Friday 17 August 2012

Volatility falling to twilight zone levels

The VIX closed in the mid 13s, this is truly freaky to behold, and there is absolutely no sign of fear in this market for at least the near term. In fact, its almost like we're back to the 2006 property bubble mood again.



VIX, weekly


The big VIX weekly cycle shows no sign of a turn higher. We've seen an eleven week decline, and todays close doesn't bode well for next week either.

Again the question has to be asked, where will the VIX floor? 12s seem imminent next Monday - with the Sp' testing 1422.

The once unthinkable VIX falling below <10, thats really not too far away now. Maybe a few bullish comments by the Bernanke at Jackson hole can achieve such a bullish feat?

But thats fine though, the economy is all fixed, right?

*It is notable that VIX futures for early 2013 are in the mid 20s, although that is not exactly too unusual.

Closing Brief

Today's Opex was remarkably quiet, a 3pt range. Great huh? The VIX in the 13s certainly confirms the current market condition of zero volume meltup. The bots are in full control.

The closing hourly indexes...





What can be said? The market is effectively dead right now. A few chess pieces are moving around the board, but really, the game is currently on hold until the next appearance of the Bernanke at the infamous 'jackson hole' of August 31'st. After that, its 2 trading weeks until the Sept' FOMC, when it seems nothing will happen.

We remain in very clear narrowing wedges on the hourly charts for the SP'500 & Dow'30, but the transports and the Rus'2000 are a bit of a mess still.

It would seem quite possible we'll get a reaction/reversal from the sp'1422 level next Mon/Tuesday. Even if somehow we get a multi-day decline, yet another higher low is likely. For the bulls, so long as we don't break sp'1354...everything is fine.

The bears have a lot to think about over this weekend.

More across the wrap up what has been a classic algo-bot meltup week.

12pm update - opex cburn

There really is very little to note at this point. The market remains with the monthly cycles pushing higher. Sure, the bears can claim we've not made a clear break above the April high of 1422 yet, and both the transports and rus'2000 small cap are lagging way behind, is clear..the near term trend remains UP.

The higher highs..and higher lows keep on coming.


sp'monthly, rainbow


So..its a mid-August day, sunshine, warm...and the algo-bots remain very much in control.

Until we see a break under sp'1350 - some 66pts lower, I can no longer consider any further short positions.

Next update..after the close*
*yes, I'm cutting down...there is very little point in such frequent updates, whilst the algo-bots are in meltup mode.

Pre-Market Brief

Its opex, normally that could be expected to be at least a little bit choppy. Futures are currently flat, to fractionally lower for most indexes.




We're in a clear accelerating wedge on the hourly chart. A break to the downside is likely, but it remains a lousy situation for the bears. At what level will the break happen? 1422 would make sense for some kind of intra-day swing/reversal point.

Yet, there is no catalyst to build downside momentum. There is no volume...and thus the algo-bots remain entirely in control. The melt up is set to continue.

What remains clear, we continue to put in higher highs..and  higher lows.

Next update, 12pm

For those complaining about this market

Its often said, the market is...what it is. Today's latest melt up has clearly rattled and annoyed oh so many traders today. The amount of whining and complaning across the usual financial chatter sites has seemingly really ramped higher in the past few weeks.

Yet, for all those with 'serious money' - who should be using stops, the latest post-June rally should be of no concern. Most should have been systematically kicked out between 1375-1410.

sp'monthly, rainbow


So..what part of this up trend do those who have been maintaining - or adding to short positions since sp'1266 not understand?

Which part of the current green candle on the rainbow (Elder Impulse) chart is too mysterious to understand?

A moody chart community

I sure see a whole lot of whining, bitching, and complaining today, and frankly, its laughable. The market is indeed what it is, today's latest bout of zero volume melt is to be expected - whilst there is still no catalyst to initiate some downside momentum.

After all, if there is one thing we've learnt since the 2009 lows, if there is no selling volume, the algo-bots will cause meltup in price. There are very well understood statistical reasons for why a market with no real buyers can cause prices to melt upward, and they've been covered by math pros infinitely more adept than myself. I sure won't go into that here.

I think its pretty fair to suggest that many of those complaining about this market are as much in denial as those bulls who think the economy is 'going to be just fine'.

All I know right now, is that is a green candle on the important monthly cycle, and that sure is not bearish.

Goodnight from London