Volatility on the slide again

After five days of trying, the bulls managed to hold onto index gains of around 1%, and the VIX responded with a major fall, closing 10% lower in the mid 16s.


VIX'60min

VIX'daily

Summary

For those seeking much more dynamic market action - not least to the downside, today's significant VIX drop is a massive disappointment.

The bull flag - that seemed somewhat confirmed yesterday, has now been entirely negated.

There is nothing now that suggest the indexes are going lower in the immediate term. Quite the contrary in fact, and with the US election next week, we could be looking at sub-teen VIX later this month.

Truly astounding, when you consider the 'big issues' out there.

Closing Brief

A victory for the bulls. After five consecutive opening gaps higher, the bulls finally managed to hold on, and closed the day with moderate gains across all indexes. The lower VIX very much confirmed the gains, and with a likely baby bull flag on the hourly charts, its not looking good in bear-land for Friday.


IWM'60min

Sp'60min

Trans'60

Summary

A clear victory for the bulls. Are we set for a multi-week post election rally, setting new index highs? The weekly and monthly charts still warn of trouble, but it won't take much to negate those minor warnings.

Under any viewpoint, bears should be really concerned with today's price action.

Big jobs data tomorrow, if Mr Market decides 'its great', then we could easily see 1440s tomorrow.

For the bears...today has to be seen as a major blow to hopes of an autumnal sell-off.
--

back later.

3pm update - baby bull flag?

Mr Market is still holding comfortably onto the gains. Bears should be desperately seeking a close back under the hourly 10MA @ 1419, that now seems impossible today. It looks like the bulls are back in control...sigh.


sp'60min

Summary

The various cycles are all VERY conflicting right now.

The hourly is maxed out, although the smaller 15min is now ready to surge again.
The daily is low, so that allows a major 5-10 days UP.
The weekly confirmed a bearish outlook last week, and currently..is still suggesting weakness
The monthly..as we closed yesterday is now suggestive of initial weakness - the first since May.

So, its a bit of a real confusing mess right now.

Anyone who claims they 'know for sure' which way we're going in the near term is perhaps even more deluded that those who think QE3 will actually help the economy.

back after the close.

2pm update - soft resistance zone 1425/30

With two hours left of the trading day, the market is comfortably holding onto moderate gains of 0.75/1.0%. VIX is battling to stay in the 17s.


sp'60min

VIX'60min

Summary

The last hour pullback could merely be a micro-bull flag, which..if it is, would mean 1430/40s can't be more than a few trading hours away.

Bears are in real trouble. Arguably, a daily close >1440, seals victory for the bulls.
--

It has to be said, today is a major disappointment. Bulls can justifiably have a good laugh about what they have again managed. We are a mere 3% or so from the QE highs.

12pm update - bulls wrestling back control

On the fifth attempt, the bulls are battling back. The VIX is significantly lower by 8%, and is sitting around what is critical support, a close in the 16s would be a major victory for the bulls who are clearly seeking a 'rally into the election'.


sp'60min

sp'daily5

VIX'daily

Summary

It is not looking at all good for the bears. I suppose - and its indicated on both charts, a resistance zone of 1425/30.

A daily close anywhere in the 1430s would be a major victory for the bulls, and could well be setting up a multi-week ramp post-election.

The weekly chart momentum is STILL bearish, but...another day or two of this, and the bears will have lost what little downside momentum they had. It is somewhat disheartening..to put it mildly.

As ever, for those with serious money...good short-stops would be 'useful'.

back at 3pm.

10am update - bulls trying to breakout

The market is again trying to break higher, although we're still lurking within the 'war zone', at least on the big sp'500 index. The VIX is already 5% lower, wiping away all of yesterdays minor gain.


sp'60min

sp'daily5

Summary

A somewhat rough start to the day for the bears, but then...we've seen it in the previous FOUR trading days.

So, lets see if the bulls fail to hold the moderate 0.5% gains for a fifth time.

Just how many damn opportunities are those deluded maniacs going to get for a counter-ramp?


back at 12pm

Pre-Market Brief

Good morning. Futures are back to flat after being lower by around 0.5% earlier overnight. We are due a wide spread of econ-data this morning, so Mr Market will have a lot of excuses to pick a direction.


sp'60min

sp'daily5

Summary

The daily index charts appear to have a bear flag, we'll need a clear break <1400 to see that confirmed.

ADP private sector October jobs: 158k. But that number is truly unreliable, even more than a VIX <20.
--

Bears should be seeking a daily close <1397, which would be sp 16pts lower, that seems too much to expect for today. Perhaps tomorrow. A VIX close in the 19s would be...useful.

back at 10am.

October comes to a close

October closes with the main indexes putting in their first monthly loss since May. For the doomer bears out there, this should be seen as a provisional sign there that could yet be some major downside action into year end. With WTIC Oil - and many other commodities, closing the month lower, it would seem Mr Deflation is still lurking out there.

Lets take a brief overview of how we closed the month.


Nasdaq Comp, monthly, 6yr

Dow, monthly, rainbow

sp'monthly, rainbow

WTIC, monthly, rainbow

Transports, monthly, rainbow

Summary

So, October is over. In some ways, I can understand if some of the doomer-bears are disappointed. After all, despite some lousy econ-data (both US, and international), the indexes are only slightly lower. Yet, a decline IS a decline, and the blue candles as seen on the Dow/Sp' rainbow charts could be a provisional warning of trouble for Nov/December..

For the deflationary doomers out there, the monthly close for WTIC Oil was especially pleasing to see. Just consider all the earlier 'middle east..imminent doom' talk we had, and yet, Oil still closed 6% lower this month. Pretty amazing!

The tranny, which was my first red flag for the Autumn actually closed the month with a bullish green candle, but, it remains in an extraordinarily tight trading range since the start of the year. It is arguably still the case, that the tranny is yet to make a decisive move either way.


The Election

We have an election next Tuesday, Doubtless that will be a market-moving event, and likely has serious implications for the longer term, not least if Romney snatches victory.

Lets be clear, the index declines this month are a possible very early sign of trouble. We still have the ticking time bomb that is Europe (although there might be a few years left on that detonator clock), but more so...we have the US fiscal cliff to be resolved.

If the political maniacs can't agree to delay most of the tax increases and spending cuts, then Mr Market will need to 'adjust' to a very significant extent. There remains a very strong possibility we'll still hit sp'1200 within the remaining two months of this year.

Goodnight from London

Daily Index Cycle update

After a four day break the US markets reopened, but the intra-day action really wasn't too much. The SP'500 traded between 1418 and 1405, just about a 1% range. The VIX closed 4% higher, but that small move is inconclusive.


Dow

Sp'daily5

Trans

Summary

For the fourth day running, the bulls have tried to rally at the open, only to fail. I have to say, I think this is very significant, and regardless of the contrary issue that the bears are 'failing' to break lower, we are at least not melting higher.

The declining daily 10MA @ sp'1429 will be soft resistance on any possible 'stupid bounce'. Bulls should be seeking a daily close >1430, right now, that seems a tough task.

Bears should be seeking a clean daily close under the Sept'3rd low of sp'1397. Anything trading activity in the 1380s should be good evidence that the 'door is open'.

The weekly charts would suggest a move to around 1335/20 within the next week or two. I can't imagine anything lower than that, regardless of any 'spooky news' in the next few days..and especially across the weekend.

A little more later...which will be focused on how we closed October.