Tuesday 22 May 2012

VIX - a real mixed day

Volatility saw a major ramp in the closing hour after the Euro (and taking equities too!) sank due to comments from the ex Greek leader.


VIX' daily


The VIX hourly cycle did break both the 22 target level..and even the 20% level briefly. The last hour ramp to 23 was pretty surprising. The one solace for the bulls is that the VIX put in a lower high, and closed with a spike - often the sign of a top.

From a cycle perspective, the VIX has broken its up channel, and is starting a new decline.

Closing Brief

A somewhat disturbingly bad end to the day. The Euro slipped over 1% in the closing hour - due to a news report that Greece is making a plan to exit the Euro, yet stocks closed flat on the day - after a last 5 minute recovery ramp.

With the closing hour sell off, things are not looking quite so bullish after all. Although the mornings bullish signals are still valid - so long as VIX doesn't make a new high, and the indexes hold above last Fridays low. The 'serious money' bulls will have good stops at least no lower than equivalent of sp'1290.





A very messy closing hour. Those Greeks are sure messing this market up!

However, the daily chart is still only at day'2 of this new cycle, there is plenty of upside potential this week.

*Dell earnings just out...sucked.... stock is down -5% or so.

What is clear, Bulls need another significant up day - probably at least equal to Monday, that will decisively break ALL indexes out of the down channel.

More later in the evening

3pm update - closing hour mini ramp?

The chop seems to be concerning a few 'out there', but really, its only day'2. We saw a LOT of confirmations this morning, not least the VIX, which even broke 20 briefly. I remain looking for a significantly higher Wednesday.




The Rus'2000 is weaker than the Dow and other indexes today, but thats not entirely too concerning. It has a little bull flag too, I'm looking for 77.75/80.25 tomorrow.

*The fact that the Dow' has broken outside of the channel is one reason why I'm not too concerned.  The VIX breaking under 20...also helps!

More after the close.

2pm update - another baby bull flag?

The Dow is looking like its building a baby bull flag. Whether it closes at the high of the day, I don't think it matters too much. A close above the hourly 10MA, currently just over 12500 will be kinda important.


So once again, the issue is how well can the market close the final hour? Can we get the second 'rally into the close' in a row, or will it revert back to what seemed a daily closing hour sell off?


Today's stock 'carnage'...even worse than FB...a loss making dirty coal company

PCX, daily   - where it seems a customer took the coal..but ain't going to pay! Urghh

Stay tuned.

1pm update - market churning

Day'2 of this up cycle....sp'1292 is fading away into the distance....first target remains 1340.


More later!

12pm update - daily cycles..first target sp'1340

Market looks fine still. A little chop, probably sucking in a few reckless bears re-shorting (done that myself at times), and its only day'2 of this cycle. We could go up for some weeks. As I noted over the weekend, it is entirely viable -despite the negative news, that those proclaiming new index highs in June will be proved right.

If we close this week above sp'1352, then my sp weekly wave'5 chart will be the one to focus on. How we close this week will be vital to offering a clue as to if new highs are viable. If we only close the week in the 1330s, I think new highs can be ruled out.

Sp' daily - bearish outlook

Sp' weekly - count'1


The key resistance levels are clear...1340, 1370/80, 1395, 1422.

Considering the depth we are on the MACD cycle, I'm inclined to believe we will hit at least sp'1370 early next week. The important issue then will be what happens..do we level out..flat top...and start to collapse away in a giant wave'3 to sp'1100s....or...do we just keep trending up to the mid sp'1400s?

Time for lunch !

11am update - Breakouts...everywhere

Market starting to accelerate away. The big money bears will already have retreated back to their caves..at least until early June.

So many key signals are triggering in this past hour. For this hour, I'll stick to the 60min cycles, highlighting those important breakouts. Yes, some are not quite there yet, but all indexes are trending higher for a second day running.






Confidence is returning (at least to me), I'm adding back some numbers and giant arrows to my charts. Or maybe thats not such a good sign? Oh well...I'm still super bearish across the 2-5 month term, I'll note those updated outlooks in the next hour.

Good wishes :)

10am update - the Facebook entertainment continues

Whilst the main market takes a little more time to consolidate yesterdays gains, FB remains highly amusing to watch.

FB, daily

Yeah, fair value remains $4, and that is my 'generous' valuation..In the market that we have, I'd guess 12/10 within 9 months or so. Although, at the current rate of decline, we'll hit that by end June, ;)

Back in the main market...




*As I type, Dow is trying to break out of the down channel....a very good sign for the bulls.

Today could easily close flat, but that's okay. In previous cycles, often we'll see an initial gain on day'1, then a holding day, before day'3 provides very significant follow through. Arguably, the bulls should want to see SP' above 1330/35 by early Thursday. Remember if we close above 1352 by the Friday close, that would be super-bullish - and initially confirm the 'wave '5 idea' I've posted about.

It looks like we'll get a VIX close <22 late today or Wednesday. That bodes well for the bigger picture of a move to at least 1340, more likely 1370/80.

*TVIX holders suffering again, but AAPL seeing good follow through.

Pre-Market Brief

Good morning. Overnight futures minor chop has gently turned to moderate gains so far. SP'500 is currently set to rise 6pts to around 1322. There are two minor pieces of econ-data at 10am.



By the end of today, the upper channel line will be sp'1320. A close today over 1325 would likely confirm a new wave higher is indeed underway.

For the bulls, a second consecutive close over the hourly 10MA - currently 1305 will be important, and is something we've not seen since late April.

*Best buy numbers came in line, but same store sales kinda sucked. They are leaving guidance unchanged...I'm guessing they will have to change that later in the year once they concede the US is probably going to slip into a recession.

*FB is already lower by around a dollar, back to the low 33s. Fair Value remains $4, and that is arguably being overly generous. Mid-term primary price target is $12/10, within 9 months.

As ever....more across the day.

Sp'500 weekly - some ideas to keep in mind

With the Sp'500 index breaking higher today - the first decent closing gain in over 3 weeks, this past weekends idea for a new up-cycle is already starting to take shape.

Sp' weekly - 3 scenarios

Sp' weekly, bullish outlook (the wave'5 idea)

Sp'monthly - primary outlook remains bearish


Today's 20 point gain in the sp'500 was a good start to the bullish near term outlook (even if its a wave'2 up). First targets are 1340, then 1370/80. The weekly 10MA @ 1368 will also be a soft resistance level to the advance. Its certainly interesting that the 1370/80 level would make for an ideal level to bounce to, before a collapse wave'3 in June.

I think we'll know if the 'wave'5 chart idea is correct, if we are higher than sp'1340 by the end of this week. If we are higher than 1352, that would make for a bullish engulfing candle on the weekly chart - matching the very same style of candle seen after wave'2 completed last November. It would be VERY bullish, and highly suggestive of new index highs by late June/July - perhaps as high as sp' 1440/60.

So...that's something to keep in mind for the rest of this week.

Goodnight from London city.

Daily Cycle Update

It appears the market has floored on the daily cycle at the secondary support level of sp'1292, and we are beginning some degree of an up-cycle. The move lower in the VIX today likely confirms this viewpoint.

IWM daily, bearish outlook



Sp, bullish outlook



The above selection are a real mixture of outlooks. I'm trying to keep a very open mind as to what happens in the coming few weeks. The bounce/rally, could easily just be a minor wave'2 UP, before a collapse wave in June.

It will be imperative for short term traders to watch for the market getting stuck at either 1340, 1370/80..and whether it can break above 1295. A move over 1422 would doubtless dismay the bears, and lure in another large number of permabulls.

My best guess?

I defer to the monthly charts when I'm unsure, and monthly charts say 'sp'1100s this year'. As I noted this past weekend, it is even viable we get new highs briefly in June, before quickly falling back - aka, the 'ultimate mind-frak for traders'.

Right now, my best guess would be we move up to that big resistance area of sp'1380. That would make for a strong minor wave'2 UP of 7%, and if we do rollover at that level, a swift and severe collapse to the sp'1150/00 level would occur in the span of 2-4 weeks, no later than early July.

For the moment, I remain in an underwater long position, looking to exit around 1340..where I will reassess.