Wednesday 4 April 2012

Weekly Cycle Update

Weekly cycles are still generally positive, but some indexes are getting a little close to the cliff edge.


Right now - especially when you take into account the 60min cycle, SP'1380 would be acceptable as the lowest level, before the general bull trend/outlook gets into trouble.


Clearly, IWM is right on the edge. Also, the momentum cycle is starting to get kinda close to the 0 line - along with the sto' <80. Pretty weak.

As noted yesterday, bulls MUST see IWM break above the 86 level within a few weeks, in order to confirm that sp'1550 will be attained in the next few months.

A break below 81 - whether Thursday  - or next Monday would be a real threat to the bull case, and a move under 80.00...would arguably be the first real warning to the bulls that the rally since last October is coming to an end.

Closing Summary was not exactly the most exciting end to the day, lets look at those hourly cycles...


SP' already making a challenge to get back above the important 10MA. The MACD cycle looks like it has floored - and certainly the price action put in a good 5 hour floor today. However, even if we open up moderately positive Thursday, its likely going to take 3-5 hours just to get back to + cycle.


The Rus'2000 index is still weaker than just about all other indexes, but even this did put in some attempt of a bounce. Most bearish case would be some kinda overnight upset/bad Friday jobs data, and see this drop to around 80.00 by late Monday. The monthly cycle would strongly argue against that though, and the VIX is already looking maxed out.


VIX already on the decline, although it did put in a higher high today. Can the VIX hold positive cycle tomorrow, and break into the 18s?

Thursday (end of the trading week!) 

The bulls don't necessarily need a strong Thursday. Even a flat day -whilst the cycles reset (especially the hourly) would be okay.

Best bull case:
SP +7/10pts, by late morning - before some highly probable retracement/re-test of the 1400/05 level.
IWM to around 82.50/75.  The 83.00/ gap-fill levels seems kinda unlikely though.

*I am holding long - via IWM calls overnight. I'm prepared to hold into next week if tomorrow is largely flat.

If we open up (for whatever reason) strongly I'd look to sell into the open, and re-long later in the day at the base of the next 15min cycle sometime between 11am-2pm. I am still guessing the Friday jobs data will lead to the next major move up in the market.

More...somewhat later...

Time for Lunch

Sp'60min - a count idea.

Looking for a move to 1405 at least within a few hours.

However, we might get stuck there, and rollover into the close, with a low tomorrow around 1390/85.

I don't see much chance of anything lower than that. As a few have noted, probably will just recycle back upward next week -as all the daily and monthly cycles suggest.

So, I look to bail at least over 1405 later, and re-long tomorrow at lower levels.

More later :)

11am update

*I guess I'm in the mood to post a lot these past few days!

I'm guessing we have floored, at least for a few hours.


*I am long from IWM 81.79. It should be okay for at least a bounce to the 10MA - which is of course falling quite rapidly..
target, by end day : 82.50/75


Sp' still stronger than IWM.
From a cycle perspective, we're pretty much exhausted, at least for a few hours.

I will exit longs, if we can get a good enough bounce. 82.50 would be a worthwhile exit, and come back tomorrow. maybe for an even better entry lower down, before the Friday jobs data.
good wishes..for what is..quite an interesting day.

10am update

good morning

Everything on track...


iwm 60min

I'm a buyer once i see some price stability, and the MACD cycle level out.

That might take a few more hours.

There is no hurry.

*Bears going heavy short, and getting hysterically excited about a 'big move lower', are likely going to get their arms ripped off.

Metals..still under relentless attack

Both Gold and Silver suffered after Tuesdays FOMC press release

GLD monthly, 2yr outlook

A break under $1550 should open up $1200 later this year. I admit its a very bold outlook, - and it assumes massive $ strength later in the year - primarily due to renewed EU concerns and general 'flight to safety'.

SLV, monthly, 2yr outlook

Silver already below what I'd argue was the important 10MA line to hold over. First target remains $25, and I'm guessing that won't hold either.

The deflationary view

The precious metals will continue to weaken if the economic weakness/deflationary outlook is correct. Despite a lot of further QE3 talk, metals are still weak. Can you imagine how the metals would react if the Bernanke officially announced 'no more QE for the foreseeable future?'.

Long term, metals remain the ultimate 'physical' holdings, but near term...the trend lower looks set to continue.

Good wishes.... (and keep stacking)

No Fear

There is no fear in this market. None. I suppose some would say that is the sign of a market top, but hey...the 'no fear' stage can last we've already seen a number of times in the last 3 years.

Despite today's afternoon market decline, the VIX closed barely up.

VIX, rainbow chart, daily, near term

Baring a major move lower, it does not look like VIX is going to go much above 17.or 18 by Thursday. By then of course the cycle will arguably be complete, and that sets up for another wave lower for the VIX starting next Monday.

VIX weekly - momentum still crawling back up

A lot of posters out there do point out the giant wedge that the VIX is displaying, but still...the 'floor' could last many months..easily into the June/July period which is where my index highs (SP'1550) would be.

Until VIX breaks above 20...any moves are unreliable, and to be treated as minor..and completely irrelevant noise.