Tuesday 17 July 2012

Volatility..falls again

Early morning jitters about the lack of Fed action only saw the VIX briefly climb 2%. The close was a lousy -3%, and VIX remains bizarrely low.

VIX, 60min

VIX, daily, rainbow

Still no blue candle yet..bears can't get excited yet.

VIX, weekly


Nothing too dramatic today, just minor declines. We are getting real close to the floor. It might even have been put in today, but I'm guessing at least one more move lower.

Some will be looking for a brief drop outside the lower bollinger band..a red reversal candle..and then UP we go!

The big weekly chart outlook looks fine...VIX should explode into the 30s/40s this August.

Closing Brief

Its possible the top was put in this afternoon, but it will take a few more days for any conclusive rollover on the daily cycle to occur.

The closing hourly index charts...





The VIX closed moderately red -3%, and thus the index gains were confirmed. Certainly, there is NO bearish rollover yet.

The big issue for Wednesday will be do we somehow magically break 1374...or do we get stuck? I'm guessing the latter.

More later

3pm update - closing hour boredom?

Afternoon gains are holding up very well for the bulls. Doubtless, many will be touting new index highs >1422 again. 1422 sure ain't far away, a mere 4%, but its 4% too far.

The daily cycle is looking good..check the MACD (blue bar histogram) cycle...

sp, daily


We are putting in the third tower of this up cycle since the 1266 low. A triple up cycle is pretty much the most the bull maniacs could have hoped for. No way can I envisage a fourth wave higher next week.

I'm certainly open to the notion that I might short tomorrow at 1365/70.and we still briefly hit 1385/90...but I would not be concerned. The risk/reward at current levels is very good.

Clearly, the big money bears can short ALL they like, with good short-stops anywhere from a tight 1375, to loose 1390..or even 1423.
So, I'm going to wait until tomorrow. One more little block on the MACD cycle...that should be enough to complete this wave. 

More after the close

2pm update - oh so tempting!

Hmm...it sure is tempting right now to start hitting buttons...

A rare intra-day update on all 3 major hourly cycles...

IWM (representing rus'2000 small cap)




We're approaching my re-short target zone of 1365/70.

I do NOT expect a new high >1374. I might be wrong, but 'worse case upside' is 1385/90, so I'd not be too annoyed if we jump a further 1.5% higher.

For the moment, I am not on imminent standby to start hitting buttons. The daily cycle is NOT showing a turn yet.

It is getting a little exciting though, we're getting so close to what could be micro-wave'2 of big'3.

1pm update - PBD (post bernanke depression) ?

A pretty dynamic day so far...sp+7..then -8...now +7 again. With the VIX -5%...bears certainly are not in control of things right now.

The daily chart is pretty clear, we're still in an uptrend. The only issue is whether we get stuck before 1374, I'm guessing we do.




Market seems to be holding up quite well, but will Mr Market be a little upset now that the Bernanke is gone? The good news...

Benny returns tomorrow at 10am.  Oh yeah! The fun never ends!

We could certainly see a few hours of chop this afternoon, but I'd guess we close around current levels, and that opens up 1365/70 tomorrow. No point shorting ..yet, as those TVIX/UVXY players are again realising, urghhh.

More later!

12pm update - Buy the Chairman Dip?

Choppy action this morning, but it looks like we could have seen the end of a little B' wave lower - flooring at sp'1345. That would make for a near perfect floor, its near the base of the up channel.

All that's missing now.is.the final C wave up. That could complete by late Wednesday or early Thursday. Clearly, the bulls will want to punch above this mornings high of 1361.

So..if we're 1365/70 tomorrow/early Thursday..I'm hitting buttons.


VIX, daily, rainbow

Still no blue candle on the rainbow chart!


With the VIX red, its looking like 1345 was the floor for what I believe might be a standard B wave.

Bears should start preparing for a major re-short tomorrow, in the mid/upper 1360s.

The good bear..is a well prepared bear ;)

11am update - Uncle Ben Chop-fest

The hourly chart says it all. The bullish pennant did indeed get confirmed at the open with sp+7pts..yet as the Bernanke was finding his chair.. markets have flipped red and are testing the soft support of 1350..which has failed to hold.

Its not looking so great right now. I guess the day-traders could chase it lower with a tight stop, but I can't.



The VIX is only marginally higher +1%, so its confirming the declines, but this is still a very weak gain so far.

In terms of the hourly cycle, we could easily bounce off the lower channel line, somewhere around 1340/45

A daily close in the 1330s would be pretty bearish!

There is probably at least another hour of Ben to come, this session could last until 1pm.

10am update - Time for Bernanke

A reasonable start to Tuesday - although the gains are now fading, the break over 1360 does open up 1365/70 within 3-5 hours. It is going to be very tempting to short today if the hourly cycle starts to rollover after lunch


sp, daily5


Look for a reaction to this mornings Bernanke talk AFTER they close the session, sometime around midday.

I remain on the sidelines, but standing by to short later today, target zone is 1365/70.

Stay tuned

Pre-Market Brief - Its Bernanke Day

A busy day is ahead. We have Bernanke talking to the Senate Banking Committee at 10am, and that will probably last until midday. We've 3 pieces of key econ-data, all of which will give the market an excuse to move.

Futures are currently showing sp +5pts, so, we are set to open 1358- which is a touch above yesterdays high.


The hourly index charts are all showing bullish pennants. I only noticed them in the closing hour yesterday, but its one reason why I'm not surprised at what look to be moderate gains. Max' upside for today looks to be sp'1370 (upper channel line). I'd think we're far more likely to get stuck around 1365/67.

sp, daily5


So, is the top to be put in today? That is very difficult to say, but if we get stuck in the 1365/70 zone, I'll be very tempted to launch a re-short. My near term outlook remains bearish for the end of July and into August, so I'm definately seeking to jump aboard.

Benny will doubtless get blanket coverage on the clown networks all morning. Mr Market will be pretty fixacted on every word, look for a move after he has ceased talking.

Good wishes for.Bernanke trading day!

The Ultimate Death Cross - a preliminary warning of trouble in 2013

To close today, I want to highlight something I noticed on Zerohedge earlier today- detailing the looming 'ultimate death cross'. I wasn't even aware that there are chartists out there who consider a 'monthly death cross'. The 'daily cycle' death cross is something that just about everyone is aware of - and that gets a fair bit of publicity at least once or twice a year, so this 'monthly cycle' cross of doom was actually new to me!

The last time we saw the contrary 'ultimate golden cross', was in the mid 1960s I believe. So, its been almost FIFTY years since we've seen the 50 MA below the 200 MA.

I suppose the doomsters could call it one of the key signs that the 'American/Western economy Golden Age' is coming to an end. For the moment, all I know is that the printing maniacs are still out there on the loose, and are ready and waiting to pump asset prices right back up.

Sp, monthly, 6yr

sp, monthly, 20yr

Stockcharts only go back twenty years, but you can clearly see, the 50 MA has always been above the 200MA, but is now a mere 6.57 pts away.


Even clown channel (CNBC) did a feature on the 'ultimate death cross' today (dare I cite them?)..take a look anyway....

When will the death cross occur ?

Even if we fall to sp'1200/1150 by the end of August/early September, the very slow moving monthly averages might not cross for some months to come. It might take as long as October, and even then..if the Bernanke has initiated QE3 - with a strong market ramp, then the cross might not occur at all this year!

Anyway, its something to keep in mind, each time you see one of the monthly SP' charts on these pages.

Goodnight from London

Daily Index Cycle update

A choppy Monday, yet the indexes are still broadly climbing since the low of sp'1325 last Thursday. Whether we put in a new high >1374, or rollover before then, is very hard to say right now.

Regardless, such higher prices should be seen as a bonus by the big money bears out there. A rollover and significant wave lower are due to start within the next week or so.

IWM, daily

SP, daily



These are all minor moves in the scheme of things. We did indeed close off the lows of the day, so maybe that is a little sign of the underlying up trend that we're still in.

How will Tuesday pan out? I'd guess even if we see a move lower to 1345/40, the bears would still be wise to wait until Wed/Thursday.

If we're around 1360/65.and getting stuck on Wednesday, I'd be very likely to re-short then.

A little more later.