Friday 31 August 2012

Volatility a touch lower

The VIX actually had a pretty flat day, which was surprising considering the moves/direction of the main indexes today.

Arguably, the most bearish chart of the week, the VIX weekly cycle, where we have a confirmed close outside of a giant wedge. Immediate upside target is 21, sometime next week.





Considering the indexes were dow +120pts earlier today, the VIX held together pretty well, Also, the fact that the uncertainly inherent about Jackson Hole is also out of the way, the VIX did hold up well indeed!

The hourly and daily cycles show a nice near term up trend that is still broadly continuing.

However, most important of all, the weekly cycle did get the confirmation I was seeking last weekend. We have another tick higher on the MACD cycle, and we are set to go positive cycle at the Tuesday open.

The weekly VIX cycle is warning of index declines next week. Sp'1385/80 looks very viable next Tue/Wednesday.

More later

Closing Brief

I think today was a bit of a rough day for most traders, and for many, August as a whole was a difficult month - even for those on the bullish side.

The closing hourly index charts...





So, August trading comes to an end. September is going to be a lot more active...I hope.

The hourly index cycles are a real mess after today's chop, but at least, Jackson hole is out of the way. We're done with that nonsense for another year.

Next up...the monthly jobs data next Friday - although there are various EU meetings early next week, that might take more centre stage.

I remain seeking at least a hit of 1385/80 early next week.

Have a good weekend!

*More later this evening, with bits and pieces across the 3 day weekend.

3pm update - closing hour weakness?

The big closing hour, of Jackson Hole day. The last trading day of August, and hopefully, the end to the summer doldrums.



Well, lets see how we close into the 3 day weekend

*I've added to existing index shorts, from the sp'1408 level.  Certainly not the top of the day, but, its barely 1% from the recent 1426 cycle peak.

2pm update - it remains a mess

This is one hell of a way to end the month. Today's chopfest continues.

Just look at the 5min chart for today...





What can be said today, other than 'urghh'. The moves in themselves are less than 1% swings, but still, its starting to really get annoying.

*as for the closing hour, who wants to hold across a 3 day weekend? Bears are highly susceptible to a Tuesday gap higher - ECB issues? , whilst bulls are going to have face a lack of QE until after the election.

Ugly market, and for ugly August.

Stay tuned.

12pm update - fiercely choppy

What a semi-horrific mess its turning out to be. I guess this is one way to lead into a 3 day weekend

Early dow 110pt gains collapse to near evens, now we're back to +120pts, with the VIX -3%, the dollar is getting smacked lower, with most indexes up around 0.75%.




A real mess, and the immediate hourly cycle trend is starting to look toppy again.

Downside target is 1385/80 still, but thats assuming a new multi-week rally is not beginning today.

Very unreliable trading day.

*Metals are making clear breaks higher

10am update - At the Hole

Good morning. The Day of the Hole, and we're already in ramp mode.




Lets give this nonsense a few hours to find a clear direction.

As I been noting for a few days, the problems the bears face is the MACD daily cycle is already pretty low, and right now, its starting to tick higher again.

Rus'2000, warning of trouble?


The black candle of doom to open the day. Hmm, not the best of starts, and IWM is close to going red.

Can the tranny close under 5k this August?

Friday is not only the last day of the week, but the end of trading for August. Once again, its important to watch how the transports closes the month.

Today's close under the big 5000 level was pretty bearish in itself, but how we close Friday will be infinitely more important.

Transports, monthly

Transports, monthly, rainbow


So, the tranny closed at 4993, that's pretty good for the bears, but can it hold under 5k tomorrow to close the month? Its too hard to call, regardless of what the Bernanke says, what will be even more important is how the market interprets the words. Market perception - whether delusional or 'facing reality', remains the key aspect.

The rainbow chart is still sporting a red candle for the tranny, and remains one of the first real warning signs for September.

Best guess for Friday, a sell off, as far down as sp'1385/80, but that will probably be it for this cycle. We have a 3 day weekend ahead of the market, and considering the MACD cycle on the main indexes, we could easily see a 2-4 day recovery next week. The only issue then will be, can we put in a lower high <1426, or continued further melt upwards

What remains central to this autumn, are the two events of mid-September, the FOMC of Sept'13, and the German constitutional court ruling on the ESM of Sept'12. Both will largely determine whether the SP' drops to 1200, or will continue to melt higher to close the year in the 1500s.

One thing is for sure..August is almost done. ;)

Goodnight from London

Daily Index Cycle update

The market closed moderately lower across all indexes, with the VIX confirming the move. The dow is closest to breaking the trend line from the June low.

Dow, daily

Sp, daily

Transports, daily


An interesting day. Sure the declines were barely 1% for some indexes, but its the first decent bit of price action in over 5 trading days.

The dow is actually pretty close to breaking the June rising trend line, we only need to hit 12925 tomorrow - a drop of only 75pts to make a clear break. The next key level is 12800, so there is a near term 200pts to the downside available.

Sp' downside target remains 1380, it will be very difficult to break under that. Secondary target - the previous cycle low, is 1354. As I keep highlighting, the bears need sp'1340s to get confident.

The tranny closed under the important 5000 level. A close tomorrow under 5k would be a really important warning, and make for a nice red candle on the rainbow monthly chart.

A little more later