Tuesday 27 November 2012

Volatility a little higher

With the indexes seeing a little weakness in the late afternoon, the VIX flipped from moderately lower, to closing +2.7% @ 15.92. Such moves though, are to be treated largely as mere noise.




So...both the hourly and daily cycle are now trending higher. At the current rate though, it will take around 3-5 trading days for the VIX to go positive on the MACD (blue bar histogram) cycle.

Wednesday, there will be clear resistance around 16.0.

A break over 16.0, would open the door to 16.75/17.00, although I think the latter unlikely until we see a much stronger down move in the indexes - possibly <sp'1380.

More later.

Closing Brief

Some weakness in the late afternoon, but its nothing too significant, and the main outlook still looks on track. Primary target remains sp'1425, which right now seems most likely this Thursday. Despite the declines, the VIX is only 2% higher.





I can understand if some traders who have been shorting since last Friday around 1400 are now believing the peak is already in for this cycle. I suppose its possible, but I'm still guessing no.

Even with the declines today, the daily MACD cycle is still ticking higher. There is NO sign that we're in a levelling phase yet.

It is notable though that the 50% fib' retacement of 1409/10 appears to a significant barrier to further gains. 

The usual bits and pieces across the evening.

2pm update - more minor chop

The hourly cycle is probably close to flooring, and in theory, we should have a viable 4-6 hour up cycle 'soon'. Primary target remains sp'1425. VIX remains weak, -2%.




So, I'm still resolutely waiting for one final lunge higher, to hit the target, and then we'll see whether we level out..and put in a strong intra-day reversal - either tomorrow, or Thursday.

A weekly close <1400 would be a very fair target for the doomer bears out there.

Stupid stock of the year remains...the FB. A close in the 27s would be bullish, it sure is getting close.

I don't think it'll do it though, indeed, its almost the perfect short at these levels. Just look at the MACD cycle, we're getting damn high, and we're about to close the gap from late July.

UPDATE 2.30pm

A little weakness again, but still, its minor. Even a close in the 1390s really isn't anything significant.

back after the close.

UPDATE 3.25   Bears just can't break <1400.  We're still most certainly due one lunge higher to 1425

1pm update - still patient

The main indexes are a touch to the upside now, especially the Rus'2000 small cap, with the Transports also showing continued moderate strength.




As noted this morning, best guess for the Tuesday close is somewhere around sp'1412/15. That would bring into close reach, my primary target of sp'1425 by late tomorrow/early Thursday.

VIX remains low, dollar is holding the USD 80s.

All the pieces on the chess board are almost in place.

Max' pain for the TVIX holders...probably around 83/80 cents, within the next 7-10 trading hours.

Not that I've ever meddled with the 2x lev' VIX instruments!

12pm update - in a holding pattern

Mr Market is flying @ 1407, and appears to be taking a break, before the final lunge higher. Primary target remains sp'1425, by late tomorrow/early Thursday.




Things are still on track, which is very pleasing to see.

The intra-day waves are very small, and its merely allowing the hourly cycle to reset, and be primed for a good 4-6 hours rally Wed/Thursday - which would then hit my 1425 target.

re: MMR, a Forbes story to explain the last few days. Seems a major investment 'davy jones' well is having problems.

*looks like a fair few knife catchers are getting involved in MMR this morning. Very risky trade.

I remain patiently waiting for sp'1425 :)

11am update - sp'1400 being tested..again

Despite the econ-data coming in better than expected (such low expectations!), market is having a micro wash-out this morning. Whether 1400 holds or not this hour, is probably not that important. Underlying trend remains to the upside.



So far, the algo-bots seem content to keep us above sp'1400. I really don't think its too important if we drop under for a few hours. I'd guess we'll close near flat by the close.

Regardless, the current index moves are still 'mere noise'

McMoran (MMR), is something I used to follow kinda closely, I'd not checked it until this morning... its been an ugly two days.

Dedicated to all the patient bears out there..who like to take risks...

back laters :)

10am update - morning chop

The main market is likely consolidating largely sideways whilst the smaller cycles reset, and become ready for their final lunge to sp'1425 late tomorrow/early Thursday. Everything..so far seems to be on schedule.




Note that even though we closed lower yesterday, and opened lower, the MACD (blue bar histogram) cycle is still ticking higher, although we're starting to lose the power of the first 3-5 days of this 'stupid bounce'.

RE: the count on the hourly chart

If we do generally trend sideways today, its probably the wave'4..with the 5 tomorrow/Thursday

*special note...

Clown network'1 (CNBC) are wheeling out the Buffett tomorrow for breakfast, so they'll be quoting him ALL day. We've seen how this works out for Mr Market many times..... UP.

**GDP revision on Thursday will be kinda interesting, although far more important,..the Chicago PMI - due Friday morning.

As things are, I'd like to be re-short ahead of that PMI number, and across the weekend.

Pre-Market Brief

Good morning. Futures are flat, after being moderately higher earlier in the night. We have another batch of econ-data, most of which is issued at 10am.

*Durable Goods Orders: 0.0% vs -0.8% expected, with ex-trans +1.5%. Broadly speaking, the numbers are slightly 'better than expected', so there is your first 'green shoot of recovery' for today.




Again, bears should take careful note that with stocks like AAPL and FB moderately higher in the pre-market, it seems likely the underlying upward trend will show through by the close of today.

Best guess, we close somewhere around 1412/15, and then hit 1425 late tomorrow or early Thursday.

I remain patiently waiting, before the next 'big short' ;)

Primary targets remain sp'1425, and then 1225

Another day where the market rallied into the close, although this apparent wave'2 bounce from the 1343 low appears to be nearing completion. Primary target remains sp'1425, which is easily within reach, and then it will be important for the bears to see a reversal..a REALLY strong reversal to the downside.

sp'weekly2, rainbow




First, consider the daily Fib' chart, the mid sp'1420s look very viable based on this alone.

The weekly chart is flashing a provisional sell warning with a blue candle, although if we get into the sp'1420s, this will flip to green, so its not too important right now to get focused on this issue. What is important is that we don't put in a weekly close above sp'1425

Looking ahead

We have Bernanke at breakfast time. I'm not sure whether the clown network finance TV will be taking much notice of his comments, although I guess they will be. 

Durable Goods Orders will be the key econ-data of the day, if the data at least comes in-line with expectations - no matter how 'bad' it is, then Mr Market will probably be able to rally to 1415/2.

What happens when we get to 1425...that will possibly be the remaining key turning point of this year.

Any closes in the 1440s arguably rules out any major downside wave, and I'd have to re-evaluate.

Seeking a reversal

However, if we do see a strong reversal later this week, and perhaps even closing <1400, then next week sure could be 'interesting'.

The bull maniacs who are again buying the dip, sure as hell better hope the US politicians manage to agree to delaying 'most' of the tax rises and spending cuts, otherwise Mr Market is going to have to swiftly price in a US recession in Q1 2013.

Goodnight from a rainy and chilly London

Daily Index Cycle update

The main indexes closed somewhat mixed, and well above their morning lows. The broad daily trend remains to the upside, although we are very likely close to maxing out in this cycle. Primary target remains sp'1425, which seems viable late Wednesday/early Thursday.





The closing hour was again indicative of the underlying trend, which remains to the upside. With the more volatile indexes like the Transports and Rus'2000 closing moderately higher, it is a very strong sign that the Dow/Sp will see some further upside in the next few days.

I am certainly holding to my primary target of sp'1425, which is easily within reach.

A little more later.