Friday 19 October 2012

Closing Brief

The broad market saw significant losses, although the closing hour was not such a great end for the bears. The soft support of sp'1430 - and Nasdaq' 3000..held.  VIX similarly closed well off the highs, with a gain of around 12%, to close in the high 16s






If you'd offered any bear pre-market, declines of today's size, they'd have been delighted. Yet, here we are..and its somewhat disappointing (to me at least). The Monday low of sp'1427 is still intact, and until we take that out, the bulls remain in control.

The one really bearish aspect are the weekly charts - and I'll cover those over the weekend.

Have a good weekend!

*More later in the evening though...with the closing updates for the usual stuff.

3pm update - gloomy doomy final hour

With increasinlyg lousy earnings, Mr Market is taking the opportunity to sell off, and its starting to get real interesting. The weekly charts are ALL warning of 'trouble' week.

Even the VIX is starting to warn, with a 16% gain, now around 17.50





Bears should be seeking a close <1427 - which would be a massive victory, and open a mini-crash door next week.

But..with one hour to go..lets see if we can get the 'bonus' close <1427.

Next support is the very important main cycle low of sp'1397, if that is broken..then door IS open.

more after the close

2pm update - bears battling to seize control

Its certainly been a tough week. We've cycled from the brief 1427 low to 1464, and now we're back into the 1430s again. The VIX is picking up some steam, the first major jump since Sept'10 - before the Bernanke appeared to launch QE3.



Nasdaq, daily - struggling to hold 3k..which doesn't look likely

VIX' weekly


I think its time to focus on the bigger cycles again, and not get lost in the minor noise.

The weekly cycles - which broke the June trend last week, are showing a very nice spike/failed rally, and it bodes well for the bears next week.

*as I keep noting..I want to see a weekly VIX close >20 - to have initial confidence of a major down cycle underway. Clearly, that ain't going to happen this week..but..maybe next.

Bears must take out the 1427 low, if that can be done today, it should be considered a bonus though. 

back at 3pm

12pm update - Friday gloom

A gloomy day in market land, which matches the gloomy grey rainy skies of London city. Mr Market is down around 1% on most indexes, and finally..even the VIX is starting to pick up a little..currently +6%. Metals are similarly weak, so the gold bugs are going to have a real moody weekend.




After the 3 day rally, this mornings action is clearly a relief to those on the bearish side of the fence. Yet, we're still well above the recent cycle low, and VIX is still failing to show any major upside.

Bears need to close at least <1450, preferably in the 1430s. That would at least offer the hope that the Monday low of sp'1427 can be challenged early next week.

AAPL is having real would be the 200 day MA @ 580s

back at 2pm

10am update - weak opening

Good morning. The main market is moderately lower, but really, its nothing particularly of note. The VIX even opened a touch lower, despite the index declines. Its really hard to know what to make of so much lately.





Mr Market is starting to look particularly weak as I type, but the VIX is just barely green.

Earnings are really starting to stink across multiple sectors. We've been in recession since July, it would appear.

The targets are clear...

Bears need to take out 1427, and then 1397. If that is achieved, then a swift mini-collapse is somewhere between 1375/00. For confirmation of the index weakness, I'd like to see a weekly VIX close >20

back at 12pm (unless something more dramatic happens before then!)

How will October conclude?

Today was actually a little exciting with the Goggle price drop (never mind the early-release mess), but generally speaking, the last 7 trading weeks have been pretty tight. We've traded between 1427-1474, that is a mere range of 3.5% or so. That is not exactly dynamic, for what is often a volatile October!

Lets take a look at a few of the rainbow (Elder Impulse style) charts...

Transports, monthly, 6yr, rainbow

SP, monthly, 6yr, rainbow


First, lets consider the transports, which has been in a world of its own for a few weeks now. It started the month with a third consecutive red candle on the rainbow chart, but...its flipped green. Somehow, the tranny has ignored the main market, and is +5.4% on the month! That is pretty damn impressive.

If the tranny can close over 5250, that would be a conclusive break-through to the upside, and then the next target into year end would be >5400.

The sp'500 index is much more subdued than the tranny, and so far is +1.2% this month. Not exactly a move other than 'noise', although it is a green candle again.

We can clear about this right now, as we currently stand, the primary trend remains UP - even for the battered transport index, which is seemingly trying to claw its way above what some bull maniacs could justifiably argue is actually a giant 10 month wide bull flag!

Bulls should indeed seek new SP' highs >1474, with a monthly close in the transports >5400.

One bonus rainbow chart...

WTIC Oil, monthly, 6yr

Those looking for deflationary pressures need only look to WTIC Oil. Considering that the Bernanke has launched QE3, it is somewhat remarkable that WTIC is not trading >$100. Then there is the 'middle east doom' premium, there sure has been some activity there lately, and again, its amazing we are not trading well above $100.

For the moment, the underlying weak global economy is a more powerful force than the insane money-creation action of the central bankers.

Moving into opex.

Friday is opex, and should probably be a little more choppy than today. If Thursday was a turn day - concluding a 3 day rally, then perhaps we'll see some more downside, a close <1450 should (if attained) be considered a bonus to the bears.

As noted in earlier postings, key levels to be mindful of, sp'1427..and then 1397. If the latter is taken out in the next down cycle, then things might finally start to get a little serious.

We have 9 trading days left of October, hopefully...they will at least be 'entertaining'.

Goodnight from London

Daily Index Cycle update

The broader market was somewhat lower today, but only the Nasdaq managed declines of a somewhat notable 1%, although it remains comfortably over the key 3000 level. With the VIX closing flat, the equity market is certainly not feeling any concern yet.


Nasdaq Comp




Lets start with the tranny, which once again was doing its own thing. It closed with gains of just 0.15%, which was a long way down from the morning spiky highs. That brief spike would make for a nice cycle top, if that is indeed the case.

The main Dow/SP' indexes traded in a rather narrow range today, and in some ways, it has to be seen as disappointing from a bearish perspective. Just what is going to get the main indexes start to take out some of those important support levels?

For those doomer bears seeking market trouble this autumn, it is clear that the first minor low to take out is now the Monday low of sp'1427. After that, is the sp'1397 low. Until we see a few daily closes under the latter, the primary trend most definitely remains UP.

In addition to that SP' target, we'll need to see a weekly VIX closing >20. That would provide a good warning to something 'major'. Again, until that is seen, the primary trend for this bizarre market is indeed UP.

A little more later.