Tuesday 12 June 2012

VIX update - moderate falls...before the explosion

VIX failed to break above the important 24 level today, and with sp'1306 holding - completing wave'b, the markets recovered...and the VIX slipped slowly across the day.


VIX, daily - bullish outlook

VIX, weekly


VIX target is 20, possibly 19/18 by late Thursday.

I will keep this post brief, but merely a reminder that the weekly cycle is primed to explode to the upside, with VIX in the high 30s/40s, with the next cycle starting as early as this Friday.

Closing Brief - bulls back in control

A very stark contrast from yesterdays closing hour, with the market seeing a mini ramp - even higher than I was looking for. The VIX did close around 5% lower - confirming the indexes, although its holding up reasonably well in the 20s due to underlying concerns about this weekends Greek elections.

Lets look at those closing hourly index cycles





We have a clear bull flag (pink) on the hourly chart - with this mornings low being a confirmed floor for wave'b. Wave c' I believe could complete as early as Thursday morning.

Lets be clear...I'm looking for a re-short somewhere in the sp'1350s, and then seeking sp'1150/00 by the end of July.

More later...looking at the VIX, daily cycles, and an update on the bigger picture. (if you look in the left menu, I do actually detail my posting schedule).

3pm update - closing...without a collapse?

Market is still holding up okay, with the hourly momentum cycle still crawling back upward - a bigger move to around 1335/40 is anticipated tomorrow.

sp'daily, fib levels



I like Fib' levels, but I'm not sure not a disciple of them. The chart above does suggest a broad 1345/65 range for the C'wave...and I'm certainly not going to even bother getting specific about such things in this messed up algo-bot market.

Seeking a close today somewhere around 1317/21. That would be a good close for the bulls, above the hourly 10MA of 1316

More after the close!

2pm update - crawling higher

Market looking pretty stable now, with underlying hourly momentum cycles likely to go positive cycle early Wednesday morning - which coincides nicely with the retail data. Bulls have a real opportunity to whack this market up tomorrow morning into the high 1330s..or even low 1340s - which brings the 1350s within range for Thursday.


Euro/$, daily

*target is 1.28 for this cycle, before a move to 1.20/19..possibly 1.15/10 by end July.


Not much to add this hour, things seem quieter, and so some kind of low volume melt higher can more easily occur.

More later

1pm update - choppy..with upside

Market remains a bit choppy, but the hourly index cycles are all suggesting further upside. With a triple candle floor on the daily cycle at the 1306 level, we are on track to hit 1350s later this week. The next key issue will be retail data tomorrow morning (8.30am EST), if the market likes it...the trend will indeed take us beyond the recent 1330s high.


VEU, daily

* a little peak at the VEU chart, target remains 41...that should be the peak, and itequates to sp'1350s..and then down we go.


Index gains are a slipping a little lower right now, but the hourly cycle says UP. VIX is only marginally lower, the threat of 26s though, seems out of range until next week.

It would seem the bears had their chance to knock the market under sp'1306..and they failed to seize the opportunity - whilst Spanish bond yields were spiking, so..underlying action is choppy...but underlying upside.

Still holding to near term target of sp'1350.

12pm update - no excuses

The morning has so far given everyone the opportunity to switch sides or merely close existing short positions. There can be no excuses for anyone today, yet doubtless those bears who are not using stops will soon be underwater, if not already.

Market has indeed successfully held the line at 1306, and now looks like set for another attempt to hit my target zone of 1350/60 - by this Friday. I am trying to be open to slightly higher levels 1370/80, but with the bigger picture monthly charts flashing collapse warnings, I remain looking for July as the prime collapse wave month.

sp'daily - 4mth




Considering the twitchy bonds out there - especially those Spanish ones, the current gains are a little shaky, but for those with good stops...this should be nothing to be concerned with.

It does look B'wave is complete..and that just leaves C'wave, which should complete by the end of thsi week.

VIX is starting to get the smack down, confirming the current moderate index gains.
Target indeed remains 1350/60 by the end of this week.

11am update - holding the line

Market was a little spooked earlier by record highs for Spanish bond yields. The key sp'1306 low from last week is holding though..and the MACD cycle is highly suggestive that B' wave might indeed be complete. However, confidence for that is only mid-level though, and if bond yields start jumping later today, then any gains could easily evaporate.

Things will be much simpler to trade if we can get to higher levels, 1350+.




VIX is not seeing a big enough spike the bears need to confirm new index lows. This is NOT a good level to remain holding short positions.

The day-traders must be having fun though with the last few days, we've seen some good intra-day moves, and July looks like the month where VIX will break into the high 30s/40s again.

I am still waiting for 1350/60, surprisingly, very patiently.

10am update - choppy open

Early morning uncertainty is starting to turn to bears covering, and a little technical bounce that might get us back above the important hourly 10MA later today.

From a cycle perspective, we're low, and the bears face a serious problem as the day moves on. Even if they can break to 1300/1290 late today, I can't see those losses holding, unless tomorrows retail data sucks.




Bulls will want to see a close over the hourly 10MA - currently 1320. That looks within range today, however if retail data comes in bad tomorrow, then we could easily jump into the high 1330s again, and that sets up a Thur/Friday hit of my 1350/60 target - where I would likely short.

VIX is very high on the hourly MACD cycle, it could easily fall all the way back to 20,, even 19/18 by Friday if get a wave'C to 1350/60.

I remain sitting this out...waiting for 1350/60.

Stay tuned...

Pre-Market Brief

Good morning. Futures are showing very moderate gains of sp+3..so, we might open around sp'1312 or so.

*There is no major econ-data today, next major data is retail sales tomorrow morning.



So..what lies in store for this nasty market today? Yesterday saw carnage for both bulls and bears alike. Yet, from a cycle perspective, the daily/weekly are still suggesting UP...and the 60min cycle is now pretty low.

With retail data tomorrow - if it came in a little weak, we could still in theory slip to 1300/1290, before a final C'wave up.

The plan today..I'm honestly not sure...I can't go short, we've already seen a considerable move lower, and besides, the primary target remains... sp'1350/60. Similarly, the thought of going long at this stage sickens me.

One thing is clear, VIX must not go back above 26, or it would likely mean new wave'3 is underway already. I'm still guessing we have to wait until at least next week for the first opportunity of that.
More across the day

Spanish Market ready to collapse a further 23%

Just a short update on the Spanish market - which has been a leading warning for other world markets since January.

IBEX, daily

IBEX, monthly


We saw a classic fail against the daily 10MA on Monday...and it is almost a perfect backtest of the old support (now resistance) line of 7000.

Downside - as I have said for over two months..is to the 5000 level - that is around 23% lower than current levels. There is no doubt about this.

For further chatter on yesterdays action in the IBEX, see  this posting by MISH.

Good wishes for Tuesday trading

World Indexes - on the edge of collapse

To end the day, lets look at the world indexes, via the VEU (Vanguard FTSE) chart. I've added a new daily version of the same chart, I think it will become very useful in the days ahead.

VEU, daily

VEU, weekly, 6year

*near term upside target is now 40.50/41, as based on both the daily and weekly charts.


So..to any permabulls out there.....go stare at the two charts for an hour...and then ask yourself the following question...

Which part of this global equity market do you see as bullish since the May'2011 peak?

Any non-deluded person should see the weekly chart for exactly what it is, it is the biggest of warnings that a secondary deflationary collapse wave - in the same style as 2008, is imminently due.

The warning levels are clear.

First warning, a break of the recent low of 37.54
Second...and LAST warning..a break of the long standing floor of 35.0

Projections if 35.0 fails to hold

Standard bearish case:

I'd assume 27.50...which is 20% lower across global markets. This would equate to around sp'1100 - which is of course my monthly cycle target. The US indexes tend to be stronger than the world indexes...and so 1100 would be a little less than 20%..but would be very much in sync with the overall outlook.

Collapse wave case

25.00/23.50 - that would probably equate to sp'950/850. That would make for a very severe drop, and would surely lead to Bernanke - and his little friends around the world, spooling up the digital printers.

Beware of the Hysterical Maniacs

Across the weekend I've seen a lot of hysteria talk again across many news sites, about how the jobless rate is fine at 8%, about how the EU could never possibly implode, just more of the usual deluded talk from the permabulls. Those same deluded maniacs argued Greece would NEVER need a bailout, and that it would be utterly impossible to consider any possibility of anyone leaving the Euro. Hell, I'm sure some of them would still claim Greece never received a bailout!

Yet..here we are...just days away from a Greek election where the winners might decide to not only default on all their sovereign debt, but quit both the Euro, and the European Union itself. A long hard summer lies ahead for those who still don't want to see the reality.

Goodnight from a bearish London city.

Daily Index Cycle Update - wave'b yet to complete?

Today was certainly not the close that many expected - myself included. With the indexes opening up around 1%....and closing lower by around 1%, this was a pretty impressive reversal day.

Lets consider those daily charts...

IWM, bearish outlook


SP, bearish outlook



Okay, to be clear, I still hold to the overall monthly bearish target of sp'1100.

I am certain we are currently in wave'2, and that today's action is probably the top of A' wave, and B' wave lower 'should' complete around 1300/1290 tomorrow. I suppose it could trundle around until Wednesday, but the important aspect is that it must NOT break the recent low of 1266.

ANY move under 1266, and then things get really hyper-bearish - and the VIX would probably be exploding into the mid'30s.

Consider the sp' chart, which is a bit choppy for an A' wave, a move lower to 1300 would be entirely normal..and then a final move higher to the original wave'2 target of 1350/60

Sp, monthly - a reminder

Looking ahead..to doom

The weekend bailout talk - and it remains just TALK, nothing has changed yet...no money 'created out of nothing' has been issued to Spain/the banks yet. So..today's turn lower is actually VERY justified. It would seem Mr Market is in one of those brief moments of lucidity.

Doubtless we'll see more periodic rumours of LTRO'3, Fed QE, and straightforward 'private asset purchases'. The central bankers will do everything they can to forestall the 'burning pitchfork stage'. The Bernanke will certainly be lurking around sp'1100, and that remains my primary concern this summer. Yet, we are still some two hundred SP500 points away from my primary target.

For the moment, I remain a mere watcher of this market, I remain waiting for sp'1350/60 to re-short.

**VERY important update (with new chart) to close the day later at 10pm EST.