Tuesday, 17 April 2012

VIX - both sides of the story

The decline in the VIX is kinda ironic considering that the market is seemingly becoming more volatile in its daily percentage moves in the past few days.

Lets look at two of the broad near term alternatives, as well as the important weekly..and a standard rainbow chart too.

VIX, daily, Bullish market

VIX, daily, Bearish market

VIX, daily, rainbow

VIX, weekly


VIX looks set to hit 24 within the next week, before some kind of pullback. Whether that pull back is just a little..or last some weeks - even a few months (during the facebook IPO?)..we'll just have to see.

What matters I believe is that for the moment, the weekly VIX cycle remains Bullish, the upper bol' easily allows 24..which considering we're currently in the 18s would make for quite a nice move.

Closing Brief

Today was very interesting to watch and be part of. The movement in AAPL alone was enough to merit keeping an eye on things. So far at least, the big bear flag on the Sp' hourly is intact, and if this is a wave'2 up, then we have a really good wave'3 down to come starting within the next few days.

The first 5 waves down took 5 full trading days to complete, so..maybe sp'1340 by the end of next week?





Holding to original targets/outlook, looking to short tomorrow, early part of Wednesday - at the next peak of the 15 min cycle.

*However, if somehow we magically break above 1407/10..I might hold off, and reassess.

More later...dealing with the VIX, and the Index daily cycles

2pm Update - in the zone

The bear flag is still intact..only a move over 1410/15 in the days ahead will violate the initial wave'1 lower theory - if that's what it was.


Everything is on track, we're now in the target zone. Since I was looking for a 2 day C'wave, - and this is only day'1...I will most certainly wait until tomorrow.

I will look to wait until Wednesday morning - at the earliest, to initiate short positions.

More after the close!

12pm Update

So the maniacs have indeed got what appears like a C wave upwards. Most of the short term bears have been getting kicked out and covering, hence what appears a strong up move..is really not soundly based.


Sp' trending up very consistently, although the 60min cycle is starting to look toppy. I'd guess we form a baby bull flag across the rest of the day, which sets up tomorrow for one final mini jump higher.

*see pink line...8pts from base of wave'1 to base of wave'B...
add 8pts to recent 1388 high.....   1396 peak?

Its just something to consider for tomorrow.


I would refer you back to the VIX weekly - posted recently, where its important that VIX does not fall below the 10MA - currently 16.84 (will probably be 16.75/50 tomorrow)

Looking ahead to the closing hour

As noted earlier, Bulls will want a close over the 10MA, preferably 1382+. Right now, that seems pretty reasonable target to expect. That opens up a further 8/12pts tomorrow..getting us right to the target zone.

I intend to whack the Short button tomorrow morning, once we level out on the 15min cycle..anywhere over 1395 is a valid place in my view. 1405 would be much better of course.

Special note.
see Pebble's latest posting...http://pebblewriter.blogspot.com/

Pebble seems to be going with the same outlook as me. I've no idea how far down Pebble's target is, but I'd guess its at least 1340 !

Time to cook...more later..probably at 2pm

10am Update

Hmm, so with reasonable earnings from the wriggly Squid (GS, as if you don't know), the market is again attempting another break higher. So far, its holding the gains, but it sure doesn't feel very strong. A lot of stocks have very clear bear flags on their daily cycles. Meanwhile, AAPL is still twitchy, and made new lows already today..but it now $8 higher as I type.


If we're going to get follow though to the upside Wednesday/early Thursday - in order to hit the target zone of 1395/1405, we MUST close over the 10MA today, and probably close 1382/84..just to have a chance.

Right now I'm still a believer this is merely a really messy wave'2 UP...with a 3 down..taking us to 1340 sometime next week.

Clearly, if Sp' can somehow break over 1410/15..then the bull case for 1422> is back on.. Worse of all, the weekly/monthly cycles would all start to flip back into the original 7 month bullish trend.


more later

VIX Weekly...baby step forward

The VIX is starting to creep upward on the bigger..and more important weekly cycle. After last weeks bullish cross on the MACD cycle, we are so far still holding above the critical 10MA.

VIX, weekly.

Right now, only a VIX breaking under 17.00 would be cause for the bulls to feel confident, and to have real hope of SP' >1422.

Conversely, the doomer bears will desperately need to see a first stage attempt to hit VIX 24 in the days ahead. A pull back from 24 would be very natural, before the VIX might explode into the 30s/40s, especially as we move into the 'sell in May..go away' month.

The VIX weekly is certainly something to watch this week. Even if we do get a bounce in the main indexes across the next few days, the key issue will be how does the VIX close this week? A further weekly closing above the 10MA would be a serious warning of further falls in the indexes once we get opex out of the way.

Good wishes for Tuesday trading.

Oil - broad trends...mixed

Oil is still holding up very well, despite Japan, and much of Europe now back in recession.

WTIC, weekly

The weekly cycle still has a clear bull flag, although the various indicators have all started to rollover..near term..IS showing a little weakness.

WTIC, monthly

From a monthly cycle, Oil is looking like it could easily rollover, but as yet..there is still most definitely NO confirmed turn lower.

There remains a lot of talk on the clown channels about some pipeline that will supposedly do 'something' good - yes, I'm fuzzy on exactly what it is the actual effects will be, but, considering the broader macro-economic background...I'm inclined to be bearish on Oil.

There seems no point in shorting Oil via any of the usual ETfs yet, since we are still to have even the slightest of initial sell signals. As it is, baring an 'Iran/Middle Eastern' event..the notion of Oil returning to test its 2008 peak of $147 now looks out of range.