Wednesday 2 May 2012

Daily Cycle Update

The early morning falls certainly were largely negated today, we're almost back to 'business as usual' with the seemingly late-afternoon mini ramp, probably largely caused by those algo-bots.

IWM, daily, bearish outlook

SP, daily, bearish outlook

Transports, daily

NYSE Comp, daily, rainbow chart

VIX - bullish market scenario


Some very conflicting daily charts today, there are a few signs the market is still winding itself up -for a big move to the downside. The NYSE 'rainbow' chart (Elder Impulse) is suggesting that the little 6 day up cycle is coming to an end - posting the first blue candle.

The Transports were one of the strongest sectors today, and are again on the verge of breaking to the upside, I think I'll post more on that later. The Tranny...remains the sector to watch this summer.

I'm still looking for VIX to break 21...and then to 24. Even the bullish market outlook would surely allow for VIX to get at least a little spike higher later this month?

A little more. later this evening.

Closing Brief

Market slowly crept upward into the close. For the bears, today was truly annoying, but if the mini H/S formation is correct, a break under 1394 should occur tomorrow or Friday. Its an interesting situation, and as noted earlier, the daily cycle does still offer a potential bearish scenario. The weekly/monthly cycles remain bullish of course.



IWM remains weaker than SP' again, and unlike the SP', IWM did break a new low this morning. This is one minor claim the bears can at least take from today.


Not the most inspiring end to the day for the VIX, a barely 1% gain. From a cycle perspective, the VIX is looking weak again. An early Thursday morning drop in the VIX..very possible - matching up with the RS peak of SP'1405/10 ?

Daily Cycle Update..later in the evening.

3pm update - almost there

The mini H/S formation is still on track. Completion of the RS, with a fail at the hourly 10MA of sp'1403/04 would be ideal in the closing hour. Arguably, anything over 1410/12 would likely mean the scenario is wrong.


*VIX is at least remaining marginally green right now.

More after the close!

2pm update - a reminder of the bigger picture

Whilst the 60min cycle churns around - with no major moves in either direction, lets have a look at the daily cycle.

SP' daily, bearish outlook

The levels are clear for the bears...
Immediate term... <1395, then 1380
Near term.... <1357, then 1340, 1300

Key MAs to break,  10MA: 1389.    50MA: 1385

*It is interesting that two daily MAs are now right in the middle of the immediate target zone 1395-1380.

A break under 1380 will likely (if it occurs), produce a number of consecutive large down moves, I'd be looking for at least one 3% day, with VIX 21/24 eventually.

Finally..a brief chart update on the Sp'60min

The 10MA @ 1404 will be the first barrier. A fail there..and rollover into the close would be the very best the bears can hope for right now.

More later!

1pm update - RS forming ?

The market clearly floored on both the 15 and 60min cycles, the current 7pt bounce is to be expected - although of course its highly annoying to anyone still short. As ever, it is always about the power of the move, and right now the moves are just weak, the sub 20' VIX is testament to this idea. If we are going to break below 1357, we are likely going to need to see VIX break the 21 level.

SP'60min looking for a RS to form...1405/07 would be the ideal max' level. The fact that the 10MA is also around that level - currently sp'1406, would make for a nice place for the market to fail/rollover.

Maybe this micro-cycle can peak before today ends? That would at least make Thursday a little more bearish, and then we can await Friday for the more dynamic way or the other.

12pm update - mini H/S forming?

The downside momentum was not enough to decisively break under the recent 1394 low. So,..up we go again.
Looking at the hourly cycle, are we setting up a mini head/shoulders formation? To confirm it, first we need a fail/rollover at the 1405/10 level...and then a swift move to break <1394. Its something to watch for as the day develops, and into Thursday. The RS - if that's what it will be, might take until late Thursday to fully form, and that would set up the major snap/fall under 1394 this Friday -when the big jobs data is released.


From a MACD cycle perspective, we are already very low, and due a few hours to the upside.

Best guess right now...a move back to 1405/07...forming a RS, before a second attempt to break 1394, more likely tomorrow.

More later, its time for lunch!

11am update - still awaiting a decisive break

Sp'1393 is not good enough for the bears. The bulls have effectively held the first line of defence this morning. Right now, bulls are getting a hammer off the 1394 previous low. This could be a disaster for the bears if we break above 1415. As ever, good trading stops are the answer to such unknowns.


Not much to add right now, so far..bears do NOT have their break. I suppose we could back test the 10MA at 1405..before starting a second attempt to break <1394.

The daily cycle still looks potentially bearish, but more on that later!

10am update

An important morning ahead. With very poor ADP jobs data, market is getting an excuse for follow through to the downside. The natural cycle for the 60min cycle was inclined to be down anyway this morning (as I posted yesterday lunchtime), this opening minor drop is not unexpected. The critical issue is whether we can break the recent low of 1394. I guess it could be said its not important for it to be done this morning - rather than by the close of today, but it will be much harder to do later. The bears need to see weakness down to 1390.. now!

*10am Factory Orders data: -1.5%  vs -1.6% expected


You can see the key levels, most important of all, bulls need to hold that 1385/80 zone...otherwise..real problems. However, low 1380s..even 1370s look an awfully long way down. There isn't the momentum right now to get this market lower, bears need more bad news!

*regarding the 1-5 count (in black). Its really just a vague guess. I suppose it could be right, but with the market as it is, its a VERY unreliable count. Only with a move <1380 would I say 'it was probably right..after all'.


Bears really need to see VIX close in the 18s either later today or early Thursday.

Spanish IBEX is falling again, even clown channel was highlighting it just earlier. IBEX 6800..with around 1800pts to fall in the 'near term' - as I stated for some weeks now.

More later!

Pre-market Brief

Good morning, those ADP jobs numbers sure are disappointing the market. Futures were slipping to -0.75%. This is actually a little exciting, the key level remains 1395..and then 1380.

*ADP jobs data: 119k  (previous 209k) vs. expected 183k


Yesterdays last hour was pretty interesting, looking for good follow through this morning.

Bears need a lower low, preferably under 1390.
Bulls merely need to hold above 1395/1400..

A long day ahead...good wishes for Wednesday!

Euro-Trash - an update

The Euro Currency appears ready for a major new down cycle. Both the daily and weekly cycles are now ready and able to begin a new down wave to around 1.25/24. I am tempted to wonder what news event/story might help precipitate such a move, but perhaps it'll just be a natural cyclical move lower.

Euro, daily

Euro, weekly


Just look at those MACD (blue bar histogram) cycles on both charts, they are both in the right position for a rollover this month. Even if it started today, it will take at least 3-5 trading days to know for sure if the trend is really changing.

Look for a break of 1.30. If that fails to hold as support, we should see at least a swift 5 cent move lower. In the scheme of things, that would only be a move of 5% from present levels, but it would certainly help to kick the Dollar upward, and that would put significant downward pressure on both equities and commodities (especially those precious metals!).

The rest of the week will be busy too...I think its time to rest.

Goodnight from the city of Green Shoots.