sp'daily5b - scenarios
sp'daily4 - original bearish outlook
Summary
Today's intra-day action is the sort of nonsense that can understandably drive most traders insane, and I have to admit, I still find these brief..but fierce ramps, really annoying.
Yet, such ramps are to be expected, even if the general market is trading lower. In fact, as many recognise, the biggest ramps are during major market declines. Just look at the daily charts from 2008, endless hyper-ramps of 2, 3, even 5%...on a random, but pretty frequent basis.
I'm still holding to my original outlook, which is broadly seeking the low sp'1200s. This may occur in a very crashy (May 2010) manner, or more likely drag out into January. At the very minimum, a test of the June 1266 low seems a given, and I don't think that will hold for too long.
Bears need VIX to explode
VIX, weekly
If we're going to take out the recent sp'1343 low, bears will surely need to see the VIX break >20, and then spike higher into at least the low 30s. If my index target of low 1200s is correct, I would be surprised if the VIX doesn't briefly try to break 40.
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Bonus charts - the Dollar
USD, daily
The dollar finally managed to put in a positive close today. The daily MACD (blue bar histogram) cycle is just starting to tick higher, but its still very negative momentum.
Index bears need to see USD back above 81, and make a break into the 82s. The monthly rainbow chart is actually sporting a red candle right now, but that could easily flip to green, if USD battles higher into the 81s.
USD 84/85 seems viable in early 2013, which would put serious downside pressure on both equities and commodities - especially the metals and Oil.
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The target levels are clear, lets see what Thursday brings.
Goodnight from London