Thursday 6 December 2012

Volatility holding up

Whilst the main indexes saw a succession of micro-rallies, the VIX managed to hold together, closing fractionally higher, +0.7%, to rest @ 16.58. Considering the looming fiscal cliff, this is an insanely low VIX, and it could explode at any time.




I've not much to say on today, other than the flat VIX was one of only two bright spots for the bears today - the other being the bullish dollar.

more later

Closing Brief

A choppy day, closing at the highs, it is a pretty disappointing end to the day. The hourly charts are starting to look lousy for the bears, although the VIX managed a green close.





Another messy trading day, where we remain stuck between 1415/00.

Its pretty annoying, and at times, frankly, a bit boring.

Friday is the monthly jobs data, and its really tough to guess how the market might take it, even if I knew the number that the BLS decides to go with.

back later in the evening, with the usual bits and pieces.

3pm update - closing hour weakness (again?)

Here we go again, is it a case of seeing another micro-rally fade into nothing in the closing hour? We're about to find out. The rising $ is pressing down on the dollar denominated markets, the VIX is holding together..just, so lets see if we can see the day-trading bull rats jump ship.




special note...
The action of the past few days is much more suggestive that we're just not going to be able to take out the sp'1343 low in this down cycle.

More on this important issue after the close.

As things are, bears should be seeking at least a flat close, with VIX trying to make a break for the 17s.

UPDATE 3.20pm expected.

2pm update - Mr Dollar keeping the pressure on

Whilst the indexes are still trying to hold minor gains, the USD is comfortably up 0.6% in the 80.20s, this is a significant move, and will keep downward pressure on the equity/commodity markets, possibly all the way into early next week.




Bears should still be seeking a close <1400, with VIX 17+.

It remains a chop-fest, and clearly, a break >1415 would open up the low 1420s again. However, the latter seems unlikely, considering the daily and weekly charts.

Unquestionably, the primary short-stop line is sp'1423, the Monday spike.

I don't have an intra-day $ chart, but here is the Euro..which - as usual, will suffice..

A clear break, first target is 1.28, and then 1.2650

UPDATE 2.30pm  Consider the daily transports..

I think a very reasonable pre-FOMC (next Wednesday) target is 4900.

All things considered, its looking increasingly less likely we can break the recent key sp'1343 low this side of Christmas. A large B' wave - should still get down to around 1375 though, by early Tuesday. We're only talking about a barely 3% move, and thats easily viable across a few days.

1pm update - seeking afternoon weakness

Despite yet another micro-rally, the weakness is still there. Even worse for the bulls, the dollar is back in the 80s, and the VIX is green. Seeking a close <sp'1400, which should open up a gap lower into the 1380s early Friday. A bold call, but..the weakness IS there.

trans'60min - updated channel.



Yes, it is still a choppy mess, but until there is at least some kind of mini wash-out move to the downside, anyone going long at these levels is just plain crazy. The worse of them being the AAPL knife catchers. Good luck with that trade, you insane maniacs!

REL tranny chart.

I've adjusted the channel a bit, and I'm highlighting the issue that we might yet be building a large B; wave, with one final C' wave completing into the Christmas trading week.

Such a C' wave does NOT mean my broader outlook is invalid.

I remain short, will hold overnight, and look for an exit on the next VIX spike, which may be as high as the low 19s.

UPDATE 1.30pm , still holding within the channel..just.

Still seeking a close <1400

12pm update - another twisted day in the US markets

The market remains on the edge of breaking out, although there is some distinct instability out there for those watching the tiny 5 and 1 minute charts. Bears need a close <1400, that would open a much anticipated gap lower into the 1380s, with VIX 19s.




Most notable today remains the Dollar, which is now up 0.5% - a pretty significant move in currency land. Metals are surprisingly green despite the $ move, although Oil is weak..-2%.

On balance, I think there is still some serious underlying downside building up, even though is appears we are back to short term up trend.

So, its a real mess in many respects.

As it is, I'm sticking to the original outlook, waiting to exit at the next major down wave in the sp'1380s, with the VIX in the 19s. That IS viable tomorrow.

Ohh, and as for AAPL, it remains laughable.

The few minutes of clown channel  that I could stomach earlier, saw CNBC's Melissa Lee do her very best to again cheer lead the 'AAPL $1100 in 2013' mantra. Incredible.

FCX - I never got to around to mentioning it yesterday, but here it is...

Its hit my secondary target zone, and although it might bounce a bit, I'm guessing 25/20 in 2013, along with the other miners (GDX 35/30).

FCX remains one my top 5 companies in the world (!), but for now, its probably one to watch.

UPDATE 12.30pm  I've adjusted the tranny 60min chart, I think its important update.

The big issue, and a CRITICAL one for the bears, is where we floor in the next down wave. If we put in a slightly higher low, it'd suggest we are just in the middle of creating a giant B' wave, with a C' into Christmas.

I could live with that..if I have to. As it is, I'm still seeking a move lower in the immediate term.

Tranny suggest we floor next Tuesday.

11am update - another dumb micro-bounce

Opening chop has now turned to yet another micro-rally. A move over sp'1416 would open up the low 1420s, and threaten the near term bearish outlook. VIX and Dollar are still green though, so..the current minor equity gains are very vulnerable.




Its yet another messy day. There is still a lack of direction.

*VIX 60min, looking weak, despite fractional gains. urghh

I remain short, but its so frustrating, I am real tired of waiting for this nonsense to get back into the mid 1390s.

AAPL is seeing some crazy action as the bull maniacs try to knife catch. A death-cross is still due tomorrow, and the near term trend remains down.

Transports remains weak, despite the other indexes. Seeking a clear break under what could be a bear flag @ <5080

re: 'stupid market' see this story from Zerohedge on the nonsense so far this morning.

10am update - waiting..again

Opening minor chop, Mr Market seems somewhat adrift. Weakness in equities should appear as the day develops. The dollar is higher, and that is putting pressure on the metals and Oil. AAPL is down expected, with a death cross due tomorrow.




I'm trying to be patient, but its getting annoying again. We have the jobs data tomorrow, and then there is the issue that the ignorant media are now touting next weeks FOMC as the 'QE4 annoucement', even though the 45bn t-bond buying was ALREADY announced in mid-September. Idiots.

I remain seeking an exit @ 1395, although 1385 would be the natural bigger first target.

Transports, set to go negative cycle, with a bearish MACD cross, in about 3-4 hours.

If we can break <5080, that would suggest the sub-wave'2 idea is correct, and we should fall into Friday.

Pre-Market Brief

Good morning. Futures are fractionally lower, sp -1pt, we're set to open around sp'1408. After yesterdays late morning mini-ramp, bears are understandably edgy about being short in what remains a treacherous market. As usual.. eyes to the VIX..and the transports.

*weekly jobless claims: 370k vs 380k expected, as ever though, there really isn't much to make of that data point.





Considering everything, there should be renewed weakness today, and primary target remains 1385. That still seems viable, no later than tomorrow.

I remain short, seeking my next exit around 1395, which I believe might come this morning before yet another bounce.

A long day ahead, and it won't take much of a rumour/news story to snap this market sharply higher..or lower. Everyone is getting twitchy about there I sense, and certainly includes..yours truly.

UPDATE 9.20am

Notice the Dollar, almost breaking USD 80.0.

Metals, Oil,..weak. Sp'-3pts...we now set to open around 1406.

I'd like an exit around 1395 by 11am.

Awaiting a major snap lower

It was a very mixed trading day. Once again opening gains failed to hold, then moderate declines developed, only to see a mini-ramp, with gains of 1% on most indexes.Yet, the underlying weakness is still there, and we saw much of the gains fade into the close.

sp'daily5b - scenarios

sp'daily4 - original bearish outlook


Today's intra-day action is the sort of nonsense that can understandably drive most traders insane, and I have to admit, I still find these brief..but fierce ramps, really annoying.

Yet, such ramps are to be expected, even if the general market is trading lower. In fact, as many recognise, the biggest ramps are during major market declines. Just look at the daily charts from 2008, endless hyper-ramps of 2, 3, even 5%...on a random, but pretty frequent basis.

I'm still holding to my original outlook, which is broadly seeking the low sp'1200s. This may occur in a very crashy (May 2010) manner, or more likely drag out into January. At the very minimum, a test of the June 1266 low seems a given, and I don't think that will hold for too long.

Bears need VIX to explode

VIX, weekly

If we're going to take out the recent sp'1343 low, bears will surely need to see the VIX break >20, and then spike higher into at least the low 30s. If my index target of low 1200s is correct, I would be surprised if the VIX doesn't briefly try to break 40.

Bonus charts - the Dollar

USD, daily

USD, monthly2, rainbow

The dollar finally managed to put in a positive close today. The daily MACD (blue bar histogram) cycle is just starting to tick higher, but its still very negative momentum.

Index bears need to see USD back above 81, and make a break into the 82s. The monthly rainbow chart is actually sporting a red candle right now, but that could easily flip to green, if USD battles higher into the 81s.

USD 84/85 seems viable in early 2013, which would put serious downside pressure on both equities and commodities - especially the metals and Oil.

The target levels are clear, lets see what Thursday brings.

Goodnight from London

Daily Index Cycle update

A very confusing and roller coaster trading day, although the trading range was barely 1%, so we're not into 'crazy wild swings' quite yet. Most of the main indexes closed moderately higher, despite a closing hour slump. With the VIX apparently flooring in the mid 16s, we could see much stronger downside moves, first target remains - sp'1385.

Nasdaq Comp





At 11am this morning I asked 'are we having fun yet?' Mere minutes later, the market turned, and ramped 150 dow points in just over an hour. Maybe I should be more careful with my words, do I tempt fate too much ?

So, the closing hour action was at least bearish into Thursday, and closing <1410 was quite a relief. 

Thursday, it will obviously be important to take out today's low of sp'1398, and break into the 1380s. If that is achieved, then everything remains 'broadly' on schedule.

I remain short, and seeking first target of sp'1385. It will be VERY difficult for the indexes to break below the 200 day MA though, and today's late morning ramp again showed that the market can still easily smack the bears down.

A little more later