Tuesday 24 April 2012

Mr VIX...why so quiet?

The VIX, whilst it remains under 20, is still suggesting there is still good underlying bullish strength in this market. The general short term formation 'could' be a bull flag, but the VIX is sure not projecting much volatility upside into Wednesday, despite the looming FOMC announcement.

VIX, daily, rainbow chart

VIX, daily - bullish scenario

VIX, daily - bearish scenario

VIX, weekly, 2yr


The weekly chart is still supportive of the notion that the market peaked around sp'1422. The MACD cycle on the VIX weekly has been crawling back upward for over 3 months, and is indeed now net positive. The upper bollinger band of 24/25 I believe would be the near term ceiling for any spike. So, VIX 24 and Sp'1340, that would make sense to me for the next cycle floor.

At some point of course, the VIX will once again explode into the 30s...40s..and even 50s. The 2008 collapse wave peak of the 90s feels like a twisted fading nightmare, but of course, the financial 'system' itself is fatally flawed, so one day maybe I'll make a post of 'VIX hits 100..its the end of the world!'. Whether that is months..or years away...I kinda hope I'm still around to make a post on it ;)

Daily Index Cycle Update

Whilst Apple has posted better than expected earnings AH, lets take a look at those daily cycles, via the Elder Impulse 'rainbow' style chart.

IWM (representing the rus'2000 small cap)

Nasdaq Comp




The tech' sector remains weakest, although that is partly due to the whacking that AAPL has endured. The Dow is threatening a bull flag formation, a break over 13150 would confirm that idea, and be suggestive of much higher levels. IWM and the NYSE comp' both remain inconclusive.

From a MACD (green bar histogram) cycle perspective, IWM, Dow, and NYSE are very close to going positive cycle. This is a VERY serious threat to even the near term moderate bearish target of sp'1340.

If the bears are going to break this market below the recent 1357 low, they will need to do it no later than Wednesday afternoon or early Thursday. If the market merely trades sideways across the next few days, the bears will likely have missed their chance, and then we'll cycle up into May.

The markets reaction to the FOMC tomorrow..will be extremely decisive.

Closing Brief

A pretty uninspiring close, whether you take a bullish or bearish stance. The daily cycle still supports slightly lower prices for the next few days. Still awaiting AAPL earnings in AH, but even more importantly...the market response to FOMC tomorrow afternoon.



More later, on the daily cycles, and perhaps another reminder/update on the bigger weekly/monthly cycles.

3pm update - still awaiting decisive break lower

A little bounce in the previous hour, but the near term trend remains down. The VIX is trying to turn upward, but...very weak so far. Target remains sp'1340s



More after the close, with an update on 'that' company.

2pm update - waiting for the cycle to rollover

Whilst prices peaked a few hours ago, the MACD cycle is yet to level out on the 60min cycle. We may see the first sign of the cycle rolling over in the closing hour.


Still waiting for a break below the red (10MA) line, bears really need a close under that.

*special note on AAPL

AAPL, daily

There is NOTHING bullish about the near term trend. The maniacs are still buying though, first bounce level would be 595 (10MA), but the immediate downside is 490/500. AAPL will be entertaining to watch at the close, but in trading terms, is arguably best left alone!

1pm update - here we go again

Looks like we're rolling over again, into the close and FOMC Wednesday.


*most of important right now for the bears, need to see a break and close under the 10MA, sp'1368

Nothing much to add from earlier. Suffice to say, I'm still looking for sp'1340s, which right now, would make for a final wave'5..and then we go UP. The count though, it just doesn't seem right, after all, we only snapped lower yesterday, so today is day'2. I suppose if we hit 1340 early Thursday, that'd count as day'4 in a wave3, that'd just about be long enough in terms of time.

More later...not least those AAPL earnings.

12pm update - tired...and waiting

So...now the bears are waiting for yet another break lower. It is frustrating me again that if we fall 15/20pts, we are retracing almost the entire amount back up. Sigh.




So yeah, I'm getting real tired of this nonsense today. Sure, there are AAPL  earnings at the close, and we have the FOMC tomorrow, which will probably fail to inspire the market. Yet, if 1340/45 is the lowest we go tomorrow, then what about the next wave?

The daily 'bearish scenario' I have been posting for days, the wave'4 suggest 1340 up to1370/80 - but hey, we're already near 1380 today, so, its almost a case of 'going nowhere' across the next few weeks.

I guess I had hoped for more dynamic moves lower, and whilst the VIX is failing to break over 20, big falls in the indexes don't seem likely any time soon. Maybe my despondent mood is the contrary indicator that its time to re-short?

11am update - bear flag...fails

Mere minutes after my 10am update we saw a snap up, breaking over the little bear flag. Clearly, a lot of bears just got kicked out, and are now spooked. Doubtless, many of them will also be concerned that AAPL will post 'better than expected' earnings after the close.

However, the daily cycle is clear, and there are two major levels the bull lunatics need to CLOSE above just to have a chance at reversing yesterdays confirmed bear flag break. First, the 10MA of sp'1376, and the 50MA of 1380.



Considering we've already have a pretty significant bounce from yesterdays floor, surely we are going to rollover before the close?

The wave count is really confusing right now, was yesterday merely wave'1 down? If that's the case, there is still a long way to go, at least sp'1300 within 3-7 trading days. If instead today is the top of wave'4, then that would likely mean we floor post FOMC around 1340. I suppose that could merely be the floor of the main wave'3 - with a 4 & 5 to come in May (see daily chart).

As ever, we'll just have to wait and see. What seems critical is what happens when we get near 1340/45, whether its tomorrow, or a few days later.

10am update - the bear flag holding

Its a bit of a minor battle right now, between the crazy lunatics still looking for sp>1400, and those aiming for 1340/25 later this week. Daily cycles suggest at least a few more days lower to come.

Econ-data at 10am mixed, new homes sales for March -7.1%...urghh




Bears need to see VIX close higher again today, 21+ sure would be decisive, but it does not look viable either today.

Everyone is getting obsessed with what the FOMC will say in tomorrow afternoons report. There won't be any new QE tomorrow, nor in May. I suppose June is possible, but in market land, that is a long ways away. We'll surely sell off before then, at least down to the 10MA on the monthly - sp'1285, if not into the mid 1100s.

more later!

Pre market Brief - its AAPL day!

Good morning, the overnight futures mini ramp is continuing to gently fade. We have of course earnings from Apple at the close, and the FOMC meets tomorrow. The rest of this week will be full of action, so strap in!


We might break just above the small bear flag - and 10MA, but I can't see it lasting for more than an hour or so. I am looking for a significant sell off as the day progresses.

The broader daily and weekly cycles are absolutely suggesting further losses this week are highly probable, and thus all rallies are to be shorted, or used as opportunities to exit existing long positions.

Good wishes for Tuesday trading

SPY/VIX ratio - a bearish clue?

A quick update on the quirky SPY/VIX ratio charts. With today's rise in the VIX, and a moderate fall in the Sp'500, we are seeing some supporting evidence of the near term bearish outlook. There is also a hint.- see chart'3, that the giant H/S formation theory might be correct. If that is the case, the market has a long way yet to decline across the next few months.

SPY/VIX, near term, weekly. 1yr

SPY/VIX, 10yr historic

SPY/VIX, 3yr, near term, bearish H/S scenario/theory

Goodnight...from London city.

Daily Summary -bearish trends confirmed

Today was good, there was plenty of action, not least including after hours with stocks like NFLX.

Dow, daily

Dow confirming the bear flag, next support level is around 12700, then 12200. So, any move under around 12650/600, should offer a pretty easy 300pts downside to trade.

Sp, daily

Today's opening gap confirmed the bear flag, and next target remains 1340. Whether we break under that, or have to first put in a lower high (in early May)...we'll have to wait and see.

Transports, daily

Still awaiting a key break below the multi-month support level of 5050/5000.

VIX, daily, bearish market scenario

A black candle today for the vix - not exactly the best the bears could have got, but it will do, and is a clear break above the recent pullback. The next target is a break above the recent 21 high, and a move to 24. It is doubtful VIX can break/hold over 24 in the near term - baring some huge index falls below sp'1300.


Bearish outlooks are looking very good, we had some nice confirmations today, and the bigger weekly/monthly cycles are also turning bearish. Tuesday may well open somewhat higher/mixed, but I strongly believe we'll eventually break much lower - and quickly, to hit the primary target of 1340. Right now, that would be no later than Wednesday afternoon.