Friday 9 November 2012

Volatility set to spike

With the main equity indexes continuing to look weak, it would seem the VIX is still long overdue a considerable spike higher. A move to at least 20/21 seems likely, but its possible we may briefly see 24/26, before the indexes see a bounce back to sp'1400.





It was something of a particularly strange week in VIX land. Thursday was an especially weird day, and despite the indexes closing lower by 1%, the VIX still closed -3%. I really don't know what to make of it.

Regardless, ALL three VIX cycles look very bullish for early next week. The hourly cycle is very close to breaking the key 20 threshold. A daily close >20 would be really bearish for the indexes, and open up a brief spike to the mid 20s.

All things considered, I just can't see VIX in the 30s for at least a few more weeks..and that's still assuming the bears can put a lid on the next index up cycle.

My best guess...if sp'1345/ week, then VIX 24.

more later...

Closing Brief

Mr Market rallied almost 1% in the morning session, but even the President failed to inspire the algo-bots, and we saw some latter day weakness. The close under sp'1380 was an especially bearish aspect to end the week on. The VIX managed a fractional green close, confirming the slight weakness this afternoon.



A bit of a choppy end to the day...but we closed under the big daily 200 MA on the sp
*I am short, holding across the weekend, and seeking sp'1345/ the first half of next week, certainly before opex.

Have a good weekend

3pm update - shorting into the close

Mr Market is again trying to rally, but even the President failed to inspire the market earlier.



Standing by to short into the close...seeking sp'1345/40.

Threshold to 'chase it lower' 1381/80

updates..coming ;)

UPDATE 3.07pm

Am short...holding across the weekend...seeking sp'1345/40

back after the close.

2pm update - Paranoid Bears

Obama's appearance at 1pm sure did not help inspire the market, which promptly fell 12 sp' points in the past hour. So, we're back @ 1380, with VIX green - for the first time since Wednesday.




It is looking like 12.30pm may have been the peak of the day, in which case we'll just fall all the way into the close. Urghh. Its getting frustrating again.

I will be short before the close though. Weekly charts suggest major move viable at any time, 1345/40.

From a count perspective, I suppose its still possible we can get back to the 1390s..but it will real difficult now that the hourly cycle is starting to rollover again.


UPDATE 2.05pm

If market breaks 1377..I think I'm going to have to chase this lower. Its not a strategy I like at all though. It would seem those bears still waiting, were actually overly patient today.

I think you can see how 1377 is kinda decisive. If we break that, there really is nothing but empty air into Monday, at which point we could be a very considerable way lower.

For now, still waiting.

2.30pm   still waiting. this up wave could be a c' wave to 1390/95, maybe a double top @ 1391. hmm

1pm update - awaiting his highness

Market is holding on tightly to gains of around 0.75-1.0%. VIX is a little lower, -3%, but not that much, considering the bounce. Primary target remains sp'1345/40..within days.




Obama is due to speak at 1pm EST about the fiscal cliff, and that might give the market an excuse for a final minor wave higher to 1395...even 1400.

Regardless, frankly, I think 1395/1400 is a gift to the bears.

Lets be clear, I might be wrong, but those weekly charts sure say 'keep shorting until 1345/40'.

back at 2pm...or earlier, if I do start hitting buttons.

*I have eyes on Dec SPY puts, most of those are -20/25% today.

UPDATE 1.20pm
Market drops 5pts due to Obama...but...quickly rebounding.
Could be a minor B' wave...if so..seeking 1395/ 2.30/3pm


kinda ugly..

Could still be a B' wave, but this market sure ain't happy.

12pm update - market vainly trying to rally

Mr Market is trying to very hard. The damage from yesterday though, can't be repaired with a 1% gain. No...primary target remains on track...within days..1345/40.




A reminder - see daily5f, that yesterday we saw all 3 triggers hit.

Weekly charts are very conclusive..this major move lower is not complete.

Seeking a re-short around 2-3pm..anywhere in the 1390/95 range looks very tasty zone. That would offer a good 50pts downside across Mon/Tuesday.

Time for lunch !

back soon

UPDATE 12.24pm

Market breaks the hourly 10MA...we're starting to get a little overstretched though.

Its gonna be real tough to hold over 1395.

I am resolutely trying to be patient....until 2pm.. - after which time, his highness (obama), will have spoken


11am update - bounce well underway

Market is cleansing away the weaker bears, and sucking in some of the dumbest bull maniacs out there. A move to 1390, maybe (briefly) even 1395/1400 is possible this afternoon. I find it near impossible to consider the market closing over 1400.



I'm giving this at least a few more hours to churn, and max out. Hopefully, it'll max out around 2.30/3pm...and then slump in the closing hour - setting up a major collapse wave on Monday.

VIX is holding up a little better than I would have thought, -2%

back at 12pm

UPDATE 11.35am

Maybe (although I was looking for the same thing  yesterday)..we'll see an ABC wave up into 3pm

Regardless, near term trend is up..probably for a few hours.
Hourly chart is trying to bust above the 10MA @ 1385. That would open up 1390/95

10am update - seeking a baby bounce

Good morning. Market has opened weak again, but we're slightly off the lows (oh no, do I sound like Bartiromo?). VIX again!  Really?

*consumer sentiment comes in better than expected...helping the bounce begin.




I can't be shorting....yet.

I am all cash, waiting to short on the next bounce...somewhere in the 1385/90 range, this afternoon is my target time frame.

Weekly charts still target 1345/40, which I'm guessing will be hit next Mon/Tuesday.

Yes, I'm looking for a major capitulation day early next week, a dow -400/500 day. A wash-out move, which then starts a severe reversal back to 1400.

back at 12pm (or earlier, if anything happens)

Primary target within range

Another decline for the equity markets, and we're now just 2-3% from the original primary target of sp'1345. On the bigger monthly charts, we're starting to see some confirmation of last months provisional warning of trouble.

sp'weekly, rainbow

sp'monthly, rainbow

Summary does look likely my original target will be hit.

*with the recent declines, the lower bollinger on the weekly charts is now down to 1340, so I would merely keep in mind a slightly broader target zone of 1350/40.

An overly patient bear?

I exited early this morning with a moderate gain, (after that annoying 6pt bounce quickly faded to nothing), and it is somewhat frustrating to have seen the market just keep on falling across the day...all the way into the close.

I now merely look to re-short on the next bounce, whenever that might be. Hopefully, something in the 1385/95 range, that would suffice for an exit early next week on the next big down day.

Its been an interesting week so far. I'm sure Friday will be no different. I will indeed hope the bulls manage some sort of mini-rally, I want some cheaper index option puts :)

Goodnight from London

Daily Index Cycle update

The main indexes closed lower by around 1%, and this has to be seen as a very dismal day for the bulls after Wednesdays 2.3% decline. The one major non-confirmation was the VIX, which closed 3% lower. Near term trend remains most definitely downward, with a primary target of sp'1345.




We are now just 2% away from the sp'1345 target - as suggested by the weekly charts. That seems viable as early as tomorrow, or certainly next Mon/Tuesday.

Arguably, there is no point having major short positions after the next major down day. That would likely be it for the bears, for a few weeks.

A strong bounce - across a mere 3-7 days, (I am guessing) will take the indexes from sp'1345 to 1400. It is at that point, where the bears need to put in a lower high on the weekly charts, something we've not done since April.

If bears can put in that lower high, then sp'1200 is viable soon after.

A little more later.