410 would be useful for the bears.


sp'daily5

vix;daily

Summary

Everything is looking on track.

*The VIX daily cycle is due to + MACD cycle next Tue/Wed, so bears should be looking for the first big down move in the indexes (below sp'1385 ?) around then.

The following chart will be important for the next down cycle...

Most important of all, a break under the recent sp'1343 low will be the last warning the bull maniacs get.
-

11am update - eyes on the transports

The old leader - the transports is still leading, and warning of trouble. A break <5080 would be a key break of near term up trend, and open up 5000 by late early Monday. VIX is starting to show some power.


trans'60min

VIX'60min

Summary

We are seeing a little weakness, and despite the attempt at breaking new highs, the market has failed.

VIX is on the move, although I'd have to see a 10% move to consider is anything than 'noise'
-

So, I will keep my eyes on the old leader, a break <5080 would be significant, and would suggest the sp' will be  trading <1400 'soon'.
 --

UPDATE 11.25am We're seeing good weakness in the old leader. The first warning might be triggered within next hour or two.

10am update - morning weakness

Well, we're off and running for the last day of the month. Minor opening chop, and there is the smell of weakness in the air. A move <1409 would be quite interesting, and open the door to sub 1400s.

*Chicago PMI: 50.4, not in recessionary territory, but its still 'weak'.


sp'60min

sp'daily5

Summary

I still argue the bears merely need today to close flat. That would be an acceptable set up for early December.

A close <1405 would be a real bonus though.

*Look at the daily MACD (blue bar histogram) cycle, we're VERY close to rolling over, and after 9 days UP - since the 1343 low, we're due down cycle - one that will exceed the recent spike-low of 1385.
--

A long day ahead, lets see how many of the bull maniacs decide to jump ship ahead of the weekend.

UPDATE... take a look at the hourly VIX. Thats pretty bearish for the indexes as the day proceeds

UPDATE 10.30 Look to the tranny, a break <5080 would be the FIRST warning that my general outlook is correct. If that occurs, should see the sp<1400 late today or Monday.

Pre-Market Brief

Good morning. Its the last trading day of the week and the month. How we close today will be important in many respects, not least from a chartists perspective. Futures are showing slight gains, sp +2pts, we're set to open around 1418, a mere 2pts from yesterday mornings peak.


sp'60min

sp'daily5

Summary

Indeed, an important day is ahead.

As someone who is generally more focused on the bigger trends, as I noted in my overnight post, what is VERY important for the bears today, is to see the indexes close the day flat...or preferably a little lower. That would ensure at least the monthly cycles remain with provisional warnings of trouble for December.
--

One good aspect that IS already the case for the bears is that the hourly cycles are all primed for a considerable down cycle now.

I suppose we could still hit the 50 day MA this morning @ 1422...and see a reversal from there.  However, I absolutely do not want to see a daily close >1425, or worse 1430. That would be a major problem.

*we have two pieces of econ-data today.

Personal income/outlays, important for the macro-economists out there.

However, much more important to the market..Chicago PMI @ 9.45am. Market is expecting 50.3
So, bears should be seeking anything under the recessionary threshold of 50.0  Any reading <48, and Mr Market will likely use it as an excuse to sell off, testing the sp'1400 level again.
-

back at 10am

Another trading month to conclude

We have just one trading day left of the month, and how we close tomorrow will probably provide some key technical clues as to where we are headed next month, and into early 2013. Bears should be seeking at least a flat Friday, or preferably <sp'1410. A close under sp'1400 would be massively bearish for next week.


sp'monthly3, rainbow

sp'daily4 - original bearish outlook

VIX, weekly, 6yr, rainbow

Summary

Tomorrow is the end of what has been a pretty busy week, and also the end of the trading month.

The daily'4 chart - remains on track, and effectively, my outlook is that we are in back test mode - against the (now broken) Oct'2011 rising support. If I'm right, we shouldn't be putting in any daily closes >1430, and in fact, we should see a pretty strong reversal within the next day or two.


VIX - tight...and ready to explode.

Here is a new chart, rainbow VIX, spanning the past six years. The point I'd like to highlight is the super tight bollinger trading bands. We've not seen bands this tight since spring 2007. Usually - as is widely recognised, when the bands get tight, eventually there is a snap move.

With the VIX in the lowly 15s, I can only imagine that any 'snap'..will be to the upside. The only issue is 'when'.


Monthly closings

One particular aspect that I will be focusing on tomorrow is how the monthly charts will be closing, not least my infamous 'rainbow' (Elder Impulse) charts.

As things stand, despite yet another higher close, the Sp' monthly is still sporting a blue candle. Now, it was red earlier this month - when we were in the mid 1300s, but a blue candle is still an important provisional warning of trouble.

At the very least tomorrow, I will want to see the indexes close flat, or preferably, at least a little lower. A close <sp'1400 would be an absolutely superb way to end the month. I can't wait to find out!

Goodnight from London

Daily Index Cycle update

The main market closed higher by around 0.5%. However, once again, the Rus'2000, and the Transports were leading, closing around 1% and 0.6% respectively higher. The near term trend remains to the upside, although any break <sp'1400 would cause serious technical damage, and open the door to a major wave lower.


IWM (Rus'2000 small cap)

SP'daily5

Trans

Summary

So, the SP' has not hit the 50 day MA @ 1422, nor the 61% fib @ 1425. Its thus possible we'll do that tomorrow, if so, I can live with being short a day early.

As things are, I think we're close to being maxed out. Certainly, the hourly cycles (see earlier post) are all primed to rollover this Friday, and continue lower into Monday.
--

Indeed, it was quite an interesting and exciting day, where after almost two weeks of waiting, I finally hit some trading buttons. I'm now heavy short, and seeking my first exit around sp'1400/1395 within the next 1-3 trading days.





Lets see how many of the deluded bull maniacs wish to hold across the weekend. I think we'll see some 'protective selling' tomorrow, not least since its the end of the trading month.

A little more later

Volatility lower..yet again

With the indexes closing higher, the VIX slipped again, closing lower by 2.9%, to settle @ 15.06. On any basis we're surely close to seeing a multi-day up cycle in the VIX, and there will then again be the issue of whether we can see a break through the concrete wall that is the VIX 20 threshold


VIX'60min

VIX'daily

Summary

At some point we're going to see some really large up moves in the VIX. It might be next week, but it might not be until next year. It really is difficult to say.

What is clear though, the VIX is at a VERY low level, and thus options (especially front month, and out to Jan/Feb) are relatively cheap.

If there is a 'surprise' upset - especially if its related to lack of resolution of the fiscal cliff, then the VIX is going to see a number of 20, even 30% up days. Although as noted a few times recently, even a 30% VIX move wouldn't quite get us to VIX 20!

More later...on the indexes.

Closing Brief

The market again closed higher, although a little below the morning highs. The weakness in the closing hour was nothing significant, but everything is now set up for the next down cycle across Friday, and into early next week.


Dow'60min

Sp'60min

Trans'60min

Summary

Despite the choppy closing hour, everything is set up for some degree of down cycle tomorrow, and that may last into early next week.

What is critical to realise is that a break of the sp'1400 level would break the current up trend from the sp'1343 low.

All those bears who have been shorting today - and indeed across the past few days, only need to see a move back <1400 for some major downside action to occur.
--

So, I will hold short into tomorrow, and look to be short across (at least) the first half of December. As ever though, there will up cycles to avoid, regardless of whether I'm right about the broader (much anticipated) down trend.

The usual bits and pieces across the evening.

3pm update - closing hour weakness?

It still looks like we're in a levelling out phase, as best seen on the hourly index charts. So long as we don't break new highs >1420 in the closing hour, bears who were shorting into today's rally should be okay.


sp'60min

sp'daily5

Summary

It will always be a tricky market, and we could still break to new highs by the close, but on balance, I'm guessing no.

The hourly MACD (blue bar histogram) cycle is unquestionably on the upper side, and thus the next move should be to the downside.

*FB broke 27, so a lot of the 'big money' has just been stopped out, hence the rapid 4% rise in the last few hours.  Still a lot of hysteria surrounds that company.

UPDATE 3.25pm Transports - which has been my 'clean wave' guide for the last few weeks, showing weakness, a snap lower into the close very possible. Bears have a real chance of a major gap lower at the Friday lower, where I'm seeking any weakness enhanced by PMI data at 9.45am.

Trans'60min

back after the close

2pm update - afternoon chop

The market remains in a choppy phase after the earlier political chatter. It remains entirely possible that the wave'2 bounce is now complete, and we'll see some weakness into the close. The 50 MA @ 1423 will pose significant resistance, if we somehow see a short-stop cascade >1420


sp'60min

VIX'60min

Summary

So..we're hovering close to the early morning highs, where now?

Well, the bulls are no doubt seeking a close >1420, on hopes that the politicians will come to an agreement within short order.

The bears should be seeking a close within the next few days, back <1400.

VIX remains subdued, but so far, despite the index gains, its not broken below the Nov'21 lows.

With two hours to go, lets see who can take command into the close.

UPDATE 2.30pm Tranny is stuck under the morning spike high.

I'd really like to see things start to tick lower from these levels. If I'm wrong, I can live with it, but at least I'm short with VIX cycle low, and indexes on the upper side.

Trans'60min

Perhaps we're looking at some kind of micro double-top today.

1pm update - What is best in life?

The market is getting moody, after the US politicians are again seen as nothing less than squabbling little children. A few more days of this, and the mainstream consensus may shift to realising no agreement will be made this side of Christmas. If that is the case, we'll be quickly back <1400.

 

sp'60min

sp'daily5

Summary

Bears need to break the rising hourly 10MA @ 1407/08.

A close of 1405/00 would be preferred, but so long as don't break >1420, I'm very content with how things have turned out.

I remain short, and seeking my first exit either tomorrow or Monday, somewhere around 1400, or under.

What would be best in life..a Monday collapse into the sp'1200s. I can dream, right?

back at 2pm

12pm update - waiting for a rollover

The hourly cycles are very close to rolling over, and we might see strong confirmation by the close. Red indexes are viable in the late afternoon.


sp'60min

trans'60min

Summary

Kinda tired, its been a busy few days. Now its just a case of waiting.

*I am now also short the overhyped and overvalued FB from 26.50. Seeking $20 within 3-6 weeks.

time for lunch :)
--

UPDATE 12.30pm  With the politicians talking again, Mr Market is all over the place.

updated 60min chart, with possible new down channel.

I'd like a close today 1405/00. I certainly don't want any breaks >1420, but I can sustain that..if necessary. I am pretty confident of the overall outlook. So long as we don't break and hold the 1440s, should be good.

What is important to recognise, a daily close <1400, would be significant, and probably confirm that wave'2 is complete.