Wednesday 5 September 2012

Volatility a touch lower

With the main market largely unchanged today, the VIX was similarly somewhat flat, closing just over 1% lower. However, yesterdays black candle remains something of a warning that a new up cycle in equities is very viable.




We remain in a broad up trend, as seen on both the hourly and daily cycles. Yet, that black candle really should be considered a serious warning.

Similarly, just look at the MACD (blue bar histogram) cycle, which is now clearly rolling over. VIX is set to drop for the next 5-7 days, baring a 'market upset'. That of course may indeed come from the ECB tomorrow, so its something to keep in mind.

As things are, I'm guessing Draghi will somehow give the algo-bots the excuse to either gap the market straight over resistance of sp'1412, or at least keep the market from breaking support @ 1397.

*from a big 'doom perspective', it could be argued that the recent up wave is minute'1 of a larger down cycle that is now underway. In that case, we're due VIX to decline in a minute'2, before a '3 allows the VIX to break into the 20s...and 30s sometime after mid-September.

More later.

Closing Brief

Another quiet day, although this no doubt due partly to everyone waiting until the ECB decision tomorrow.

VIX closed a touch lower, and still confirms the underlying strength in the indexes.





There really isn't much to say. The Rus'2000 index remains pretty strong, with the Dow/Transports lagging the broader flat market.

We'll very likely get a major snap tomorrow. I'm guessing it will be higher.

As a permabear, I'm sitting this out.

More later.

3pm update - bullish Thursday

The closing hour, seeking a flat close, still in a trading range of 2% that has lasted almost 5 weeks.

dow' daily


Suffice to say, seeking a break higher tomorrow. Whether that is to new highs..difficult to say.

More after the close

2pm update - more noise

A quiet Wednesday, and everything is now on hold until the decision of the ECB is made tomorrow.



From a MACD cycle perspective, we could in theory go negative cycle just before the close, so there is the likelihood of some weakness, but there really isn't much momentum to the downside right now.

VIX is still a little red, and does not bode well for the bears tomorrow.

12pm update - ready to jump

Mr Market awaits the ECB/Mr Draghi tomorrow. We'll probably close within a point or so of where we are right now.




Default position right now for any bear is surely to 'sit it out'. Too much risk of a giant gap higher tomorrow in the US markets.

time for lunch!, back at 2pm

10am update - choppy

Good morning. A mixed open, and a little weakness is again showing through. Despite the weakness, I don't expect a break under yesterdays low




Considering the daily cycles - see last evenings update, I just don't see this market going below key support of sp'1397.

Draghi will be speaking tomorrow, and that could easily lead to a gap up of 1-2%. Bears beware!

Best guess remains...we do indeed go higher into next week. Whether we can break a new high, thats the key issue. The monthly trend would say..yes...the weekly cycle - rolling lower...'no'.

Until we get some clarity, I sitting it out.

Back at 12pm

Primary trend remains UP

Another quiet day in the market today, we're still in a very narrow trading range of just a few percent, that goes back over four weeks.

Lets look at the master index...

NYSE Composite, monthly, rainbow


If we can take out last weeks high of 8160, then the next target will be the March high of 8327. Frankly, if that is surpassed, a major challenge to the May 2011 peak of 8718 would be almost a given. That would likely take some weeks to attain though, and would be suggestive of a slow motion algo-bot meltup all the way into the Christmas period.

So, in the next few days, we should be mindful of both the 8160 and 8327 thresholds.

What is clear, the current trend on the rainbow chart for the master index is indeed still up  Baring an 'event' spooking the market, higher prices seem very likely.

*I will note, the transports - the 'old leader', is sporting a red rainbow candle for September, so the bigger bearish outlook is teasingly within the realm of possibilities.

Goodnight from London

Daily Index cycle update

A bit of a mixed day for the indexes, but they closed arguably more bullish than bearish. Both the transports and the Rus'2000 index are again leading the turn back higher.

With the VIX putting in a black candle on the daily charts, it seems very likely we'll see further index gains for at least another day or two.





A relatively quiet Monday. All those doomer bears looking for some kind of dramatic move lower today will clearly be disappointed once again. There sure was some gloomy news stories across the long weekend, but for the moment, Mr Market simply does not care.

A new up trend is due...

Look at the MACD (blue bar histogram) cycle, we are showing the first signs of levelling out, and we could easily climb all the way into the next FOMC of next Thursday Sept'13. Can we take out the recent sp'1426 high? It IS very possible, but it sure won't be easy for the bulls.

Yet, so long as there is no sellside volume, the algo-bots will be free to start a new up cycle. First target after 1426, is the upper bollinger - as seen on the monthly cycle, around the 1460 level

For the moment, yours truly is more than content to just sit back and watch.

A little more later.