Monday 7 May 2012

Daily Cycle Update

It was indeed a very choppy and somewhat confusing Monday for many traders. However, considering that the market fell from 1415 (Tuesday) to 1363 this morning, a little bounce of 10pts is to be expected - even though the European elections upset a lot of market watchers. The Monday closing hour was arguably a little weak, it is difficult to know if this means Tuesday will show the weakness which many were expecting for today, or if we'll see a further 0.5/1.0% brief upside.

Right now, I'm guessing we open lower Tuesday, maybe getting down to the 1350/55 level before the next intra-day bounce. Sp'1340 would seem more likely around late Wednesday/early Thursday.

IWM, daily, bearish outlook

From a daily perspective, today's IWM bounce looks pretty weak. The MACD (blue bar histogram cycle) remains very bearish, we are negative cycle..and the trend is still down - contrary to what many might have surmised as a result of today's action.

Dow, daily

A straightforward fourth consecutive loss for the Dow - although 3 of these days are only minor drops. We're still a mere 2% from last Tuesdays 4 year peak! Next target would be dow 12750, which would make for a good -250pt down day.

SP, daily, bearish

The SP' daily chart remains my favourite right now. This version more clearly highlights the rising support line - which we indeed floored at this morning. Bears clearly need a break below 1360, and that should open up a swift move to 1340. There are 'soft' levels around 1325/20, and then the big 1300 of course.

Personally, I'm still very much looking for an attempt to get down to the 200 day MA at 1276 within next 2 weeks - sometime BEFORE opex (Friday May'18).

Transport, daily, rainbow (Elder Impulse)

The Transports - which I keep noting is probably going to be the key directional indicator for the weeks and months ahead, still put in a red candle today, despite a positive close. The transports remains stuck in an extremely tight trading range.


So, for the bears it was admittedly a disappointing day. The usual overnight ES' ramp - regardless of 'why' it happened, we've certainly seen it many hundreds of a times across the last few years. This market sure does react in a twisted and illogical way sometimes (or should that be 'most' times?)

The daily H/S formation will remain intact unless we break above the RS of 1415. I would assume the 'serious money' will have short-stops around the 1385/95 level.

As noted earlier, I am short again (from sp'1373)..and holding for sp'1340.

More across the evening.

Closing Brief

Considering the seemingly epic attempt by the clown channels to spin today as bullish, this was a weak close. We may yet have a quick burst higher Tuesday morning, but regardless, the main trend remains down. I am content to be short..once again.




The VIX closed right at the 10MA. There is plenty of upside on the VIX, first target remains 21 (which it would have done this morning, were it not for the early morning recovery). After 21...then 24.

Much more across the evening, including the Euro, which remains due for a major down cycle.

3pm - back on the short train

The Choppy Monday may have reached its peak. With one hour left of the trading day..lets see how we close! No one can have any excuses today, bulls got their chance to exit in the low 1370s (when 1350s were looking likely last night)..and bears can short from comfortably higher levels. The bigger picture remains bearish, unless we break higher than 1385/95.

Sp'60min cycle


I re-shorted around 45mins equivalent of sp'1373. Target remains 1340 for the next exit.

The closing hour might offer a clue as to the mood early Tuesday.

2pm update - tricky afternoon

The short term 15/60min cycles are very much saying further upside into the close, whilst the daily/weekly cycles will both keep putting downward pressure on this market. I still think today is working out okay - whether bullish or bearish inclined.

However, clearly today there are a lot of very disgruntled and moody bears out there. Surprisingly, I'm not one of them, having bailed at the open.



Immediate 2-6 hour trend is still upward, but yet we could still drop pretty hard in the last 90minutes of today. Its time to move to the 15min cycle

I continue to remain open minded, and consider a re-short before the close, the typical 'ideal peak' would be around 2.30pm - so just 30mins to go.

Top of the bear flag (pink)..sp'1375...we should be hitting that this hour.

Sp' 1340 remains the primary target, and that IS viable as early as tomorrow.

update. 2.15pm
Short, from equivilent of sp'1373.  I might be a few hours, even a day early, but I'm shorting from 1% higher than my 9.30am exit..that'll do.

Lets see if we see some weakness into the close. 

1pm update - the baby bear flag is growing

Everything remains on track. The baby bear flag (pink) is the target for late today. I suppose we could cycle higher into Tuesday - although the daily cycle would argue against it. Both the daily and weekly cycles are going to put a constant downward pressure on every bounce/micro-rally we get.



A pretty bearish VIX in the immediate 1-3 hour term, not least with it having just moved to negative MACD cycle. There is certainly no sign of a turn back higher.

From a cycle perspective, we are due to go +cycle on the MACD (blue bar histogram) within the next 2 hour. That would be suggestive of a possible continued mini bounce into early Tuesday. I strongly believe we will soon fail though.

I am still looking to re-short later today, it will be increasingly tempting in the 1375/80 zone.

More later.

12pm update - Messy Monday

Today is proving to be a real confusing least for those not keeping the bigger cycles in mind. To an outsider, it might look like this market still has underlying strength. In a way, it certainly has, but last weeks action was VERY bearish, and the fact that overnight futures did break some key levels - not least Euro/$ 1.30 is further confirmation of the new down trend.

So, as I noted earlier this morning 'everyone should be happy'. Bulls get a further chance to exit, and bears get a further chance to short. Anyone complaining about today is not looking at the bigger picture. It is often hard to see what the picture is..if you look too closely, you crazy day-traders ;)




Primary daily and weekly trends remain down. Only a move back above sp'1395 would make me bullish in the near term.

For the 'big serious money', it is an EASY trade right now. Any shorts should have a stop around 1395-1422..depending on personal preference.

I remain looking to re-short this market before the close. Seeking Sp'1340 within a few days..or better.

10am update - looking to short the baby bounce

Well, there are probably many stupid reasons why this market is rising, I suppose the Buffett is one of them. As ever, what matters is the bigger picture, anyway, lets look at those important hourly cycles


VIX, 60min

Look for support at the 10MA of  18.70

*I intentionally got stopped out at the open, will look to re-short later in the day. I would believe - and hold to my overall analysis that the market will move to at least 1270 within the near term.

Thus, my default trade is to short...any bounces.

So, keep a close eye on those 60min cycles...including the VIX.

Bulls are probably getting a chance to exit 150/200pts higher than they could have hoped for last night.
Bears - not already short, are getting another chance to short at better levels.

Everyone should be happy this morning ;)

yours..ready to fire ze missiles..later today.

Pre-Market Brief

Those bears who are just waking up will be understandably annoyed with what they are seeing. The SP' currently looks set to open lower by just 4/6pts. So much for -17pts last night!

I'm not sure what to make of it (is Benny/PPT meddling?), although I've seen this kind of nonsense so many hundreds of times, some traders have already noted it could merely be an overnight back test of the 1350/55 gap.

Lets keep the bigger picture in mind both for today, and across this trading week


First soft resistance is the lower bollinger of 1355, which is also right near the precious 1357 low.

So, I'm looking for a low around 1360/55 in the opening 30mins, maybe as late as 11am.

As things stand, I am looking for a standard 0.75/1.0% intra-day we might even go green today. Whether we close green, that's too hard to even vaguely guess.

There are many out there calling for a multi-day bounce, but if we're only at 1360...even a 2% bounce would get us back to 1390..which is back to the previous support area. I don't believe we'll see above 1390s for some considerable time.

*I'm looking to exit some option puts early in the morning, and will certainly look to re-short later in the day, probably no later than 2pm.

As usual...updates across the day.