Tuesday 11 September 2012

Volatility flat

Whilst the indexes climbed again, the VIX was effectively flat most of the day.




For the moment, near term looks like the VIX will pull back lower. The big issue will be whether VIX can put in a higher low >14.00.

From a MACD cycle perspective, the hourly chart is pretty clear, we're more than likely to see the VIX cycle reset, with a major fall on Wednesday.

The bigger daily and weekly cycles remain a mess. Things will be clearer once the Fed is outta the way again this Thursday.

Closing Brief

The market closed with moderate gains, there was certainly a little variety across the indexes. Tech was weak, whilst the transports were pretty strong.

The closing hourly charts...





So, another up day..as expected.

I remain content to wait, sp'1445 remains viable tomorrow. It remains a smaller possibility that we'll see a hysteria QE3 reaction day to 1450/60..brief spike, but that won't hold.

Underlying MACD cycle does not favour the shorts overnight, we could easily gap right into the 1440s tomorrow open, even though the German 'yes' vote has already been assumed by many.

The bears time will come again, but for now, its clearly not the time.

More later in the evening

3pm update - closing hour weakness..again?

Market looking tired again, but we're still comfortably green across most of the indexes. Tech' is a touch weak, no doubt due to AAPL, which is now red again.

VIX is a touch red, and remains very high on its hourly cycle. It is still arguably a bad time to be short the indexes.



Nothing much to add...sp'1445 still seems very viable within the very near term.

Only if the sp' breaks below 1425 would I start to wonder if the top is in, for the current up cycle.

Again, it remains the case that we are just relentlessly putting in higher highs..and higher lows, with the recent low of 1397 now the first target in any bear move lower.

So, if we're 1440/45 prior to the Bernanke, and he disappoints the market somehow, we could easily fall 30/35pts, and it doesn't do ANY damage to the primary up trend.

More after the close.

2pm update - I have waited.

Market is comfortably continuing its rally. As expected, yesterdays little closing hour weakness was just Mr Market resetting the smaller 15/60min cycles again. With everything reset, we will probably trundle higher into Wednesday.

The VIX is especially due to fall a fair bit further, as clearly seen on the MACD via the hourly cycle. The bears should look for a higher VIX low, whilst the indexes putting in one final higher high.





The gains are holding pretty well it has to be said.

The primary target of sp'1445 looks viable..not today, but much more likely tomorrow.

There is no hurry, and lets be clear, anyone shorting now is probably too early anyway, and there is significant risk with another Fed decision just 2 days away.

...I have waited so long...for you...Mr Bernanke..to do your QEeeeeeeeeeee.

12pm update - a bit choppy

Market certainly starting to appear a little tired.

The dow and Rus'2000 have broken above what I'm guessing are bull flags on the hourly chart, the sp' is still lagging a bit. Maybe it'll catch up late today/early tomorrow.



Considering the MACD cycle on the hourly, I'm going to wait until tomorrow for a re-short. There is no hurry, whilst we're still in the 1430s. Besides, the daily cycles are still crusing comfortably higher. There is NO sign of a turn yet, especially on the transports which is looking pretty strong still.

sp'1445 is still prime target. I suppose we could briefly hit 1450/60 on some kind of crazy QE hysteria spike this Thursday, but thats 'best bull case', and somewhat unlikely.

I'd really like to short ahead of the Bernanke tomorrow, anywhere 1440/45 would easily suffice!

So...I wait.

Back at 2pm.

11am update - market battling higher

Everything is on track still, a move into the low 1440s seems very likely.



The good bears should be patiently waiting for the 1440s, which could indeed be hit later today.

From a MACD cycle point of view, we are certainly due to keep rising all the way into the close, with a possible minor gap higher tomorrow morning.

10am update - need a break over 1435

A somewhat mixed open, nothing much either way, but if we can break back over the hourly 10MA of 1435, then we should have a chance of 1440s by late afternoon.




I'm focused on the MACD cycle, looking for at least 4-6 hours up, but it could be considerably more.

Until we're in the low 1440s, no point shorting..yet.
stay tuned !

Pre-Market Brief

Good morning. Futures have turned around from sp -5pts overnight, to now +3pts, we're set to open around sp'1432.  That's a pretty good turn, but we do need to break the recent high of 1438.

Target remains 1445, that may take as long as tomorrow to hit.




So, those bears looking for follow through after yesterdays closing hour weakness will be annoyed at the overnight swing.

I've seen plenty of others out there though suggest this is some kind of fourth wave, with one final push into the low 1440s...just as I am looking for.

If we can somehow break over 1440 today, I will be very tempted to re-short ahead of the German court ruling and FOMC.
*it is now eleven years since that fateful morning.... a reminder that we're all only getting older.

Good wishes for Tuesday trading.

Bears need Dow back under 13k

With the market weakening into the close today, there is again a little increase in bearish chatter across the financial web.

The Dow - along with all other indexes, is continuing to climb on a general basis, but its certainly looking like a giant wedge, which by definition should break to the downside. There is reasonable confidence in this outlook, the big unknown though is how far down do we go in the next multi-week down cycle.

Dow, weekly, 2yr

Dow, monthly, 6yr


Clearly, dow 13k is a key level of support, and until that is taken out, the bears are arguably better to just sit and wait for the break lower first. After all, the current trend could just keep on going all the way into 2013.

What is interesting is if 12k fails - as near impossible as that might seem right now,  it would probably lead to an eventual hit of the 11k support/channel. Right now, 11k sure is a very long way down, a 'distant hope' doesn't even begin to cover it.

Were I the Bernanke, I'd sure wait until dow'11k, and then spool up the digital printers to max. As it is, another FOMC decision is due this Thursday at 12.30pm. We'll just have to see what the Fed maniacs decide, I'm guessing nothing is done until the December FOMC.

As for the German court decision on the ECM this Wednesday (time unknown), that's probably even more an unknown variable than the Fed.

Goodnight from London

Daily Index Cycle update

The biggest closing decline in the sp' for six days, but the transports is warning of further upside in the broader market this Tuesday, and possibly also into Wednesday.

Primary target remains sp'1445.




The broader market was weak into the close, but it really wasn't anything for the bears to justifiably get excited about. Considering the mega ramp on Thursday, today only makes a minor dent to those strong gains.

I think the tranny should be a real warning to the bears tomorrow, it shows no sign of weakness, and in fact is due to have a MACD bullish cross, and go positive on the underlying cycle. A move to around 5200 looks easily within range, thats around 2%, and would equate to sp'1445.

I am patiently looking to re-short this nasty market somewhere in the 1440/45 area. Downside should be to at least 1420, if not 1375 by the end of the month.

Lets be clear though, any of the 'doomers' out there need to see a monthly close <1375, until that is achieved, shorting this market is definately the riskier side of the trade.

A little more later.