Friday, 13 April 2012

Friday Wrap - Daily Cycles

A pretty bearish end to the week. Lets take a look at the two outlooks which I noted just a few days ago. There are infinite possibilities of course in this crazy market, but I think the following two broad outlooks are still useful to consider, and can help provoke a few thoughts from both a bearish and bullish viewpoint.

Sp' - bullish outlook

From a cycle point of view, we've already floored, but of course we can remain low for days or even weeks. A break under 1340 arguably wrecks ALL bullish outlooks in the near and mid term. Bulls really need to see a new high sp'1422> preferably before the month ends - that would flip the weekly and monthly cycles back to a bullish trend.

VIX - bullish (market) outlook

My original VIX target of 24 (which seems to have often been a VIX cycle peak in the last few years), is still some 4% pts away, but that could be attained within just 2 or 3 days.

Right now, the bulls will not want to see VIX break a new high on Monday...a move over 21.00 would open the door to an almost immediate jump to 24- which would certainly equate to Sp'1340.

The Bearish market outlook

SP' bearish scenario

This is arguably a 'doomer' chart, it targets 1270/50 sometime this May, although the possibility - especially if European Bond spreads start to spike, would be a move to 1150, but that would probably take a bit longer..maybe June/July (much like the action in summer 2010).

VIX, daily, bearish market

Perhaps the most scary thing for the bulls right now was to see the VIX hold the 10MA on the daily yesterday. With today's significant up move, there is now the real threat of putting in a new VIX high on Mon/Tuesday.

I would still guess that if VIX hits the 24 zone, we'd see some kind of brief pullback, before the VIX explodes into the 40s.

Time for the weekend

That's probably it from me for today. We've seen some pretty dynamic market days this week, I think many will need this weekend to recover. However, there will be more from me over the weekend, especially highlighting the weekly/monthly cycles.


Closing Brief - the week ends WEAK

A pretty bearish closing hour (the bears seem very good at doing that lately), lets take just a quick look at how the hourly cycle charts closed.


Suffice to say, the blue count should probably be discarded now. Unless we can somehow gap up strongly on Monday (for whatever excuse), the bulls are again in real trouble. If blue'3 is in fact the top of minor'2 UP, then we're now in the early part of 3' down, which would probably take us to 1340.


VIX punched back higher in the late afternoon. VIX is now primed for further gains on Monday, either that, or its a huge trap for the bears.

More later..on the daily cycles

Lunch time Update

We've seen a pretty reasonable Friday morning washout. All the weak bulls were kicked out, and a new group of bears sucked in - hoping to chase it lower into next week.

I still believe -primarily based on the daily cycles, we are headed UP. Primary target remains 1395/1405...probably no later than next Wednesday.


The blue count is just one of many valid ideas out there. If we are getting one final 'large wave'5' UP, then such a wave would perhaps be comprised of 5, 3, 5, something like that.

See the following chart, for a reminder on what a bullish weekly outlook might be.

IWM, weekly - bullish count

Anyway, as noted, I am Long. No gain.

*There is still a slight possibility we close positive today, but the depth of the morning pull back was more than I had thought.

More later...probably after the close.

10am Update

Good morning

A little initial sell off, to be expected after 2 pretty strong up days. I'd guess we cycle back up later in the day, and its easily possible we close minor green, maybe 0.25/0.35% up.



*I am adding to Long positions at this time.

More later :)

Closing the week on a high?

Good morning

Considering the very moody and red start to the week, the Dow is a mere 74pts from closing the week net positive. However, even if we close a touch lower today, or up somewhat shy of a 74pt gain, we have certainly seen a very strong bounce from the earlier low.

Dow, weekly, 2yr

Looking ahead

Clearly, the bulls will want to see the Dow break to new highs, and from a technical aspect, I believe its important this is done within 2 weeks, or it won't likely be possible in the mid (3-6mth) term.

Can the dow break 13300 by end April? Its a mere 314pts away..and we're seen that kinda bounce in the last 2 days alone. Things could get truly horrific for those who steadfastly hold short positions into next week and beyond.

Good wishes for Friday trading.

Euro/Dollar Currency Update

Just a quick look at the Euro and Dollar charts.

First, lets look at the wondrous and fundamentally sound European currency.....

Euro, weekly, 5yr

The Euro has been surprisingly strong lately. Many analysis still have targets ranging from 1.25/1.15 by year end. Now that the Greek crisis is solved (yeah, as if they won't need a third bailout, lol), the Euro is gaining some strength.

Targets ? If Euro can break above 1.34/35, then we have a real chance at something very surprising occurring. The most bullish case would obviously be a challenge to the upper descending channel at the 1.45 level. Right now, to many, that would seem an impossibility.

Euro, daily, near term

Near term, we have the Euro due to cycle up, and look set to again test the 1.34 level. A break over the 200 day MA at 1.3578 would get a lot of media/analysts attention.

Dollar, mid term bullish count

The above chart count is just a wild speculation, based on the notion of one further wave of weakness - with Euro strength in early summer, before a pretty severe trend change, with strong dollar strength into the winter.Conversely, a break over 81.00 would violate this count.

Regardless, any further dollar strength would put downward pressure on both the commodity and equity markets.