Wednesday 15 August 2012

Volatility..minor chop

A fractional decline in the VIX today. The daily cycle is suggesting downside momentum is beginning to wane. A new up cycle is well overdue.


VIX, dailly


The underlying MACD (blue bar histogram) cycle is suggesting a new up wave is due, but it really might not amount to much. If we can't even break into the 17s, then those looking for VIX 12...even 10, will have a chance by early September.

However, what remains clear, for those buying long dated VIX calls at these levels, there sure is an awful lot of upside potential.

Closing Brief

Another day of nothing. We close with most indexes all holding within their ever narrower bearish wedge. The Rus'2000 and the Transports remain a real mess, no clear formation I can fathom.

The closing hourly index charts...





The Rus'2000 and Transports were showing some strength today, I'm not sure what to make of it really, both indexes can be leaders, are they warning of ramps in the dow/sp'500 tomorrow?

A little more later, but conditions remain the same as over a week ago.

3pm update - the exciting closing hour....if only

Sideways chop into the close, simply...nothing is going on. There is certainly potencial for further melt up, if sp' can break 1410, it could take a fair few stops out.



The 60min cycle has reset to a large extent...and now able to proceed up into tomorrow. Not that anyone is buying of course.
I guess we'll close largely complete day'8 in this tight range.

2pm update - still waiting, on the edge

The dow is close to breaking the lower channel/trend, as seen on the hourly...


Transports, daily


Another 15/20pts off the dow, and we might actually have a chance at leaving this current super narrow trading range of the past 8 days.

*the transports is seeing some considerable strength today, and I'm really not sure why. 

1pm update - boring nonsense

I'm getting real tired of this. Its day'8 in a trading range of just 20pts on the sp'500 index.




Both the hourly and daily charts are clear. In price terms we are flat lining. Underlying momentum (see MACD) continues to weaken. At current rate of decline we'll get a bearish MACD cross next Monday.

Urghh, another 3 days of this 'nothing'?

12pm update - wake me up at dow -60pts

Back to the 'nothing' again. I suppose if we do get to having wild intra-day swings in the Sept-Nov' period, people will be longing for zero volume chop. Such is human nature.


sp, daily, rainbow

5 blue candles on the rainbow chart, this is making for hell of a top !


Nothing going on...urghh!

11am update - waiting for a fall

Market remains very minor chop. The daily cycle continues to lose upside momentum, and some sort of weakness should be seen increasingly through the rest of today.


VIX, daily, rainbow


If we break the lower channel line, we should start to see some significant declines by the close.

Look for dow -45/60pts. If we see that sometime today, it should be indicative of a major turn underway.

Regardless, stop levels for anyone wanting to take new positions are VERY clear, since we've been in such a tight trading range for the last 8 days.
VIX remains largely flat, nothing notable yet. Yet, we do have two blue candles on the rainbow chart...a turn is being indicated.

10am update - choppy open

With somewhat mixed econ-data, the market looks kinda lost already.

VIX is a touch lower, we're back to 'not much happening', after just 30 minutes.




Dow'30 bounces off the hourly lower channel...I would still guess it'll fail to hold sometime today.

Another day of nothing? Urghh.. I hope not.

Pre-Market Brief

Good morning. Futures are a little lower, sp -3pts, we're set to open around the 1400 level.

*Empire manufacturing survey, -5.85 vs +7.0 consensus.   Ugly !



Bears really need a close in the 1380s today. That would make for a good initial decline. Even though its opex this Friday, it looks like we'll be falling into opex, rather than trade sideways. We've been stuck in a 20pt trading range for 7 days, I can't see it lasting much longer!

So, look for a close in the 1380s, and VIX in the low 16s.

*we have industrial production and housing data to come at 9.15am and 10am respectively.

Good wishes for Wednesday trading.

WTIC Oil - looking for a break of the flag

Oil was a touch higher today, but remains below the ultimate psychological level of $100. All those who are on the 'US slipping into a recession in Q3/4' waggon, should be wanting to see lower oil prices as a sign of underlying weakness in the global economy.

WTIC, weekly


We have a clear bear flag on the weekly cycle, although in price terms, its to be dismissed if we put in a few closes over $100. Indeed, the bears should want to see prices level out here, with an attempt to break the flag no later than mid September.

First target would be $85, that should confirm the flag, and open up a test of the recent low of 77.28.

If we can break into the low 70s...that should allow $60 across a number of months. That could take until late spring 2013 though.

An unreliable commodity

Oil remains a real wild card though. Not only is the price rigged by the cartel of OPEC, and greatly affected by basic demand/supply aspects, there is also the never ending chatter of 'imminent middle east conflict' that often sends prices higher.

One final thing, is the issue of further QE. How can the Bernanke (or his successor - if Romney wins) do QE with Oil already close to $100 ? Oil back over $125/140 would be a very serious problem for the struggling western economies. I would guess, the Fed would be more than happy to launch new QE with Oil in the low 60s. Who would complain then?

Goodnight from London conclude tonight..a word from his highness....

Daily Index Cycle update

Another day trading within the same 20pt zone that we've seen for some 7 days now.



A fractional lower close on the sp'500. Yet again though, the bulls can claim a higher high..and even a higher low compared to yesterdays action. Primary trend in price remains UP.

What is clear, the bears need a close under 1390 for even the first initial indication of some kind of cycle top.

Even more important, only with a close <1350, can the bears start to get a little confident of a bearish autumn ahead.