Monday 9 July 2012

Volatility..a first move higher

The VIX closed 5% higher today, although still remains at the bizarrely low level of 17.98. The daily and weekly cycles continue to offer significant upside in the days and weeks ahead.

VIX, 60min

VIX, daily, rainbow

Still no decisive sign of a turn (via a green candle) on the rainbow chart.

VIX, weekly


VIX is low, and its not a difficult/risky belief to suggest that upside is more likely than downside. The only issue is how long do the bears need to wait?

I guess it could still be a few weeks until the VIX explodes into the 30s (or even 40s). The hourly cycle clearly shows the resistance around the 18 level. Bears need to see a snap/break over 20 to pick up some upside momentum.

Until VIX is back over 20, this largely sideways action could last for some weeks. Arguably a break over 20 is a valid 'chase it higher' entry point for the Volatility players.

More later...

Closing Brief

A pretty mediocre day, but even a moderate red close should be seen as progress by the bears, and today - unlike Friday, confirmed the declines.

The closing hourly index charts...





Very minor losses for the indexes, arguably a flat day. Still waiting for the next sp-20/25pt day. Its well overdue!
*coal miners all smashed lower (again!) today, I'll post some more on PCX, BTU later this evening on my stocks page!

3pm update - falling into the close?

With Alcoa earnings kicking off the Q2 earnings season, who wants to be long ahead of the close? I didn't think so.

sp, daily5


Looking forward to Alcoa earnings at the close, there will doubtless be some follow through effects on the broader market at the Tuesday open.

Best bear case close... 1345, vix 18.50/75

I'll hold short into Tuesday, and see how we open then.
 More after the close

2pm update - still..quiet

With no major econ-data this week, I guess the rest of this week could be like this, but the daily index cycles warn of much lower levels later this week.

Consumer credit data at 3pm...and we have Alcoa earnings at the close. I wonder how the cheer leaders on the clown networks will try to spin any lousy earnings this week.

Sp' daily5

VIX, daily

*a simple chart, but its clear that VIX is yet to break the down trend. Only a move over 19.50 can the bears start to get a little excited.


From a MACD cycle perspective, we are now day'3 down across most indexes, with negative cycle still 2-3 days away. Assuming the trend continues, that would suggest 1330 will not hold, and that should mean a fair chance of 1310 - which was the floor in the last down cycle.

Bears just need to see <1305, and that should clarify the bigger picture, in which case 1225/00 is coming.

First things first though....lets see if we can at least get a moderately red close!

1pm update - slipping lower..slowly

Market appears weak, every micro bounce seems to be getting faded by the day-traders. We're certainly not seeing any kind of nonsense 0.5/1.0% bounce today!

First target remains 1340/35, with VIX 19




We have broken the baby bear flag, so, that's something at least for the bears today.

Right now, a close of 1340 would be best bear case. The exciting thing then is, if the market can gap lower Tuesday more than 11pts....1329s would break the larger daily up trend...and open up 1300, within 2-3 days.

More later...on what remains a quiet start to the week

12pm update - the important channel line

Right now, the lower channel - on the daily index cycle, allows 1330 without breaking the current broad up trend. So, the bulls still have plenty of buffer zone before they are in any trouble at all.

VIX remains only moderately higher. Bears should really be seeking VIX +7/10% by the close, which would equate to around sp'1340.

sp' daily5

sp' weekly

*You can see that a break into the 1320s would really do some damage, and break below the underside of what is a six week giant bear flag (wave'2).


A pretty quiet day. We do have consumer credit at 3pm, so that will be something for a few to watch.

As it is, I'll look to hold short overnight, I'd really like an exit at least 1335. What would be interesting is if we can close around 1340..and then gap down into the 1320s - breaking the up trend..and opening up much deeper falls later in the week, even <1300.

Indeed..the Tuesday open will be very important for the bears.
Time for lunch!

11am update - its oh so quiet

Morning weakness continues, but its still very minor moves.

The VIX daily/weekly cycles are still warning of major increases in volatility, but..until we're over 20, none of these 5/7/10% moves can be taken seriously.


VIX, daily, rainbow

Blue candle so far today on the rainbow chart, a green candle by the close would be a bonus to the bears, and set up the next move to hit VIX 20.


First soft resistance, the hourly 10MA @ 1353. I'd be very surprised if we can break into the 1360s today. We 'should' on any basis at least hit 1340 in the near term.

Its kinda starting to look like we might just trundle sideways all the way across the day, merely awaiting the first earnings report from AA.

I remain short, first exit target 1340/35..which now looks likely not until tomorrow.

10am update - morning weakness

It was somewhat amusing to see them briefly flash the markets green, only to then knock it lower. Bulls had a chance to exit at 1355...there can be no excuses today!


Bears should look for a break below the baby bear flag (pink), sp'1347/45 would confirm it, and that opens up 1340 later today.



VIX is higher, but its still arguably minor 'noise'. Bears will want to see at least +7%, preferably 10% to close today.

We have Alcoa (AA) earnings at the close, I can't imagine them posting anything good.

Pre-Market Brief

Good morning. Futures are marginally lower, sp -3pts, so we're set to open around 1351 or so. Nothing much  happened overnight, I guess Mr Market is waiting for the next EU rumour or some other nonsense.

*The only econ-data today is consumer credit later this afternoon at 3pm. I suppose that could move the market a little, but it tends not to be that much of a market mover these days - even when the number is bad.

A reminder on where we are....


Sp'1335 would certainly be a very natural place to target later today or early Tuesday.

sp' daily5


I'm looking for at least a move to 1340 today, that would be a nice 14pts lower, I'll look to exit there, and then see how any latter day bounce action is.

The lower channel line on the daily suggest 1330/35 today, but that will have risen to 1340 by this Friday.

So if we're below 1340 by this Friday, that in itself should mean we're on our way to sp'1266, although right now that seems at least 2 trading weeks away.

One last bounce?

There are plenty of chartists out there suggesting a move to 1340..and then a bounce to either put in a slightly lower high..or even one final higher high in the 1370/90 range. That remains my concern early this week.

Those bears looking for much lower levels must seek a VIX breaking back above 20 this week. If the VIX closes flat today (or even red!), then bears have a real problem again.

Good wishes for the trading week ahead!