Tuesday 20 November 2012

Volatility still weak

Whilst the main markets had a choppy trading day, and closing flat, the VIX itself closed a little lower, -1% @ 15.08. This remains a bizarrely low VIX, at a time when the politicians seem not particularly in a rush to delay the tax rises/spending cuts. The clock is ticking.




There is not much to say really, VIX remains low, and until its back above 20, the moves are still very unreliable.

At some point the VIX will explode. If my wave count is correct for the indexes (see Sp'daily4), then VIX should break above 20 no later than early January*

*I am open to a major decline beginning next week, however, the seasonal 'Santa rally' is a factor that might delay the next wave lower. Bears need to be careful not to get damaged by the Santa.

Closing Brief

The market saw a recovery in the closing hour, and closed broadly flat, after a minor early afternoon down cycle. The VIX closed a touch lower, and again confirms the complete lack of concern in the immediate time frame.





A day where most of us should have been elsewhere. News from BBY and HPQ, and some comments from Bernanke,  was kinda interesting though.

Its hard to call how tomorrow will go, but underlying near term trend is UP.

Primary target remains the 1410/25 zone by early next week.

bits and pieces across the evening.

3pm update - closing hour chop

The market is holding around the 200 day MA once again, after the previous hour mini wash-out. Considering the daily cycle, there is little reason to believe anything has changed. VIX is a touch higher, but its to be classed as mere noise.




Its getting a bit choppy, and aside from the moves in HPQ and BBY, its a little (dare I say)..dull.

..and that's why I won't be part of this until next week. No point.

*I don't expect much tomorrow. The hourly cycle would offer potential downside, but it'd surely be brief at best.

back after the close

2pm update - afternoon skirmish

Mr Market is just doing its usual thing. Sucking in the dumbest of bears, and kicking out the weakest of bulls. Primary target remains the 1410/25 zone, to be reached early next week.




Not much to add, daily MACD (blue bar histogram) cycle is due to go positive, at the Wednesday open - even if we close a little red today.

With Bernanke out of the way, there really isn't anything too major until next week. The weekly jobs data will be issued tomorrow morning, with a few other things. There really shouldn't be too much opportunity of downside, baring a random news headline.

Bears should be staying out of these minor skirmishes until next week.

back at 3pm

12pm update - the patient bear

The market is largely flat, and holding around 1387, comfortably above the important 200 day MA of sp'1382. The good bears who managed to avoid yesterdays mindless nonsense, still need to be patient. It will likely take some days for this wave'2 bounce to play out.


sp'daily4 - the general 'bearish outlook'


So...we're off the morning lows, and the indexes are flirting with green.

I'm kinda surprised at seeing some traders - who are unquestionably smarter and more experienced than me, who have been shorting since last Friday. There was always a major threat of a 'stupid bounce'..and these things generally last at least 7-10 days. I would refer anyone to late June 2011.

Re-shorting at this early stage seems overly pre-emptive..and risky.

I remain content to sit back..and watch this nonsense play out into next week.

The good bear...is a patient bear

time for lunch, back around 2pm

UPDATE 1.15pm

Market falling back again, but its a very minor move after the recent move higher.

We should not be breaking <1370 on any basis.

10am update - Tuesday bear tease

Mr Market opens a little lower, but its surely nothing less than a cruel little tease to the bears. The near term momentum is strongly to the upside, and it would be very odd if we somehow closed today significantly lower. HPQ is notable stock of the day already.




I'm guessing this opening decline is nothing less than a little shakeout after yesterdays 2% index gains.

Right now, there are some bear chasers getting sucked into the idea that we're going down now, and the weaker bull hands are getting stopped out.
We will probably close comfortably in the 1380s, if not even the low 1390s.

HPQ, daily - the embarrassment..with a sprinkling of fraud.

It would appear that those incompetent fools at HPQ are not only unable to reverse the ongoing decline of their primary business, but the 'Autonomy' company which they purchased last autumn is not much more than a shell company.

Great job HPQ board of directors! You clearly deserve a pay rise, and extra Christmas bonus!

*HPQ CEO Meg Whitman will appear live on clown network @ 10.40am.

If Ms. Whitman had any sense she'd fire the entire board of directors. But no...she will wait until she herself gets fired next summer - by those very same directors. but hey, she'll still walk away with millions

Ladies and Gentleman, that is crony capitalism at its finest!

UPDATE 10.55am. Whitman is highly amusing to watch. Nothing less than poltical spin from her, and she'll get the boot for sure next summer...around the same time as HPQ gets kicked from the Dow'30.


Looks like the bear tease is playing out. Opening minor declines, and we're already green on the SP'.

Probably chop into the afternoon, and closing a touch green.

Pre-Market Brief

Good morning. Futures are a touch lower, the sp -1pt, we're set to open around 1385. This will probably be a very disappointing open for the bears, after the ratings downgrade of France last night.

Primary upside target is sp'1425, to be hit early next week.




A downgrade of France, and the market is holding up fine. Yet, it is to be expected. Yesterday the was first major up day in a fair while, it will be difficult to reverse that level of momentum after just one day.

I will remain on the sidelines until next week, and will wait for a re-short in the low 1400s, which may occur as early as Monday.

*Bernanke speaks later today, bears should be very mindful of that.

It is very viable we'll hit sp'1400 late today, or certainly..during tomorrows session.

Good wishes for Tuesday trading!

UPDATE..stock of the day (see fair value stocks at the close)..will have to be HPQ, which is -9% in pre-market, after lousy earnings, and talk of fraud.

As I wrote just last week, the company is an embaressment. Primary target is $10, and then I expect HPQ to be removed from the Dow in second half of 2013.

Waiting for the bounce to fully play out

After a nineteen day decline, we're now seeing a very natural bounce. Upside target zone is sp'1410/25, to conclude as early as next week. The mid-term target remains sp'1200/1175, which looks to be no later than early Spring 2013.




The bounce from sp'1345 has been very pleasing to see, and instills a little more confidence in my general outlook for next year.

However, a single price hit does not count for much, and the bears - as a group, need to see four key aspects in the weeks and months ahead...

1. The first lower high. Anything <1474 will be enough, although it will take some some weeks/months to be sure that the 'lower high' was indeed the case.

2. Take out the June sp'1266 low. That will be a major event if/when it happens

3. Break into low 1200s..see a floor develop, and then a multi-month bounce higher - which I anticipate will take us into early summer 2013.

4. Put in a lower high on the monthly charts. Again, that will need to be <1474. Personally, I'd like to see a lower high in June/August 2013, no higher than around 1350/75.

Only if those four things occur, would the bears have a chance at seeing some sort of collapse wave, in the style of autumn 2008. I will post much more on this outlook in the months ahead.

Sitting it out

I can't stomach going long (most of the time), so I'm merely going to sit this entire up wave out, even though I'm pretty confident it will play out as projected.

At least I am not still hitting the short button, as I have sadly tended to do in the past.

As ever...the patient bear...is the good bear.

Goodnight from London

Daily Index Cycle update

The main market rallied by around 2% today. The gains were mostly all seized by 11am, at which point the market largely flat lined - the sort of nonsense we've seen so many times in the past few years. Volume was light, and most of the gains were probably due to short-covering - not least in stocks like AAPL.





I started the day very much open to re-shorting the market @ sp'1370/75, but the market was breaking 1375 before we even opened. With the market liking the housing data (as I feared), the gains just kept building, and a re-short became completely out of the question.

Clearly, the current down wave (however you want to count it) is over, and we're headed up.

The only issue is how far?

My original outlook was....1345, then 1400/25...and then low 1200s..possibly as early as December - not least if the fiscal cliff is not adequately delayed.

sp'daily4 - original outlook

The above chart is my 'best guess' for the weeks and next 2-4 months. I could be wildly wrong, we'll soon see.

Bears need to put in their first lower high <1474, rollover..and take out the June 1266 low. If that happens, then 2013 could be 'very interesting' indeed.

A little more later.