Friday 21 December 2012

Volatility fractionally higher

The main indexes saw something of a choppy day, with two very distinct bounces. The VIX suffered as a result, and despite the indexes closing around 1% lower, the VIX only closed 1% higher to settle @ 17.84. Across the week, the VIX climbed around 5%





Today was a bit of a mess in volatility terms. The opening high of 19.93 was teasingly close to breaking the key VIX 20 threshold. today. The VIX soon put in a black candle on the hourly and daily charts, and this weakness was indeed seen across the day.

The closing daily candle is really something of an oddity. A giant black candle...a higher close, but massively below the opening gap levels. Normally I would get pretty concerned at such a black candle, but...considering everything going on, I think bears should not get too worried. The indexes did close a fair bit lower, and the weekly index charts are sporting what could be a spike high.

Weekly cycle still warning of upside potential

The big VIX weekly chart remains one of the charts for the bears to keep in mind. It remains the case that I await the first weekly VIX closing >20. Once that is achieved, then bears can be more confident that much higher the 30s..even 40s are viable in the subsequent 2-4 weeks.

Today was the fourth consecutive weekly gain for the VIX, perhaps next week - despite being a shortened Christmas trading week, perhaps we can see VIX break into the 20s.

More later, on the indexes.

Closing Brief

The main indexes all closed somewhat lower, but the declines are certainly less than those who were watching the futures last night would have been expecting. The sp' gained a little over 1% on the week. The VIX closed only marginally higher, although the dollar held onto gains of 0.4%, and is close to breaking back into the 80s





So..another week comes to a close, and for the bears, its been a tough one, with very troubling gains on Monday and Tuesday, minor declines on Wednesday, only for another rally yesterday.

Across the week the indexes are higher, but its not by too much, and we do have a little spike on the weekly charts.

Lots to say, but that's for later.

*I remain short across the weekend, including a new VIX call block, where I am seeking an exit around VIX 24/26 when the break through eventually comes.

Have a good weekend everyone.

3pm update - closing hour drop?

Mr Market is still battling it out, with one hour left of the week. There is a small chance of a snap lower. Bears need to see the morning low of sp'1422 taken out to have any chance of testing the key sp'1413.




We've seen two very significant intra-day bounces, I do not expect a close in the sp'1430s.

*Baring a surprise collapse into the sp'1390s, I will comfortably hold short across the weekend, and 'hope' for a gap lower on Monday.

UPDATE 3.40pm ..looks like the algo-bots are doing a stop run...

 Oh well, I can live with it, we're still closing red.

2pm update - the battle continues

We're seeing another intra-day bounce, and the market is trying to break back into the 1430s. Considering the wider concerns, a close in the 1430s would still seem very difficult for the bulls.

A brief reflection on the weekly charts, which are still warning of trouble.




As has been the case all week, bears need to take out the recent sp'1413 low, with VIX >20.

Right now, that seems unlikely by the end of today, but there IS weakness out there, and there is of course considerable possibility of a Monday gap lower.

I like the Keltner...and yes.. the target is still sp'1225.

 The last warning the bulls get will be if the November 1343 low is taken out


 Still battling it out in the 1420s....seeking a closing hour move <1420.

12pm update - lunchtime market woes

The market bounce in early morning, but as expected..we're seeing renewed weakness. After all, who wants to buy after last nights (brief) lock limit down? With no cliff agreement not likely until the latter part of January, if not Feb/March, Mr Market is beginning to re-price.

There is a considerable way down to go. Primary target remains sp'1225.




Things are going okay for the bears, we're seen a bounce, its a case of 'how do we close?'. I think we can at least test last Fridays lows of 1413..and take out out.

An absence of scary facts

I find it interesting how the clown networks have entirely failed to note the flash-crash in the ES last night. I've not watched them 24/7, but..from what I gather, none have mentioned it.

The point I'd like to emphasise is - as we saw in May 2010, overnight brief spikes lower can be an indication of where the market will trade in normal trading the next day.

Last night we hit the equivalent of sp'1393.

So...if we can break into the low sp'1390s later today, I'll look to bail then...and re-short, sometime next week.

UPDATE 12.27pm   I really like the lower channel of the Keltner as an exit late today...if we get there.

An exit in the low 1390s..would certainly seem wise, with a bounce next week to 1410/15.

LVS is a nice chart

target would be low 30s within the next 1-3 months.

UPDATE 1pm Well, they are still battling it out in the sp'1420s.

Bears should be seeking significant latter day weakness, with an attempt to take out the sp'1413 low from last Friday.

If that occurs..expect things to spiral...FAST.

Any close today <1413..and we'll have a very spiky weekly candle.

VIX has slipped back into the high 18s again, but.. that will break the key 20 threshold..if sp<1413.

Lets see how this proceeds..with 3 hours left of the week!

11am update - market on edge

We've already seen a significant morning bounce, and the VIX has really cooled off, yet the overnight moves are not to be dismissed so easily. The 50pt lock limit down on the ES futures was a very significant warning that this market can now implode at any point.




So..a bounce has probably shaken out most of the weaker bears, and sucked in the dumbest of bull maniacs.

I'm seeking latter day weakness, with a break of rising support -which by the close will be around sp'1425.

*I picked up some VIX calls in the past hour, this might be one of the last opportunities to go long VIX <20.
First target remains a daily/weekly close >20. Then 24/26..and then low 30s.

UPDATE 11.20am The euro is seeing some weakness, confirmed the recent two day top.

A break <1.30 would probably see the SP' well below 1400

UPDATE 11.25am...we're seeing some renewed weakness, and we're now about to take out the rising support on the daily at 1425.

This opens up the recent 1413 low.. then 1398.

10am update - eyes on the bigger charts

The market opens somewhat slowly, but we're now lurking in the sp'1420s..approaching rising support @ sp'1421 on the hourly charts.  VIX is 12% higher..just a touch under the 20 threshold.

*special note, keep in mind that the ES spike lower was around sp', if there is a late day upset/panic, that would the level to watch for.





Its going to be a busy day. Boehner is due to appear around 10am..and no doubt there will probably be other political speakers across the day.

This twitchy market could flash-crash at any point.

*I'll highlight the more important bigger charts as the day goes on.

More than anything, the VIX weekly is key. The VIX could explode into the 30s later next week, despite it being Christmas trading week.

I'd like to see a close <1413, but thats possibly just overly hopeful.

re: black candle on VIX hourly. Normally I would be concerned about it, but considering everything..not today.

VIX should break 20' 'soon'.. at which point we'll see if can hit last nights ES low of sp'1393.

 UPDATE 10.20am We're seeing a little bounce, as they battle it out.

I realise some actually think we'll close green, although I find that difficult to imagine.


I'd like a close in the low sp'1410s...creating a second spiky weekly candle. That'd set up the next few weeks, with a move into the sp'1200s.

Long day ahead...

UPDATE 10.35am With the VIX up just 5%, I just picked up some VIX calls.. Jan'27s.

A weekly VIX close >20 would be very bearish for next week

Pre-Market Brief

Good morning...and welcome to a new Mayan age ;) Overnight (ES) futures which briefly were lock limit down -50pts, are currently -17pts, we're set to open around sp'1425.




After last nights mini-carnage, this morning could be seen as a little disappointing, although I think its fine.

There is a good chance we can close the week flat..back in the low sp'1410s

Its quad-opex, will indeed by choppy, and volume will doubtless be much higher.

UPDATE 9am  ES -20, we're set to open @ sp'1423.

First target would be the key low of sp'1413, yes, the one I've been talking about all week.

UPDATE 9.35am... a sombre opening, with bells ringing for 'newtown'.

VIX testing the big 20 threshold..

Awaiting a Witchy OPEX

The following was drafted before the ES flash-crashed -50pts in earlier overnight futures trading. See previous post for updated daily chart/details on Friday outlook.

Today saw yet another moderately higher close for the equity market, with some indexes putting in new post Dec FOMC highs. With just 5.5 trading days left of the year, there really isn't much time for the bears to knock lower this market, even to the low 1400s.



sp'monthly3, rainbow


The big monthly rainbow chart is now my primary concern. With today's gains, the Sp is back to an outright bullish green candle.

At the very least, the bears MUST close the year with a blue candle on the big monthly charts. We're only talking about 1-2% lower on the indexes. Yet, if Mr Market busts higher into the 1450/60s, it looks like we could close the year with very bullish monthly charts.

Quadruple Witching Friday

Tomorrow is the last big opex of the year, and we should in theory see a little higher trading volume, along with end of week positions being closed out. The issue I'm wondering is whether the market makers would like to whack the SPY - and other index ETFS down to the equivalent of sp'1420. 

Early this morning I had hopes we could perhaps close the week back at last Fridays closing level of sp'1413. That just seems out of range now, especially when you consider the hourly charts, where it will be very difficult to break rising support in the low 1420s.

*we have 3 key pieces of econ-data tomorrow, so the market will have plenty of excuses to see slightly more dynamic action than we saw today.

Well, its been a very long day...

BONUS video...

Queen cheer leader Maria, from clown network, having something of a melt down...

Goodnight from London

11pm update - ES futures flash-crash 50pts

The ES futures flash-crashed 50pts in the early hours of overnight trading, a result of a shelved vote on Boehner's fiscal cliff 'plan B'. A major bounce occurred though, and we have stabilised around 20-25 ES pts lower. We are currently set to open around sp'1420.

sp'daily5 - AH special update chart


So, the SP'500 equivalent was down around 50pts..briefly. Now, its important to note other indexes were not as badly affected, down around 30/35pts equivalent.

However, on any basis, this is the biggest overnight move since March 2011 (the Japan quake time frame)

If we open around sp'1420, there is VERY high likelihood VIX will open at least a little over the key VIX 20 threshold....which is one of the key warning signs of trouble.

updates..for one further hour..then I'm going to collapse, much like the ES did earlier.

An important remind on the key sp'500 thresholds...

sp'1413, 1398..and then the 200 day MA @ 1387.

I do not see any 'likely' chance of taking out the 200 day MA tomorrow..or for that matter..Monday.

UPDATE 11.15pm ...I'm suspecting a baby bear flag on the overnight futures...

There is no reason -considering the earlier market shock wave, why we can't open at the earlier ES lows around sp'1393.

UPDATE 11.35pm ...we're still holding declines of -23pts...we're set to open sp'1420.

I don't think bears should get too concerned about the initial bounce...

Lets see  how the morning plays out.

*automatic pre-scheduled post due at midnight EST....  and thats it from me I think..

goodnight everyone!

9.15pm update - ES futures flash-crash 50pts

Overnight futures earlier flash crashed, with the ES dropping 50pts to the low 1390s.

The direct equivalent would be a Friday sp'500 open around sp'1393.

As at 9.15pm, ES -22      , we're set to open around sp'1421


I've labelled the 50pt fall, with the recent 20pt fall.

The interesting issue is that even a 20pt would just about break the rising support, and open up a move to test the recent 1413 low - that I been babbling about all week.

for live futures charts see: FOREXpros

Updates..until I keel over and fall asleep..or when the world ends. Whichever comes first.

9.30pm UPDATE    Futures still holding declines of -22pts, we're set to open around sp'1421.

9.50pm  I can't see the individual futures contracts flying around, but I sure can imagine the semi-mayhem right now as they battle it out.

Who wants to buy above ES -20pts ? So one it seems.

It seems many are starting to recognise that an early morning 'best bear case' downside target is in the low sp'1390s.

Would that equate to VIX +30%  around 24 - often a key resistance level on  a spike?

10pm update  ES -25pts , we're now set to open around sp'1418

Mr $ is up 0.3%..with Gold -8$ again. Hell, Gold bugs gonna wake up real mad again!
10.30pm update - ES -23pts, we're hovering around sp'1420...

updated daily chart...

A 50pt limit down open would be great, but i'll settle for 20/25pts to start opex Friday.
The interesting aspect will be VIX, which I'm still guessing will open >20.

Certainly, a 50pt sp' drop ..would surely lead to VIX 24/26

8.30pm update - futures dropping...hard

Futures falling pretty hard...algo-bots getting upset.  We closed @ 1443, currently  sp-19pts @ equivalent of 1424 for the Friday open.

However, we were -34pts...around the sp'1410 level just earlier...

sp'60min -

*for live data see the usual links on finviz/forexpros...


the previous low 1413 - taken out just now in overnight futures.

Critical low - 1398... that requires sp-47pts or so.

UPDATE 8.44pm , it seems the ES mini actually hit thats a further 15pts lower...

So far then, we're taken out the 1413, and tested..precisely (I think) the 1398 low from Dec'5th.

sp'daily - updated keep in mind tomorrow, the big 1400/1398 zone.

After that, its the 200 day MA @ 1389

9pm update - I guess (was never quite sure) ..the ES has a limit down of just 50pts ?

So, if the close was 1443, did we actually hit equivalent of 1393 - the lower bollinger on the daily?

Regardless of the exact number, we just saw a massive drop on the ES, and the 1400/1390 area might be a key level to keep in mind for Friday.

Daily Index Cycle update

The main indexes closed moderately higher after what was a somewhat choppy trading day.  Once again, the transports and the Rus'2000 were the stronger indexes, with the tech' sector lagging. Near term trend remains upward.






It was not the most exciting day, but there was certainly some interesting price action in individual stocks.
The transports had yet another higher close, and we're now getting very close to the important 5400 level - the March highs. A daily close >5400 would be VERY bullish for the broader market. So, the doomer bears should be very concerned that the old still leading UP.

A week ago

Last Friday we closed @ sp'1413, after the FOMC spike high of 1438. The fact we broke that high this week remains a troubling issue. I would really like to see a major down day tomorrow, its the last major opex of the year, so maybe the market makers would like to pin the SPY @ 142 ? Yet, we've not had a major decline in around 5-6 weeks. Even a 1% decline tomorrow seems overly hopeful.

A little more later