Tuesday 31 July 2012

Volatility holds onto moderate gains

With the indexes closing at their lows of the day, the VIX similarly closed at its high of the day.


VIX, daily, rainbow

VIX, weekly


The daily rainbow chart again put in another green candle. With the upper bollinger at 20, that would be the natural first target for bears tomorrow, if the FOMC disappoint.

VIX remains low..there is an awful long way up just to hit the mid 20s - which is traditionally the zone where only 'moderate market declines' take the VIX.

For the bears looking for a major new wave lower, look to see VIX break 21, if we see 21.25/50 at any time, then it could get interesting. Yet, at the same time, I still think any index decline are not to be trusted until we're back under sp'1325.
In the bigger picture, I remain looking for VIX 35/40 in August

Closing Brief

The close below the 1380 level should be seen as a tiny victory for the bears, but the hourly charts ALL now have bull flags, and the MACD cycle is fully reset.





Yes, we closed at the low of the day, but its minor noise, and can't be taken seriously. You can see bull flags (pink) on the hourly cycle charts, we could easily gap out of that at the open tomorrow ,or battle our way to 1395/1400 if the market likes what the fed has to say.

As ever, high risk holding into a Fed day. Urghh

More later

3pm update - Closing hour churn

Well, the 1380 level is holding up pretty well. A close above it looks more likely than not.

sp'60min, rainbow



Mr Market is merely in a holding pattern until tomorrow, awaiting the results of the FOMC jury. Urghh

* the hourly MACD cycle could easily be flooring at these levels, and as others out there note, a move into the 1390/1400s is viable. Whether that makes for a final wave'5...no idea.

All I am sure of right now, all declines until 1325..not to be taken seriously.

More after the close

2pm update - still relatively quiet

A brief print under 1380 of 1379.80, maybe that was the low of the day. In the bigger picture, its all noise of course. Besides, tomorrow is a fed day, who wants to take new positions ahead of what those crazy printing maniacs might do?

A close under 1380 would be a small prize for the bears, but it sure isn't much considering we were in the 1330s last Tuesday.

Sp'60min, rainbow



A flat close, a touch above 1380 looks most likely.

MACD cycle on the daily still cruising higher...doesn't look like we'll get a fourth smaller tower after all.

Q. Whats up with AAPL today? +2.6%, $15 to 610..  algo-bots chasing the momo stocks again?

1pm update - awaiting first break

Mr Market trying to hold the 1380 level, its not looking like it'll hold much longer. VIX still only +3.7%, so the bears can't take any of this seriously..yet.

Bears should clearly be seeking a close <1380.

sp'60min, rainbow


Any break of 1380 would - in theory, open the door to a move to 1360. Yet, even if that was hit tomorrow, that could just make for a brief retracement before a launch higher.

Only with a close under 1325 can ANY declines be taken seriously.

FB getting some attention today.... -6% @ 21.76..... shame.

12pm update - churning sideways into Fed day

With the econ-data inline, Mr Market is now content to trade sideways for the rest of today. Another doji candle perhaps?

I suppose if Mr Market wants to set a few of the bulls on edge, a close of 1379/77, but that looks kinda unlikely. We've already seen the 1380 level hold well.

sp'60min, rainbow


quiet day...nothing much to add.

FB declining into the 21s is somewhat amusing though..well on the way to the low teens. I would only considering buying it @ $1.25   Thats not a typo...one dollar....25 cents, then I'll...consider it.

11am update - flat top, daily cycle?

With a few pieces of econ-data coming in slightly better than expected, the marginal declines are erased back to evens. VIX remains a touch higher, but that could easily flip red later today.



Nothing much to add right now. Looks like market will flatline for rest of the day.

However, its possible we are developing a multi-day flat on the daily cycle, and as many say 'flat tops..equal market drops'. The stop levels for those taking on new positions are clear... 1392 short-stop....1380..long-side.

10am update - bored already

Somehow the Chicago PMI comes in better at 53.7, so Mr Market is again pleased with everything. Yet, who wants to be going long at these levels?



Well, seems like Tuesday might be boring after all.

VIX is barely up..and could easily flip red later this morning.

So...its looking like its a waste of time watching this casino until after the FOMC annoucement tomorrow.

Notable stock moves.. AAPL +2%..to 605. 
COH, coach (bag maker)..-20%

Pre-Market Brief

Good morning. Well, its Tuesday, and today should be a lot more active than yesterday. We have no less than 6 pieces of econ-data across this morning. Futures are currently marginally higher, sp is +2pts, and is set to open around 1387 - which is still 4pts below yesterdays high.

With all the econ-data we could easily swing +/- 0.5% or so before we finally open.




Even though we do have a lot of econ-data, the market will most definitely be focused on the FOMC meeting which begins today - the announcement is tomorrow (2.15pm EST). So there will be more talk on the clown networks about the 'coming QE' and how the Bernanke will prevent the market from losing any of its recent gains.

There is also the ECB on Thursday, and we have another lousy jobs number to look forward to on Friday.

Today is the last trading day of July, which as I noted last night, is without question a disappointing month for the bears. Perhaps today, we can at least close moderately lower.

The critical 1325 level looks an awfully long way down right now for the bears, it sure won't be easy getting down that far.

*look to the Chicago PMI @9.45am to get the market motivated..one way or the other. Considering the wider economy in late Q2, this number could really suck, so it is possible we'll be down 1% by mid-morning.

Good wishes for Tuesday trading!

July - a disappointing month for the bears

With just one trading day left of the month, it has to be said, July was a very disappointing month for the bears. There were many (myself included) who were looking for a move to 1365 and then a swift fail. The target was indeed hit, and we did see a turn back lower, but we've seen subsequent further up waves, each putting in slightly higher highs.

In some ways the strength in July should not be too surprising though. After all, June closed extremely strongly, and we have indeed seen some follow though - although its only 1.7%

sp, monthly


It does look like July will close at least marginally higher. I suppose if the market can close 10/15pts lower tomorrow (probably wishful thinking), that'd be something for the longer term bearish traders to help in looking forward to August.

As for Tuesday...

We do have some econ-data in the morning, but the market will be firmly fixated on the FOMC meeting which begins tomorrow, with an announcement on Wednesday. I certainly don't expect QE to be announced, but they sure could overtly hint at it, and that might be enough for the market to resume the recent 2 day hyper-ramp.

One thing is for sure, Tuesday will be more dynamic than today was.

Bears need to see a break below sp'1325 (with VIX +21) to have any confidence right now, whilst the bulls merely need to consolidate sideways a little - after last weeks major turn higher.

Goodnight from London