Thursday 27 September 2012

3pm update - waste of time

Well, despite just about the worse economic data we've had in a few years, and with European unrest growing again, we're seeing another massive rally day.

It is without question, a waste of time from the bearish perspective.




The daily cycle on all indexes is now levelling out, and we're all set for new highs, sp'1500s in the next few weeks. Great huh ?

What is pathetically laughable is that we declined from 1474 to 1430 , 44pts, a decline of barely 2.5%, and everyone gets hysterical again, only for today's move to revoke the previous two day decline in almost one session.

With the daily cycle turning back upward, that is probably it for the bears, for some weeks. Baring some 'upset' tomorrow, which frankly looks so unlikely, we're back to UP UP..and UP.
back later...much later.

12pm update - still seeking sp'1420s

We remain in a bear flag on the indexes, downside is still pointing towards the next soft support level of 1425/20. That probably equates to a Friday VIX of around 18/19




So long as we don't spike higher, and close over 1445, I'm still pretty confident 1420s can be hit in the near term. Its still possible we could even close in the 1420s, but that now seems more likely tomorrow.

The hourly cycles on both the indexes and the VIX are around 50% reset now, its just about enough to justify a latter day rollover.

VIX doing a gap-fill at 16.75 this afternoon, before the next jump to 18/19 ?

back at 2pm

10am update - still a bear flag

Despite the opening gains, we still have a bear flag holding on the sp'500. The VIX is -3%, but is holding up okay in the 16s.



VIX, daily, rainbow


Hmm, so, opening gains, but certainly nothing dramatic. Considering the daily and weekly index cycles, it is arguably a shorting opportunity, at least for a day-trade.

*The earlier GDP Q2 (revised) of 1.25%, and Durable Goods Orders of -13.2%...truly beyond dire. Clearly, the Fed believes the US is now in recession in Q3, and thats why it initiated QE3.

VIX rainbow chart, still a green candle despite the opening declines, trend remains UP. I am most certainly looking for a brief spike to 18/19 either late today, or tomorrow. 

I hold to my original target of 1420 by the Friday close, and look to exit there.

back at 12pm

Two red flags for October

Both equities and commodities are continuing to soften. Right now, my primary red warning flag is most definitely still red. Today, my secondary flag is now also starting to fly, WTIC Oil closed under $90 for the first time since late July.

With just 2 trading days left of the week, month, and quarter, lets see if the warnings hold into the weekend.

Trans, monthly, rainbow

WTIC Oil, weekly


Its actually looking pretty good for October. The trans closing <5k, looks pretty likely right now, and with WTIC oil back <90, there is a chance we'll close the month with two major red flags, both warning of trouble for October.

Oil in particular looks very weak, and from a MACD cycle perspective, its due to go negative cycle within the next 2 weeks - where a much sharper move to the downside should occur.

A third red flag?

With two red flags starting to wave, I was thinking about adding a third. What might that be? I'd guess a closing weekly VIX >20 would be a good bearish sign. The underlying VIX weekly MACD cycle actually went positive cycle today, and if we can somehow get a weekly close over 20, that would open the door to the much awaited jump into the 30/40s - that so many of the doomer bears have been seeking since the spring.

VIX, weekly

So, lets see how high they can kick the VIX tomorrow - and possibly into Friday too. We have a full moon on Saturday (I think), so maybe the week will end with a bit of 'moon madness' in the markets?

Goodnight from London

Daily Index Cycle update

Another day of declines for the broader market, although the losses were only moderate. The VIX increase of almost 9% did confirm the underlying weakness that currently shows no sign of ending.

IWM, daily




So, we're at sp'1433, that's just 13pts shy of my secondary target of 1420. I certainly think 1420 is very much viable for tomorrow morning, with the VIX spiking in the 18/19 range.

Considering the MACD (blue bar histogram) cycle, I just can't see a break below 1420, certainly not under 1400. The only way we can do that is if a major European scare occurs tomorrow.

If the sp'1420s are the floor, then the ONLY issue is whether we push to a new high, or put in a lower high.

With a lower high, the bears can start to ramp up their position sizes, and prepare for a challenge of 1350 in late October. A break of 1350 would make things....very interesting indeed.

A little more later.