Monday 9 April 2012

VIX - volatility coming back?

The VIX had a strong close today, no question about it. After a strong open, with weakness across the day until 3pm, when the VIX flipped higher, almost closing at a new high.

VIX - weekly cycle

The weekly cycle is something I really like to follow, and here we are...its only Monday, and we're on the verge of going MACD +cycle tomorrow.

Certainly, if market fails to hold above the 1360s..then immediate upside in the VIX is around the 30 level.

VIX - bullish market scenario

Assuming the market can hold the 1365/70 level this week, VIX will probably max out somewhere between 20/23, with then a multi-month decline to form a new low by June/July.

Special note...

If we see VIX 25+ at any point, the door is open to a May'2010 flash lower, with a huge VIX spike. We'll surely know in the next few days.

The bulls had better hold this market up, and away from the 1350s..or there is real trouble brewing - again, I'd reference the NYSE weekly, and the Transports monthly.

Closing Brief

Well, that was a pretty ugly closing hour for those on the long side.

A classic fail at the 10MA on the hourly., ending with bear flags on the indexes, and a bull flag on the VIX.


IWM 60min

VIX 60min



The bulls had a chance to get a ramp in the closing hour, with a close over the important hourly 10MA.... they FAILED. It looks like we'll now get a move down to sp'1375/70 early Tuesday. Maybe we'll floor there, but it could just as easily keep going.

More later in the evening.

2pm - pre' close Update

The 60min down cycle is indeed complete, and we're seeing the bounce.

The critical issue is how do we close? Do we fail (again) at the 10MA, and collapse for a further wave Tue/Wed to sp'1375/65 ?

The style in which we close today will be a real clue.

Sp' 60min

Taking into account the daily and weekly cycles..its VERY difficult to call this one.
Daily cycle is low, so I'd be inclined to say we'll be sp'1405/10 by Friday - not least if good earnings
Weekly cycle says 1350 is very possible either later this week, or early next.
My best guess...'UP', but then..I'm heavily biased. Anyone with 'serious money' should sure as hell be using stops on any new long position. Bears should have bailed at 10am.

Good wishes...more after the close.

Something for the doomsters

Hmm, it is a very mixed and conflicted situation today. Near term, I'm still looking for a little bounce. Here is something for the doomster bears to dwell on..and feel excited about.

NYSE composite, weekly

This is the second most bearish chart I have in my collection (I will probably throw the other one out there after the close).

The weekly MACD momentum cycle will go negative cycle NEXT week, unless, we get a significant bounce, probably to the equivalent of at least 1400 by this Friday close. Sp'1400 by end week looks pretty difficult, not least if Tue/Wed takes us to 1375/65.

So...the bears do have a very bearish piece of evidence to support their outlook - and that would be at least in the 1300/1250 kinda range. A few traders I follow would doubtless suggest sp'1150 (which is the base of the monthly ascending wedge - which I post enough of).

If the above chart was the only one I was following, then today it tells me that...
1. there is more downside to come
2. The down moves will accelerate next week, and 'probably' last at least 3-6 weeks) - see previous down cycles lengths.

Anyway, its just something to consider, whilst the 60min cycles are saying 'BUY, at least for a little bounce'

11am Update

Two charts that should scare EVERY bear out there

VIX, daily

VIX black-doom candle warning of a top - and conversely a floor in the indexes. A move back to the low 17s late Monday/early Tuesday now seems very viable.

JPM, daily (earnings this Friday)

JPM I highlighted at the weekend, and it has found support at the target level. 'If' (and it sure is a BIG if) this is as low as JPM hits this week, then to me, it'd suggest the market might easily be back above 1400 by the close of this week. Just look at the daily MACD cycle for JPM, it is way low, it is due an up cycle.

I can just imagine the horror of the bears, if AA earnings please the market tonight, and JPM (along with WFC) start kicking the financials upward on Friday.

Back later in the day, I need to consume a large amount of chocolate, and watch Game of Thrones (it makes for a nice alternative/break from watching the market).

10am Update

okay, just a few quick charts to throw out there!


IWM 60min


I actually under-estimated the weekly cycle, the 10MA still went higher at the open 1379/80. That's one good support for this morning. Other indexes broadly look the same.

The hourly cycles, look pretty low, we'll surely trundle up a bit from these levels. The only issue is how far.

Considering 'everything' else, a further wave lower for Tue/Wed still looks very viable.

For those that use stops, this is simple. buy the morning low....sell into whatever level of bounce we have later in the day.

Anyone short should have bailed by now, they could always re-short later in the day, if they still believe 1375/65 is going to hit.
More later in the day.

The 10MA on the weekly - Important!

Good morning all. Just a few brief notes/reminder on something to begin the day.

The 10MA on the weekly is something I believe will be very important. At today's open, it'll probably open around 1374/72.

Theories and Guesses everywhere!

I've read across all the usual blogs/sites, and the lowest targets I'm seeing are the low 1360s.

Consider the SP' weekly...

Arguably, that October lower channel line is a real last line in the sand for the overall bullish case. If we see 1340s..- at any point, then its all over for the bulls this Spring.

Considering the words of 'wisdom' of many pro traders/posters out there, I'd say that anything in the 1350s is probably too low, and would wreck the bullish outlook.

As someone who is presently long from sp'1398 (yeah, go figure that, with a name like mine), what I don't wish to see is anything under 1370. I will get VERY concerned if we break into the 1360s.


Sp is -17, Dow -138,  IWM is 80.11 (the worse hit usual), so we've already broken the secondary inv. H/S level of 81, all that's left is 80.00. A break of 80.00...without question opens the door to 78.

So, SP' 1375/65, with IWM 78.00, by Tue/Wed? Is that the place where the algo-bots will buy this up.and then crawl it up into opex? I aim to post some intra-day updates, so come back soon!

Good wishes for Monday trading.  

Gold - on the cliff edge

Near term prospects for Gold are showing distinct weakness, and its entirely possible we'll cycle all the way down to a 'mere' $1200 later this year.

Lets look at the near term outlook

GLD, weekly, 2yr

From the above chart, you can clearly see the long term 4 year trend remains intact..just. Yet clearly, we're on the edge of a major channel break. Arguably, a move below $1550, would likely mean Gold has a real chance of reaching as low as $1200 later this year. The other two support levels would likely only be reached in a severe deflationary scenario - and right now, that seems near impossible considering the continued QE/money printing from the central banks

Gold, monthly, 20yr historic

The long term trend for Gold remains truly amazing. Even a drop to the $1200 level - as noted in the first chart, would NOT violate the long term channel that Gold is in. Its a pretty remarkable decade long bull run, and currently...unless we break $1200, the outlook is still very positive.

Good wishes