Wednesday 28 November 2012

Volatility still trading within a narrow range

Despite the indexes seeing a sharp intra-day swing, the VIX is still trading within a particularly narrow trading range. The VIX closed lower by 2.6% to settle @ 15.51 It had earlier been up almost 5% in the high 16s.




One notable aspect of the VIX right now is indeed the narrow trading range. Despite the indexes swinging from sp -13pts to close +11pts, the VIX only swung from +5% to -2% - and that's from a very low level in the mid teens. Pretty incredible.

The hourly VIX chart is bullish indexes into tomorrow, and I'd guess we might briefly drop into the VIX 14s tomorrow - not least if SP' can break into the 1420s.

The much awaited 'VIX explosion' looks as distant as ever, but then that's how it should feel, near the top of an index wave'2 bounce.

More later...on the indexes

Closing Brief

A strong closing hour to what was a pretty stark reversal day. With the close and break >sp'1410, this opens the door to my original wave'2 bounce target of sp'1425 - as early as tomorrow.





For those who were chasing the opening declines..and who didn't have tight has been a disaster. I can understand it, but in this nasty market..there is no excuse for good stops, not least when any random news headline can cause intra-day swings like we saw today.

I had been seeking a wave'4 - or however you wish to count it, but it seems - not least from the daily chart, we have a clear wave'2, consisting of a standard ABC.

C' wave is surely underway, and I'm guessing it concludes around 1420/25, which is very viable as early as tomorrow.

I remain watching, and ready to re-short.

The usual bits and pieces across the evening....
 your invoice is in the mail.

3pm update - Mr Market and Moon Madness

Mr Market has certainly put in a strong reversal today, and we're now seeing yet another up cycle play out. A close >1409 would be very bullish for tomorrow, and bring within immediate reach, my sp1425 target.




The hourly cycle is not even positive cycle yet on the MACD (blue bar histogram), there is plenty of upside in this wave, a good 4-6 hours.

My target of sp'1425 is indeed very possible tomorrow...and so I remain...waiting.

*outside the full moon has risen over the city, and is looking mighty powerful - with Jupiter just to the left. There is a lunar eclipse tonight, but its not available everywhere. Go take a the east, this evening ;)

back after the close.

2pm update - eyes on the prize

For around a month, the target for a wave'2 bounce was 1400/25, and we're now very close to hitting that secondary target - having hit the first of 1345. If we do manage to max out tomorrow, then what comes next is going to really rattle a lot of people.




After this mornings early declines, the original outlook remains on track.

Best guess, we max out this wave'2 bounce tomorrow, somewhere around 1420/25. I'm NOT going to get too bothered whether its a few pts above or below.

What is clear is that the hourly cycle is still offering a further 4-6 trading hours to the upside..and that will easily take us into tomorrow lunchtime...where I'll be seeking a SEVERE reversal to the downside.

As ever though, I'm trying to keep an open mind...but with eyes always on the prize.

back at 3pm

1pm update - Target remains sp'1425

Mr Market seems increasingly confident now, and its very viable we'll close above the important recent high of sp'1409. It is very possible we'll hit my primary original target of sp'1425 sometime tomorrow.




I've added a possible ABC count to what I still believe is a wave'2 'stupid bounce' on the daily chart. I think there is a fair chance that is what is happening.

Yet as ever, don't get too fixated on precise counts.

What is clear..we're STILL headed broadly up.

The tranny is still sporting the cleanest waves in my view, and it still kinda looks like a 5 wave move.

Best guess, we max out tomorrow 1-2pm..with sp'1420/25

12pm update - market rallying back

After a very shaky early morning, the market has put in a powerful floor spike, and looks set to break the recent 1409 high - either late today, or early tomorrow. Primary target remains 1425, where the 50 day MA is closing lurking @ 1423.




So...a classic morning reversal, with a very clear floor spike. Regardless of whatever chop we see in the next few hours, we're surely going to break higher..>1410...and thus to my original target of 1425.

Even to my own surprise - despite stating it for many days, that could still occur tomorrow.

*we have the Fed beige book at 2pm. Mr Market could easily use any 'green shoots' talk as an excuse to rally hard into the close.

time for lunch, back in an hour..or two

UPDATE 12.30pm  Despite a little shakiness from his highness just recently speaking, the market quickly recovers, and ramping to new intra-day highs.

A close >1411..would almost ensure 1425 will be hit tomorrow.

11am update - its a nasty market

The hourly cycle was oversold from the start, and a bounce was highly likely. That bounce is now well underway, and the bears can understandably feel dismayed and disgusted. A green close is very viable now.




I am glad to be avoiding this nonsense, and that IS what it is...sheer nonsense.

This market is arguably untradable a lot of the time.

RE: 60min count. I think I'm going to stick with an ABC count now, maybe that's it.

Regardless of whatever the wave count is, we're now seemingly headed back up. The only issue is whether we can punch a new high >1410.

So, I'm sitting back..still waiting for 1425...which is still possible tomorrow.

UPDATE 11.30am Thats one powerful floor spike, as seen on the hourly chart, but looks even more strong on the daily charts. Sure looks like we'll be busting >1410 within 6-10 trading hours.

10am update - very likely bounce due

Opening declines into the high 1380s, the next key resistance level will be the 200 day MA @ 1383. VIX is largely unfazed though, up a mere 4%




We're very much due a bounce here. Despite opening declines, VIX is up a mere 4%.

I've adjusted the channel on the hourly chart a bit, I still think there is a chance this is merely a wave'4, or some type of bull flag.

However, I don't like this market at all, I remain on the sidelines. Lets see if we get the bounce as the day progresses.

Metals remain under pressure, but they are currently showing hollow-red reversal candles. At this early stage of the day, such turn candles not always reliable.

GLD, daily

*Lunar Eclipse (with the appropriate full moon) today, the kooks will be...twitchy ;)

10.05am update.. New Home sales disappoint, and market breaks a new low.

Well, its looking like the 200 day will be test in the next hour or two @ 1383.

If we trade into the could simply all fall to pieces into next week.

UPDATE 10.30am. A possible flooring spike is being put in.

*yes, I've changed the count, maybe a simple ABC ?

The MACD hourly cycle is close to flooring on any basis.
Regardless, I'm still looking for 1425.   I can wait.

Pre-Market Brief

Good morning. futures are sp-5pts, we're set to open around 1393. This is clearly a little follow through from yesterday afternoon, and not entirely unexpected. A test of the 200 day MA @ 1383 is possible, although would be somewhat unlikely.




If we do open lower, then the daily MACD cycle will likely start to show the initial sign of a rollover, yet I don't think the high is in for this cycle.

What will be important to see is how far they can ramp this market back on the next hourly up cycle.

I remain patiently waiting for a much more clearer turn, and besides, for the moment, we're still well within a near term up trend.

The precious metals are getting the hammer in early trading, gold is -$22. Oil is similarly lower, and the dollar.. not surprisingly is higher by 16bps to 80.56

So, lets see how Mr Market copes today.

Waiting for the bounce to conclude

With the Dow back under 13k, and the Sp'500 closing <1400, some might believe the top is in, although based on the hourly index charts, a further wave'5 to the upside seems very viable in the latter half of the week. With the VIX still in the 15s, Mr Market remains almost completely fearless in the immediate term.


sp'weekly2, rainbow


So, we have a blue candle on the rainbow chart, and this remains a provisional early warning of downside trouble.

What is clearly apparent from the weekly charts is the importance of the 1425/30 zone. If we do manage to break into the 1440s, then the bears are right back to square one.

'Santa' remains the wild card, although as many recognise, he doesn't always deliver every year, interestingly in Christmas 2007 - when so few realised we were in recession, Santa failed to show up, and the market declined significantly all the way into January. 

A brief reminder on my overall outlook...

sp'monthly3b - count

The above is a fair summary of what I believe is very viable across the next 3-4 months. It is very analogous to the 2007 initial decline, and I have indeed seen the same kind of outlook projected by other chartists.

What remains critical for the bears is we take out the June 1266 low. If that is achieved, then the much bigger 'doomer scenario' is on the table.

Looking ahead

Wednesday will be kinda interesting to watch. We have just one piece of econ-data at 10am - new home sales, and the Fed Beige book at 2pm. I think both could be used as dumb excuses by Mr Market to rally back, and break through the soft resistance around sp'1410.

If we see prices of 1411 or higher at any time, it should ensure that 1425 will be hit within 5-10 trading hours.

*special note, I'm aware that CNBC plan to wheel out billionaire Warren Buffett on their breakfast show, and so we can expect that clown station to be replaying his comments ALL day. We've seen this kind of nonsense before, and usually, the market is UP on such days.

I remain waiting to re-short @ sp'1425, which I believe could be hit this Thursday.

Goodnight from London

Daily Index Cycle update

The main indexes closed moderately lower, although its notable the Rus'2000 and Transports closed roughly flat. If today's late afternoon down cycle was a small wave'4, then a final small wave 5' - hitting the sp'1425 target, still seems viable for this Thursday.





Its kinda interesting to see the Transports get stuck at the 200 day MA, although there is no clear turn/levelling phase seen in the underlying MACD cycle. We could quite easily still see a further 1-2 days higher to around 5150/5200.

The sp' did close under the important 1400 level, and with the dow closing <13k for the second day running, I could understand if some bulls are already starting to get twitchy.

Holding to the original target

Despite the latter day weakness in the indexes, this is not unexpected at all, and there could easily be one final 'stupid bounce' higher, triggering many short-stops in the process.

The 1420s are not even 2% away, and its very viable we could be briefly testing the 50 day MA @ 1424 this coming Thursday.

A little more later.