Thursday 19 April 2012

Indexes - Daily Cycles, ALL bearish.

A good day for the bears...lets look at those daily cycles!

Nasdaq Comp, daily

Dow, daily

Sp' daily

Trans, daily


There are now bear flags on all the daily charts, some are certainly better than others, the Transports - which has been stuck in a range for what seems like years, is not a great bear flag, and can't be bearishly confident until we see a break under that huge support line. The other indexes though look absolutely crystal clear, bear flags..all ready to snap lower either tomorrow or early next week.

The SP (bullish scenario) chart clearly outlines the targets. 1340..1300, but 1270/50 would remain the most bearish floor I can foresee in the near term (2-6 weeks). Whether we see 1200/1150 within the next few months, that will indeed be dependent on how the weekly/monthly cycles proceed. As noted many times, what remains the most important thing of all, is how we end the month of April. A close under 1370 would be enough to merit the first sell signal from the mother of all charts - the monthly.

Looking ahead to Friday

In addition to looking at the 60min cycle (see earlier 'closing brief' post), since its OPEX, I'd guess we will mostly chop sideways. Any morning gap lower (1365/70) is likely to mostly fill back upward, although we could easily start to sell off toward the latter part of the day. Who wants to dare hold long across the weekend?

From a bearish perspective, the lack of upward movement in the VIX remains my only concern right now.  The ultimate hope for any good bear tomorrow would be a close in the VIX of 20+.

IBEX - the Spanish market is warning of major trouble

I've been regularly highlighting the Spanish IBEX index recently, I believe it is a major warning for all those who think the EU will somehow be able to keep kicking the can. Sure, the 'Greece thing' appears to have been successfully kicked along for another 6-18 months, but Greece is irrelevant, its tiny. Spain on the other hand is huge, and a vital component of the European economy.

The Spanish IBEX broke the critical 7000 level today, and is now back to levels not seen since the 2009 collapse wave low. There is now a very straightforward 2000pts to the downside, due within the next 1-6 months.

Spain, IBEX, 20yr

The EU is a horror story, we all agree on that, yes?

Spain is the literal tinder box of the EU, and many do foresee major civil unrest starting up in the next few months. Youth unemployment is around 50%..and the main level is well over 20%. Further austerity/public sector cuts, will only add to a severely bad situation, one that is spiralling out of control.

The Spanish stock market is merely reflecting what the underlying state of the country is. The IBEX is down 57% or so since the 2008 peak, and it reminds me of the Greek market...

Greece, Athex', 20yr

Greece is down over 85%....I'm guessing both Spain AND Italy will end up like this. The UK is only marginally better, since it can at least print its own currency to fund is own deficit spending - just as the US Federal Reserve does.

more later..on those daily cycles for the US indexes :)

Closing Brief - a choppy bearish day.

Despite the little bounce in the closing hour, today was a good victory for the bears. All talk of 1395/1400 is almost completely fizzled away now. Despite the last hour bounce, that does not negate the overall action which was very much to the bearish side.




A weak closing for the VIX. It can be a very quirky indicator at times, and right now, it is not supporting the bearish outlook. Bears must see VIX break upward and out of what is a bull flag.

More later in the evening, dealing with those bearish daily cycles.

3pm Update - bear flags...broken below!

Good progress for the bears this afternoon. Everything is looking good for the bigger bearish outlook. The hourly, daily, weekly, and monthly cycles are now all showing signs of weakness. Whether we get down to 1150 sometime in the next few months...well, best leave that issue for later!

First..we need to hit that primary target of 1340, which right now seems likely sometime between next Monday-Wednesday.

*I have changed the (RED) count on the hourly chart. I think even if we go to 1340, the waves will be a bit the 'little 2 UP' will occur tomorrow. Its not too important, but I thought it worth highlighting. It makes sense when you consider the daily charts...but I'll cover that after the close.



Things to watch for in the closing hour:

-A close under sp'1373 -although anything under the 10MA (currently 1383) is acceptable.
-VIX >19.75

More after the close.

2pm update - indexes inexorably slipping lower

SP' really struggling..and failing to hold the 1380s.


We could certainly bounce off the lower channel line of 1375. Clearly a close under 1374/73 would be make for a much more confidence boosting end to the day, and open up somewhere around 1365/60 early tomorrow morning.

More later!

1pm update - VIX..finally rising

Its been a pretty volatile morning, but VIX remains strangely flat....but its off the lows..and we are slowly cycling up, and the formation is a bull flag. First  target 21..then 24.

VIX, 60min


A bearish afternoon is ahead...low 1370s..remain the target.

Good wishes

12pm Update - back below the 10MA

Yet another hourly failure for the bulls..who are surely losing hope of 1390/1400 in the near term.



*Special note again...the 10MA on the daily is due to cross under the 50day MA either late today or early Friday. This is a very BEARISH event! The algo-bots will be selling into every minor up cycle.

A close in the 1370s, still seems like a very valid target for today, despite that crazy 10-11am ramp hour.

One final note..VIX has been very slow to respond, but it looks like its floored on the should see VIX ramp into the close.

time for lunch!

11am update - a wacky hour

Each trading hour seems to be getting more unstable. Bulls trying for the fourth time to break and hold above the 10MA on the hourly...

Sp'15min ...cycle getting stuck near 1390..again


A real chop-fest so far today, target remains low 1370s by the close.

   watching 'Sink the Bismarck!'........... FIRE!

10am Update - morning chop

They sure are battling it out this morning. The bulls thought they had broken above the bear flag in overnight trading...but no...we open weak.

There is no reason to believe we won't be at least moderately lower by the close. Sure there could be some choppy action, but overall...I'm looking for low 1370s later today.


They are trying to break back above the 10MA on the hourly at 1387/88. Considering the mood, it won't be easy for them to hold this level beyond 11am.

Bear stops!

Only a move over 1400/05 would have me concerned, and as noted last night, anyone with serious money should have equivalent stops at 1410/15. What matters is that the bear flags on the daily charts are absolutely clear as crystal...we ARE in a bearish formation.

First target remains 1340, although I'm increasingly starting to believe 1300 is maybe even more likely - considering the state of the weekly/monthly cycles.

We have opex tomorrow of course, so...the bigger moves are more likely next week.

More later!

8.30am Pre-market Brief

Good morning

Spanish IBEX 7k...FAILED to hold


So, 2000pts lower...yet to come. That's around 30%..and the same could arguably be said for Italy, perhaps even UK and Germany....and the US ?

Looks like market was up almost 1% at one point overnight, but we sure did fall away....

Jobless data ...lousy..386k.  Where are those green shoots?

I'm looking for SP' to close -15/17 today, something in that level, it should confirm that we'll be falling into next week. The issue is whether we get stuck at 1340...or keep on going.

Good wishes for Thursday trading!

Daily Cycles...on the edge

A good end to the day for the bears, but as they say...we're not out of the woods yet. We have bear flags everywhere, but we need to see them confirmed with clear breaks. It doesn't have to happen tomorrow or even Friday, but it'd sure have to be in the first few days of next week.

Any bear who is heavy-short with 'serious' money would be wise to have a last ditch stop of at least equivalent to sp'1410/15. Anything above that, and the near/mid term bearish outlooks all get violated.

IWM, daily, rainbow

Nasdaq comp, daily, rainbow

Dow, daily

VIX, daily


We're at a decisive junction. After a pretty strong 2 day rally, today was a good minor victory for the bears, yet its not enough.

Bears must break the market lower, Sp'1356 will confirm the original wave'1 and 2' theory., and that we are in a '3 wave. Meanwhile, the VIX needs to break >21..and that should then rise to 24 within a few days.

Thursday will be most interesting.

Goodnight from London