Friday 28 December 2012

Volatility Soars

With the indexes falling to pieces in the closing hour, the VIX closed for the second consecutive day above 20. In the brief AH trade, the VIX closed +16.69% @ 22.72. There was a notable spike of 23.23. The weekly close of VIX >20 is very significant, and a major warning of an index collapse wave.





A great deal of technical damage was achieved by the bears this week.

First, the two daily closes >20.
The weekly close >20.

The fact we closed in the 22s is a massive bonus to the bearish outlook into January.

Do not be surprised if we see a VIX (briefly) in the 30s next week, along with sp'1350/40s

More later, on the those busted up indexes

Closing Brief

Significant weakness in the closing hour, and if no adequate agreement is reached on Sunday, the market is going to implode. Primary target remain sp'1225..within 2-3 weeks, with VIX 35/45.





A very bearish end to the week, and it sets up a massive gap lower on Monday.

Congrats bears !
Bits and pieces across the evening..internet connection permitting!

3pm update - closing hour mini-cascade?

There remains significant weakness out there in market land. The VIX is comfortably holding the 20s, and is looking to make its first spike to the upside...first target zone would be somewhere around 24-26.



For the bears, a close <sp'1406 would be useful, especially in terms of the weekly index charts.

Sub 1400/1398 would be a real bonus, but that is probably overly hopeful.

Who wants to go long into the weekend?

*back after the close, although my net is so lousy this afternoon, it might be some hours until I get to post the closing updates.

2pm update - selling into the weekend?

 Mr Market is continuing to show weakness, despite repeated micro-rallies from the deluded bullish maniacs. There remains great uncertainty about where we'll be Sunday night in terms of the infamous cliff. What is clear, the weekly/monthly charts warn of...trouble.


sp'weekly2, rainbow


VIX showing renewed strength.
Red candle on the weekly index charts.

Holding to all original targets.

back at 3pm....(probably)

12pm update – edgy Friday

The main market is holding just above dow 13k, and sp'1410. The VIX is holding the 20s for the second day..and that in itself is good confirmation of yesterdays break through.




All things considered, bears should be content with the action so far today. Certainly, its nothing particularly interesting, but we sure ain't trading in the 1420s.

I'm admittedly concerned about some delusional hyper-ramp late in the day..or early Monday.

Yet, the weekly/monthly charts are clear, and so I'll stick with them.

A provisional short exit at the first VIX spike in the 24/26 range seems reasonable, that would probably equate to sp'1380/70.

The sp'weekly rainbow chart is particularly bearish...

If we can close the week with a red candle, that'd be a major warning of trouble for next week. First target would be the November low of 1343.

There remains nothing but empty air from 1343 down to 1266.

10am update – morning weakness

The sp' is back below the broken low of sp'1413, and the next key level remains sp'1398. The VIX is moderately higher, but more importantly, its again above the 20 threshold. Mr $ has lost most of its earlier gains.




*Chicago PMI, in line with expectations @ 51.6

Today and Monday are going to be a minefield for traders. We could easily see another massive ramp later today if the political maniacs decide to go for a last minute deal.

Regardless of news, the weekly..and monthly charts continue to suggest downside to the low sp'1200s..within a few weeks.

I remain short, it will be tempting to make a temporary exit, if we can hit 1395/90 

Pre-Market Brief

Good morning. Futures are moderately lower, sp -7pts, we're set to open around 1411. Most notable so far this morning is the move in the dollar, USD +0.3% @ 79.85. If this trend continues, we will indeed close the year in the 80s.




*special note... Intra-day updates will remain sporadic today. I might be back up to full speed for Monday trading.

So, futures are lower, and those bull maniacs getting excited about yesterdays ramp are buying at bizarrely high levels. I could almost understand if they were buying @ 1390/80s..but 1420, really?

Bears should be seeking...

VIX weekly close >20. That would be a massive confirmation of yesterdays break through.
A close <1413 would be important to see, preferably...<1405/00.

On the flip side, a close >1420 would be a victory for the bulls.

re: Sunday. I'm not sure anyone yet knows what the US Govt' has in mind for Sunday. Is there a vote, or ?

What is clear, overnight futures trading on Sunday will be crazy wild. We could (again) be lock limit down on the ES, or see some insane (even if brief) hyper ramp 2-3%.

Regardless of 'news', I will hold to my original targets.

Good wishes for Friday!

Primary target remains SP'1225

Thursday's late day ramp clearly rattled some of those bears who are not yet convinced that we are seeing the beginnings of a major wave lower into the sp'1200s. Despite the afternoon ramp, the indexes are still offering massive downside potential.


Sp'monthly3b - count

Sp'weekly2, rainbow


Today no doubt rattled traders on both sides. The bulls were rattled as we came very close to taking out the sp'1400 level – although Dow'13k did fall, and the bears were rattled in the afternoon as the indexes snapped higher due to another politician saying something.

These sort of crazy moves are going to be the likely norm for some weeks..if not months until a deal is finally reached.

A deal WILL be reached of course, but not before an awful lot of complaining and political squabbling has played out. Really, it could be some months before they finally sit down and agree to something.

Mr Dollar to close 2012 in the USD 80s ?

With just two trading days left of the year, the USD is easily within range of closing in the 80s. The doomer bears seeking lower indexes in early 2013 should certainly be seeking a higher dollar, which would really help keep the lid (at least to some extent) on any crazy ramps, as we saw this afternoon.

USD, daily

USD, monthly2, rainbow

So, as ever, eyes on the dollar, and look for the 80s to be re-taken by the Monday/year end close.
Goodnight from London

*please note, normal/frequent updates are unlikely until my lousy internet is fixed (next Thursday). I will best I can though.

Daily Index Cycle update

The indexes closed only slightly lower, after a crazy late afternoon ramp – inspired by some US political maniac saying 'something'. Despite the closing ramp, further key levels were broken today, and the bears are continuing to do serious 'technical damage' to the near/mid-term outlook.

*since its been a while that I managed to post some broader are five of the key indexes...

IWM (representing Rus'2000 small cap)

Nasdaq Comp





First, I believe I'm correct in saying, we closed with 'hanging man' candles on most of the daily index charts. So, despite the afternoon ramp, the indexes did close a touch red..and those daily candles are NOT bullish.

With the VIX breaking the 20 threshold, we have another key warning of trouble, and the VIX weekly chart continues to suggest 30/40s are viable within 2-4 weeks.

I do understand if some bears were really rattled by this afternoons action, but really, such ramps are to be expected..not least due to the current political squabbling.

A little more later.

*please note, normal/frequent updates are unlikely until my lousy Internet is fixed (next Thursday). I will best I can though.