Volatility marginally higher

With the indexes closing moderately lower, the VIX confirmed the move with very marginal gains. However, in the scheme of things, such moves remain largely noise. Until the VIX breaks back over 20, the bears can't take any index declines seriously.


VIX'60min

VIX, daily

VIX, weekly

Summary

The hourly cycle is primed for a few hours higher, but the formation is arguably a bear flag - with corresponding bullish pennants for the indexes.

So, if the market is pleased with any Tuesday earnings data, and can cope with the words of the Bernanke, the VIX could still fall back into the 16s, even 15s briefly this week.
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I still expect a VIX explosion into the mid 30s..possibly 40s sometime in August. Right now, I don't expect anything above VIX'50 this year. The 50 level is an absolutely key threshold those seeking a crash/collapse wave are going to need to keep in mind in the months ahead.

We have a very dynamic and turbulent few months ahead. With the Bernanke still to initiate QE3, All projections subject to change ;)

Closing Brief

A really choppy Monday, and the closing hour certainly was a little disappointing for the bulls. The VIX closed marginally higher, so confirming the moderate declines.


IWM (representing rus'2000)

Dow

Sp

Summary

From a MACD cycle perspective, the hourly cycle is set to go negative in around 2 trading hours - so, that would be around 11am tomorrow. It'd sync up well with the Bernanke speaking.

In the scheme of things though, today was all noise, although that is probably a good thing after last Fridays dow+200 lunacy.
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More later.

3pm update - closing hour gloomy doom

Whilst the market churns and chops around, here is something for your viewing entertainment from Bloomberg. Mr Stockman is yet another one in the mainstream who is starting to recognise that things are indeed weak in the broader economy...and that the US is indeed headed for recession.

It'll probably take another 2-3 weeks for the majority of the mainstream to again briefly awaken and realise 'ohoh..we have a problem'.




*it remains disappointing how Ms. Liu has turned into one of the more annoying cheer leaders out there on the clown networks. I suppose I shouldn't be surprised, but still.


meanwhile..back at the casino...

sp'60min

Summary

Sp'1350 looks like reasonable soft support right now, at the current up trend rate, we could be comfortably around 1365/70 by the Tuesday close.

With the Bernanke due to speak for much of tomorrow morning, Mr Market could be said to be effectively shut until he stops talking. So, maybe look for a post-Benny reaction around midday Tuesday.

More after the close

2pm update - no bearish turn yet.

Whilst the smaller cycles remain choppy..a quick look at the bigger daily cycles..rainbow style...


sp, daily, rainbow

vix, daily, rainbow

Summary

There is NO sign of a turn yet - via a blue candle..so those 'big money' bears..will be smarter to wait.

It is highly unlikely we'll see any turn tomorrow either. In fact we could see a further wave higher (C wave?), into the 1360s.

Tuesday earnings, INTC..will be a market mover. They remain a superb company, and I can imagine them doing okay, and thats got to be an excuse for a further ramp.

So..for the smarter..and more conservative bears...its looking like no button hitting until at least Wed/Thursday.

1pm update - afternoon meanderings

A choppy start to the week, things will probably be somewhat clearer by opex Friday ;)


sp'60min

VIX, rainbow

No sign of a turn/blue candle on the VIX rainbow chart yet.


Summary

The hourly cycle easily permits a decline down to around 1345 by the close. That would be a little problematic to the bulls who want to break >1374, and they sure won't want a close in the 1330s!

With the Bernanke due to speak tomorrow, its not exactly a low risk trade for either side right now.

As I like to say..the good bear is a patient bear.

12pm update - lunch time chop

For many, this type of market action is probably starting to get annoying again. Yet, we are in a small up trend still, and it seems there is at least some way higher yet to go.

With the Bernanke tomorrow morning, I'm not sure how Mr Market will take it. Will Benny upset things, or might a little mention of 'further measures if necessary' cause a secondary ramp wave to 1360/70s?


sp'daily5

Summary

No change from main outlook.

Sitting on sidelines..waiting for a re-short, no earlier than Tuesday. I'd like to see a few more little blocks on the MACD cycle - forming a little tower, before hitting any buttons!

Time for lunch!

11am update - messy Monday morning

Its a bit of a mess out there, moderate early morning declines, but now we're seeing a pretty strong rebound. VIX is about to turn red, and that sure doesn't bode well for those bears chasing the lower open. Ouch!


sp'60min

VIX, daily

Summary

There is NO sign of any bearish turn lower, quite the contrary. We could easily see a secondary ramp wave Tue or Wed, and it might even take out the recent 1374 high.

Even if we do break a new high, it does not ruin the bigger picture, although I sure don't want to see any move into the 1390s.

However, when the next down cycle starts, its has to be many times stronger than the recent one that went from 1374 to 1325.

So far today then...everything as expected.

More later.

10am update - minor declines

As expected, minor declines for early Monday. VIX is up 2%...barely qualifies as 'noise'.

I'd guess we trundle lower for 3-5 hours - I don't expect anything <1345, and start to show an upturn late in the day. No point re-shorting here, even though the Bernanke speaks tomorrow - often a somewhat bearish event. It still looks like the maniacs want to at least make one charge this week to take out the recent 1374 high.


sp'60min

sp'daily5

Summary

Seeking a B' wave lower. I suppose it could last all the way into early Tuesday...too difficult to say.

I am not going to get involved in this chop-fest. I'm sitting it out until the daily cycle starts to rollover again..and right now, there won't be any sign of that until late Tuesday at the very earliest.

*Bernanke speaks both tomorrow AND Wednesday, so we have some good entertainment this week.
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*recommneded reading... Ultimate Death Cross
I have a lot to say on this issue, but I'll save it for my closing post of the day later this evening.

Pre-Market Brief

Good morning. Futures are sp-5pts or so, we're set to open around 1351. I'd expect those declines to increase to around 7/10pts  by late morning, and best guess..we close largely flat.

I'm seeking further gains tomorrow - at least briefly. Both these waves could constitute the B and C waves.

We do have econ-data this morning...
Retail Sales: -0.5% vs 0.2% previous ...lousy !
Empire Manu' survey:  7.39%...vs 2.2% previous...better, but still 'low'
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sp'60min

sp,daily5

Summary

I am not looking to re-short today, tomorrow seems the very earliest, and then its a little risky since upside is around 1385 by the end of the week.

From a MACD cycle perspective - see daily chart, we could easily crawl higher until Wed/Thursday before the first sign of a rollover. However, unlike some out there, I am looking for a decisive turn lower before the end of this week.

Best guess, we rally to around 1365/70...or a new high in the 1375/80 range, and still close the week around 1350.

Good wishes for the week ahead!