Monday 15 October 2012

Volatility fails to increase

With the main indexes closing higher by around 0.75%, the VIX closed lower by over 5%, to now reside back in the low 15s. The VIX remains remarkably low, and is now seemingly starting a new down trend.




Today's decline in the VIX should be a real concern for the bears. If Sp'1427 was the floor in the indexes for this down cycle, then the VIX could break to new lows as we move into November.

Bears - especially those looking for a break below the key cycle low of sp'1397, are going to need the VIX to break back into the 17s, if not 18/19.

As things are, its not looking like the VIX is capable of breaking higher any time soon. The underlying momentum is again weakening (see MACD), and we could easily a major VIX decline as we get nearer to opex.

Crazy times.

Closing Brief

A disappointing end to the day for the bears, with the SP' breaking back into the 1440s. With the VIX closing lower, the index gains of over 0.75% were confirmed.





A lousy closing hour for the bears, those earlier signs of rollover completely reversed, and we closed at the highs.

I suppose it can be argued we're still in a broad down trend, and that this may merely be some sort of small wave'2 up, but..whatever it is, we've just seen a swing from the morning low of sp'1427 to 1440.

Difficult day in bear land, perhaps tomorrow will be better.

More later, including the VIX, which again completely failed to show any concern in the market.

3pm update - bears need to bring out the hammer

It looks like the hourly index cycles are indeed maxed out, and we're already seeing the first minor snap lower. VIX looks floored on the hourly too. A flat close looks a tough task for the bears though.




Well, lets see if some more of that 'selling into strength' occurs in this important closing hour.

Bears really do need a close back under the hourly 10MA @ 1431, that seems just about possible.

More after the close

2pm update - a little toppy

A standard little short squeeze, all of the weaker bears will have been stopped out by now. The bulls haven't even pushed into the 1440s yet, and I'm guessing only 1450s would mark a clear end to the current 6 day down cycle.

VIX remains moderately lower, showing a few signs it may have floored.




So far today the bulls have had a reasonably little move higher, but its looking like we're in a levelling phase. The only issue is how far does the next micro-down cycle go?

Bears clearly need to take out the earlier low of 1427, which seems rather unlikely today.

With two hours to go, lets see if we again see some 'selling into strength'. Considering we are less than 3% from the QE spike highs, I'm guessing we do.

I remain short, seeking an exit...1410/00.

Back at 3pm

12pm update - bears getting booted

A really messy Monday morning, minor gains, then fractional declines..and now we're seeing moderate gains of around 0.5% on the main indexes. Is that it for this cycle? The VIX is certainly saying 'no fear'.




The daily MACD cycle now starting to tick upward, but still 4 hours to go.

Bears should certainly seek a flat close, preferably a touch red.

The real concern is that if today was the low, then the next cycle is probably going to push to a new high, in which case we're STILL putting in higher highs..and higher lows.

We still have a good four hours left though, and could easily see these gains fizzle away.  I'm short yet another block from sp'1436 just a little earlier.

Time for lunch

back at 2pm

10am update - weak opening

Good morning. Well, here we go again. Opening minor gains are failing to hold, and indexes are going red again. We remain in a clear down trend on the indexes.

The VIX is again muted though, showing no concern.





The target has been 1420 - for some weeks now, and we sure are taking some considerable time to get there.

The worse aspect for the bears is the VIX, which just finds it difficult to move more than a few percent, even when the indexes are down 1%.

Metals and Oil are weak, with $ fractionally higher. Perhaps equities will play catch up to these two later in the day.

back at 12pm