Tuesday 14 August 2012

Volatility bounces..a little

The VIX closed up 8% today, but 8% of not much..is not much. VIX @ 14.85 is remarkably low on any historic perspective. I would dismiss anyone who can't recognise that there is very little downside, but huge upside in the current VIX.




The daily chart is very clear, only a break over VIX 17 is the first basic level that bears need to re-take. Even then, its a further 25% higher to break the recent 21 peak.

It remains remarkable to see the VIX at these levels, the notion of '30s or 40s' right now is indeed in the realm of crazy talk.

As noted last night, bears need to see sp <1350...and that would probably equate to VIX 19/20.

More later.

Closing Brief

Opening minor gains..but closing mostly flat. In the scheme of things, it remains all noise.

The closing hour index cycles





The daily charts show it better,  we only closed a little lower, but we did put in a nice spiky top for todays action. This is a minor, but useful 'tiny' bearish sign for the bears.

What is important tomorrow, a close in the 1380s.

More later...

3pm update - more nothing

Another near zero volume day on the NYSE - European exchanges are equally dead. Just what do the brokers do with all their time in office land?



The daily cycle IS still losing momentum, but really, price remains in a 20pt range for the past 7 days.

The VIX is up around 8%, but 8% of not much..is still not much. Until we see VIX 21+...the bears can NOT claim any big picture downside in the main market.

So, nothing much to be expected in the last hour. Maybe we can close down a few points, and at least put in a spiky candle for the daily charts.

2pm update - afternoon tedium

Dull, dull........dull. We've traded in a twenty point range on the sp'500 for seven trading days now. It is a tired market, awaiting 'something'.



A red close is still easily viable, but clearly, there is just no catalyst right now to move things.

...so yes...very tedious....this nonsense could last weeks. urghh

1pm update - hourly cycle maxed ?

As I type, hourly index cycles are getting toppy, and showing a provisional sign of rolling over.

One candle does not make a trend though. Lets see if we can get a few consecutive hours down by the close.


sp,daily, rainbow


Bears should be seeking a red close. The rainbow daily charts been suggesting a 5 day top, underlying daily momentum IS weakening, yet this morning we saw prices melting up.

It remains a real mess, all based on near zero-volume.

12pm update - tired Tuesday

Well, the market is exhausted, but prices keep on melting up. Upper channel is around 1415, although by Friday opex, it will be 1420.

See ZH for the truth on the retail data.



No sign of a turn, underlying mometum on the hourly cycle now back to positive.

Melt..melt..more melt, all the way into labour day of Sept'3rd?

Time for lunch.

11am update - an exhausted market

Despite the good retail data, you can smell the problem in the market right now, its exhaustion. I'd seek a red close.



Underlying momentum continues to weaken. Yet it has to be said, we have of course put in yet another higher high today.

This remains a lousy market for the bears, but there is no doubt, even the algo-bots who have been melting prices higher..seem tired too.

10am update - higher highs, higher lows

With the retail data coming in good, Mr Market is getting an excuse to rally on good news for once. Yet, were the data bad, we'd be rallying on renewed hopes for QE, right?

VIX is green, but its at such a low level, I don't think anything can be read from any up moves.



sp, daily5


Even with the current minor gains, we're still declining on the MACD cycle. Yet price IS of course everything, and there is NO sign of a turn in terms of the main price trend.

Bears need a break below the trading range floor of 1395, preferably a close in the 1380s. That IS possible today, - it would certainly surprise a fair few, but it sure won't be easy.

As stated over and over..until we've under 1350..bears should have zero confidence about declines in the autumn.

Pre-Market Brief

Good morning. There is a fair bit of econ-data across the rest of this week, so expect more dynamic action. At least above 'graveyard level'.

Retail Sales: 0.8% vs 0.3% consensus, hmm, better than expected.




Futures are sp+4pts, we're set to open at a new high of 1408.

Update...with the good retail data, we're now set to open up 7/10pts, in the 1310/14 range

Bears need to break under sp'1350

For the past week or so, I've been noting the importance of seeing a break back into the sp'1340s. Today's close was nothing of note, but we are potentially completing a topping formation.

Interestingly, we've so far failed to break the April/May highs. If we can back under 1350, the original 'wave'2 theory will surprisingly have held, and then we'll see a massive pick up in bearish chatter.



A quiet day in market land, with abysmal volume, and the VIX trading back into the 13s. I mean, really, Thirteen?

From a MACD (blue bar histogram) perspective, we are without doubt, still cruising higher. There is NO sign of a turn, nor even any levelling out. If we can rollover though, it would set up a very bearish September/October, with a viable 6-10 weeks of general downside.

Desperately seeking <1350

What is absolutely clear, only with a weekly close under sp'1350, can the bears start to get marginally confident about seeing much bigger declines this autumn.

With the daily cycle now rolling over, lets see how low the market can go. The previous cycle low was 1354, a daily close in the 1340s would be a very important event.

Goodnight from London.....
          no longer the sporting capital of the world  :(

Daily Index Cycle update

Morning declines largely reversed by the close of what was a deathly quiet day in terms of trading volume (see ZH). With the VIX back to the lows of March, this market does appear to be carving out some kind of top.

The issue again will be, will we merely put in yet another higher low (above 1354), or will a stronger trend change occur. It is possible though we'll bounce, create a minor H/S formation, and then break a new low.



I'm not going to post any of the other usual indexes, they are all pretty much the same today.

The Sp'500 closed today with what is a somewhat bearish hanging man candle.

I refer you to the candle of May 2'nd. Kinda interesting?

So, lets see if we can get a break into the 1380s tomorrow, and close near the lows of the day. We do have some econ-data - most notably Retail Sales, so the market will be more active.

A little more later.