Tuesday 18 September 2012

Volatility churning

The VIX closed moderately lower, -2% or so, in the low 14s. This remains a fearless market, with no concern of the underlying economy, nor the threat of any black swans.



VIX' weekly


Very little to note. VIX remains remarkably low. There is always going to be a moderate risk of a major gap higher to around 16/18 late this week/early next week.

Those doomers looking for VIX over 20, are going to need to see the sp' break under the recent low of 1397. That just doesn't seem likely right now. The big weekly VIX cycle has some interesting divergences, but a VIX under 20' is really unreliable.

More later

Closing Brief

A somewhat dull Tuesday, with the VIX closing 2-3% lower. Ohh, but AAPL closed over $700, that has to mean QE3 is working right? Everyone has a job now?





Small moves for the main indexes, whilst the more unstable transports and Rus'2000 indexes continue to warn of underlying weakness.

One important issue to note is the MACD (blue bar histogram) cycle. We're very low, currently only a few bars up from today's low (especially for the tranny).

It would seem unlikely we'll see any major declines tomorrow, and instead, more churn/minor chop.

Bears will very likely have to wait until Thursday for the first chance of hitting 1440.

More later

3pm update - hourly cycle at rising support

The closing hour..and we're at an interesting place. Just another 2-3 pts lower, and we'll have a provisional break lower.

VIX remains a touch lower though, this market remains fearless, but then..everything is fixed, yes?




Just consider the carnage going on in the transports the past two days, relative to the main market.

The decline in the tranny still bodes for at least a little downside in the main indexes to around sp'1440/30 by late Thursday.

More after the close

2pm update - slow motion rollover

A top is clearly in place for the main indexes for this cycle, and we're rolling over. Most interesting is seeing the transports literally collapsing, whilst the other indexes remain largely flat.

Transports, daily

*special highlight on the trans', via the rainbow monthly chart.

Trans, monthly, rainbow...

We've gone from red..to green..and now back to a blue candle for the month.

The doomer bears need to see the transports close September, RED, under the 5000 key psy' level.



Seeking the 1450 soft support to break, and then 1440/30 by late Thursday.

Right now, I remain doubtful we can break below 1420s.

back at 3pm !

12pm update - patiently watching

A quiet Tuesday, there really isn't much going on. Mostly, it seems its all about the technicals. The smaller cycles are still in the process of resetting after last weeks major ramp. It will usually take 3 or 4 days just to settle things.

First soft support remains 1450, that should fail to hold, and then its just a case of whether we floor at 1440, 30, or 20. I'm guessing no lower than 1430/25.

All the doomer bears looking for a break below the recent cycle low of 1397 seem likely to again be disappointed.



Trans, daily


The tranny is again getting slammed. Few seem to have noticed. The problem for the bears, at this rate, the transports will be flooring in about 2-3 days, and then...UP we go again, urghh.

I remain patiently waiting for an exit around 1430..although...1440 would merit an exit, especially late Thursday. With quad-witching opex on Friday, an exit this Thursday, and then re-assess next Monday, seems like a good idea.

VIX is a touch lower, but I'd guess it closes a touch higher.

back at 2pm

10am update - rolling over..still

Good morning. The daily cycle continues to slowly rollover. Certainly, its nothing dramatic, and we could even chop around sideways for a few more days.

First soft support is 1450, I can't see that holding for long, and that will open up a little swift drop to 1440/30 zone. It is going to be very difficult to break 1420.





It certainly appears that 1474 was the peak of the most recent up cycle, so the only issue now is how far do we drop.

The bears desperately need a break under 1397, and I just can't see that as viable in this cycle.

The best thing the bears can hope for right now is that we put in a lower high later next week/early October.

VIX remains flat, but the daily cycle looks like its floored, the current outlook would be for a sharper decline in the indexes next Monday/Tuesday - assuming a new VIX up cycle is now underway.

I remain short, seeking an exit around 1440/30

Back at 12pm

Even sp'1400 is no good

It would seem likely we are going to see the indexes decline for some days, but the bulls remain firmly in control. Even a move to sp'1400 by the end of next week would not break the strong up trend since the June low.

sp'weekly, 2yr


The targets are clear...

Bears need to see a September close <1425, preferably 1400. Frankly, even that seems difficult to achieve, considering the 1.0trn (annual) QE that the Bernanke has now initiated.

Most important of all, only with a break under sp'1350, could the bears genuinely get excited that the giant wedge/wave'5/E theory (or whatever you want to call it) has panned out.

Until then, it really is a case of don't fight the trend...or the Bernanke.

Goodnight from London

Daily Index Cycle update

A relatively quiet day for the main market. It would appear we may have put in a short term top at sp'1474, and that we're now set for a decline to at least 1430. For the doomer bears out there, 1430 as the likely next 'higher low' has to be a truly sickening thing to consider.





Both the tranny and the Rus'2000 small cap are again leading the way lower. I'd guess we generally fall into late Wednesday/Thursday.

*Friday is Quadruple witching, and will probably be a bit choppy. It would generally seem little point taking on new positions until next Monday - whether bullish or bearish.

I remain short, seeking an exit around 1430 later this week.

As things are, with both the weekly and monthly cycles outright bullish, the notion of 'October doom' seems very unlikely to put it politely. Yes, there is the uncertainty of the election, and the looming fiscal cliff, but QE3 is here, and the usual market rules no longer apply.

Those who are still looking for doom, what will be absolutely critical to look for in the next up cycle (early October), do we put in yet another higher high >1474, or do we put in a lower high - something we've not done once since the we floored at sp'1266 in early June.

A little more later