Monday 30 April 2012

VIX - daily update

The VIX closed up a mere 5%, but it was arguably an important 5%, lets take a look at a few of the key charts.

VIX, daily, bullish scenario

VIX, daily, bearish scenario

VIX, weekly, 2yr


Even taking a bearish VIX scenario, I am still looking for a move to 24. Whether anything significantly over 24 occurs, that would be impossible to even remotely guess. As noted recently, we've had two major down moves in recent times - both of which were each motivated by a catalyst. In 2010..the Greek 'crisis round'1', in 2011 the 'American Govt might not pay its debt'. Will the market need something to kick it below at least sp'1300 in weeks to come?

The bigger VIX weekly cycle does help put things into perspective, and the VIX is still picking up a little underlying upside momentum. Clearly, a break over 21 will be key in the new month of May.

Closing Brief

A break and close below the 10MA on the hourly cycle! All things considered, today was about as good as the bears could have hoped for. Now, the bears will need follow through to the downside with a red close on Tuesday.  Similarly, the VIX increase - whilst very minor, could be the start of something significant.


SP' closes with almost a back-test of the important 10MA. Its a bear flag, but we sure need some follow through Tuesday into the 1385/80 range to confirm it.


IWM was particularly weak into the close (not sure why), if 'minor wave'2' has been identified correctly, then we're looking for a new wave lower, probably to at least 79/80 within 2-4 days.


VIX closes with a little bull flag, 21 remains the first target...then a break to 24.

Daily Cycles will be covered later in the day.

3pm update - one hour left of April

The 1395 level failed to hold..that's good to see, but we only fell to 1394, not exactly a huge 'snap' lower.A close in the 1380s seems out of range.


*keep an eye on the VIX, so far its up just 5/6%, that's very little. A +8/10% close would bode well for some downward follow through tomorrow.

As ever, how we close is even more important than how we opened ...and everything in between!

Clown channel host talking of 'sell in May and go away'. Ahh yes...we're right back to that mantra again.

More after the close.

2pm update - indexes surprisingly still red

Yeah, the indexes are I guess this is one way to end the month. Certainly, its better than expected from someone with a bearish perspective. VIX momentum is turning back upward on the daily cycle, will look at that after the close.


Must see a close under the 10MA, right now 1394 would be useful to see, you can see a clear baby bear flag on the hourly chart. Yet the MACD (blue bar histogram) cycle is pretty low, and its due to cycle back up. A back-test against the 10MA around 1400 would still be normal this hour..before perhaps a last  hour mini sell-off.

A close in the 1380s would be real 'little' victory for the bears.

1pm update - which way?

Which way will this week close? As detailed across the weekend, both the weekly and monthly cycles are back to their post October low bullish trend. Or could this be a classic bear trap? The problem the bears face is they need big falls..and strong follow through, and that is something that is so often not the case - as we saw last week.

Today the market is actually reflecting the weak econ-data, but..what about Tuesday? We could easily cycle back upward, and even put in a new high of 1406>. Tricky market...good short-stops..remain vital.


*really would prefer a close <1395, a level which has caused some real problems in the past. That would open up a break into the low 1380s Tue/Wed.

SP'monthly cycle - closing red for April ?

We have just 3 trading hours left of April. From the monthly cycle point of view..they are a VERY important 3 hours.

As they say...stay tuned!

12pm update - lunch time chatter

A pretty interesting day so far, I guess you could almost say 'better than expected'. European markets were actually getting sucked lower by the Chicago PMI data before they closed. US markets showing the first sign of weakness after four annoying upward days.


Even if a new down trend is beginning, an intra-day back-test of the 10MA @ sp'1400, would be very natural.

Clearly, 'serious money' shorts would have a short-stop around previous 1405 high..or loose 1410/15.

More across the afternoon.

11am update - could get interesting this week

It is always a constant struggle to not get overly permabearish, but this mornings Chicago PMI number is again a reminder of just how lousy things are. Japan is in a deep recession, various parts of the EU (not least Greece, UK, and now Spain!), and I'm still guessing... the USA will follow. The question is how long until the USA gets infected, six months, or maybe not until 2013? Anyway, that's a very long term issue, but in the meantime, we do have some market weakness to both start the week and end this month.

Sp'daily - bearish outlook

The H/S formation - with the bear flag (pink lines, within the RS) is certainly an interesting possibility. If it is correct, we'll know within a few days. A break under 1357 would arguably still only be a preliminary confirmation. To be confident, bears need SP <1300. First things first though, lets see how we close today.


The break below the 10MA is indeed important, bears will need a daily close under it, preferably in the 1380s - although is probably asking a great deal for today.

More later!

10am update - morning weakness

Well we're off and running, nothing dramatic, but there are certainly some interesting price movements out there, not least in AAPL, BKS, and some weakness in the metals SLV/GLD.

*Chicago PMI 56.2.. vs exp. 62.  A truly atrocious number, market is selling off a little.

I was watching clown channel just earlier..they already today said what I had noted 'to look for' yesterday 'if we get bad jobs data this week, market will rally...due to hopes of QE3'. Sigh.


Finally a break under the 10MA on the hourly, yet only a close below it will be even the slightest 'hope' for the bears. Without question, bears need to see this market back in the 1370s before any kind of justified excitement about potential downside.



I'd still argue though, whilst VIX remains under 20, any 5, 10, even 15% moves are just static/noise. Only with a break over 21 should the bears start to take any down move in the indexes seriously.

*lets also note that its the end of the month, and so the state in which the monthly charts end, will be important. Bears best hope...mid'1380s today, although that honestly seems too bold right now, despite the morning weakness.

More throughout the day.

Pre-Market Brief

Good morning, well here we go again. Another week at the rigged casino table, where the only real winners are the HFT algo-bots in the basement of GS. Futures are currently just a little lower, around -0.2/0.25%  The main econ-data we have today is the Chicago PMI at 9.45am, consensus is looking for a lower figure of 60.8 (62.2 in March). I suppose a figure <60 would give the market an excuse to sell off.


The MACD cycle is clearly showing that underlying momentum continues to wane, but actual index prices of course have still been crawling inexorably higher. It looks like we'll go negative cycle no later than lunchtime, so there 'should' be some weakness this morning, but it'd seem highly unlikely it'll be anything more than -0.5% at the lowest point - before we start to cycle back upward.

Surely, another frustrating day for the bears to come, and perhaps one where the bulls can once again 'buy the dip'.. with a good stop of course!

I think the VIX will merit watching today, if it can jump 5/7% by the close, I might consider any minor index close lower a little more seriously.

*keep an eye on AAPL too, its broken back below $600 in pre-market.

Good wishes for what is..the last day of April!

Sunday Night Futures Wheel - Quiet.

With the Futures Wheel spun up for around 90mins, SP is +2pts so far. It looks like a quiet night lies ahead, there doesn't seem to be anything likely to sway the market one way or the other. So a largely flat Monday open would currently be the best guess.


Sp' daily rainbow chart


The 60min chart which I updated on Friday I hold to, but really, its a real mess from the bearish perspective. The daily, weekly, and monthly cycles are now ALL back to a generally bullish trend. The second (Elder Impulse -'rainbow') chart above is pretty clear. Near term trend is UP, first target would be upper bol' band of 1420, which is of course just 2pts away from the recent 1422 high.

There is key econ-data every day this week, and we end with the big jobs data for April on Friday

So even though Futures are mostly flat, there will likely be some good moves this week. Another lousy jobs number would really knock the market a bit lower, but then...we know the mainstream will be back to touting 'market rallies despite bad jobs data..due to increased hopes of QE3'. Urghh!

Good wishes for Monday..and the trading week ahead!