Friday 29 March 2013

Weekend update - Monthly US indexes

The US indexes continued a strong and consistent push upward. Most indexes climbed around 4% in March, and there is simply no sign of the current trend ending. However, based on the seasonal action in the past three years, we are due a multi week down cycle of at least 7%

With the first quarter now concluded, lets take our regular look at six of the main indexes

IWM (repre' Rus'2000 small cap)

The R2K remains the second market leader, and closed the month 4.7% higher, at yet another all time high. There is absolutely NO sign of a turn/levelling phase.

Underlying MACD (blue bar histogram) cycle is still ticking higher, and there is arguably a little airspace to the upside to reach the momentum peaks seen in both spring 2010 and 2011.

The only issue in my view is whether IWM hits 100 this year, which right now is a mere 6% away.

Nasdaq Composite

The tech sector is lagging, but still managed a monthly gain of 3.4%. There is nothing bearish here either. There is no sign of any turn, and the April upper bollinger band will be offering the 3400s - although the daily and weekly charts do look exhausted on the upside.

First target on any multi-week down cycle is the 3100/3000 level.


The mighty Dow closed March at a new all time high, climbing 524pts, and now comfortably trades in the mid 14500s. There is no sign of any turn. The Dow is resting just a touch over the upper bollinger, and is clearly over-stretched.

First downside target for the bears should be 13700, which is a good 800pts lower - that seems very viable across April/May.

What is clear, the doomer bears need to see a Dow back under the November low of 12500 to have any hope that a grand cyclical top has been put in.

NYSE Composite

The master index closed the month 2.7% higher, and made the third consecutive close above the spring 2011 highs - a time when most commodities also peaked.

There is no sign of any turn, and what is notable is that this exceptionally broad index is still some 1200pts shy of its Oct'2007 high - that's a significant 14% or so.


The all important Sp'500 continues to battle higher, and put in its highest ever monthly close, although is still 7pts shy of breaking the intra day high of 1576.

The upper bollinger will probably jump to the 1580s at the start of April, so there is probably no more than another 1-2 percent higher viable. The 1600s do not seem likely this side of the summer.

Underlying MACD just keeps on ticking higher though, and even if we do have a rollover in April and May, price momentum is still going to be net positive.

Doomer bears need to see a break of the November low of 1343 to have any hope that a grand cyclical top has been put in, and right now, the weekly charts say that is simply NOT viable in the next down cycle.


The old leader closed the month up 4.4%, and from a permabear's perspective, the price action is simply scary-bullish.

This was the sixth consecutive monthly climb, a run not seen since summer 2009. Trans is trading 2-3% above the upper bollinger band, so it IS over-stretched, but price action itself is showing no sign of a turn.

Transports could slip all the way back to the old resistance high in the 5600s - some 10% lower, and still not do any damage to what remains a disturbingly powerful upward move.


Clearly, another month where the deluded bull maniacs can claim victory. Anyone who has been vainly trying to short this market has been ground down to dust...or worse.

I have to think the current up cycle from the November lows is about to conclude. The daily and weekly charts are both VERY exhausted, so we'll probably see at least a little downside this spring..but I'm really not expecting too much.

Best hope for the bears right now is a retracement to the highs of last September - the sp'1470s, which I'm guessing will take around 4-6 weeks.

Looking ahead

Next week will primarily be focused on the employment data. We also have ISM data on Monday and Wednesday, and factory orders on Tuesday. So, there will be at least something for the market to reflect upon each trading day this coming week.

In terms of near term 'viable' downside, consider the following...

sp'daily6 - Keltner

Lower Keltner band will start April around sp'1530. I can't see any hope of trading under the 1530s in the first wave lower - in the first two weeks of April. Indeed, I refer anyone to the style in which the market traded from mid-Sept to mid-Nov. That is probably the 'best case' style of decline the bears can hope for across April/May.

I realise that sort of choppy moderate decline is not exactly the stuff of bear dreams, but in my view, that is probably the best we can hope for.

Best guess is that we max out next week, and form a top in the sp'1570s. I suppose 1580s are briefly viable, but still, I certainly can't see the 1600s this side of the summer.

As ever, all comments are most welcome. I might post something late Sunday, but regardless, I will be back on Monday

Have a good weekend

Long weekend ahead

The SP'500 closes around levels not seen since October 2007, mainstream media enthusiasm is reaching new heights. Yet, the charts are warning of mid-term downside. If Q1 earnings come in somewhat 'rough', Mr Market has a significant way to re-price, at least to the sp'1470s

spdaily7 - fib levels

spweekly2, rainbow


I'm still open to a little further upside across Mon-Wednesday, so those fib levels will probably need to be adjusted. Regardless, I'm pretty content with the overall cycle count, and I think we're in the very last micro-cycle of a fifth wave.

Primary target is the sp'1470s, which happens to be the old resistance highs from last September.

Weekly charts...warning

Its kinda curious that we only closed up 12pts on the week, but it sure feels a lot more. Whether we hit..and exceed the Oct'2007 high of 1576, I don't think is of any real consequence.

Underlying MACD (green bar histogram) on the weekly charts IS rolling over, and warning of a new multi-week down cycle beginning within the next week or two.

For the week will probably be prime time to start picking up index shorts/VIX long,  for looming downside/increased volatility.

Goodnight from London

next main post, late Friday, probably on the US monthly charts

Daily Index Cycle update

The US market closed moderately higher to end the first quarter, with the sp' briefly breaking into the 1570s, a level not seen since Oct'2007. Transports were the strongest sector, climbing 1%, with the Rus'2000 small cap closing flat. Near term trend remains up.





The micro-count on the hourly indexes remains a bit of a confusing and uncertain mess.

Yet, the daily charts are pretty clear. Trend remains up!

Underlying MACD (blue bar histogram) is ticking upward, and the sp' is due to go positive cycle at the Monday open on April 1'st. There is no reason to believe we won't see at least 1 or 2 daily closes in the 1570s.

The only issue is how many up days do we get, in what I believe is the last up small up cycle of this very large November wave. Best guess..we are maxed out by Wednesday, with VIX possibly back in the 11s.

For the bears out there, its almost time.

a little more later

Thursday 28 March 2013

Volatility ends Q1 in the 12s

The VIX closed the shortened week on a weak note, -3.4% @ 12.70. Across the week, the VIX lost 6.4%. Near term trend looks like VIX 11s are viable, especially if the market can put in a few closes in the sp'1570s. VIX will surely break back into the 20s, sometime in Q2.





The market is almost maxed out (on any basis), and the VIX is similarly likely very close to putting in a key multi-month cyclical low.

Best guess, we see the indexes briefly higher Mon-Wed, and then a rollover should start to become clear by the end of next week.

First upside on the VIX is 15/16, and then 19/20. A weekly close >20 would be extremely significant, and bode for something more 'interesting' than just an ordinary 4-6 week down cycle.

For the bears, the latter part of next week is arguably VIX shopping time.

more later...on the indexes

Closing Brief - Q1 complete

The market closed at levels not seen since October 2007. Clearly the recovery is now complete, and the Bernanke can be fully pleased with himself! The sp' closed just a touch under the key 1570 target zone.



So, that's it for the week, month..and the quarter! expected.

Next week will likely be prime re-short time.

*the usual bits and pieces to wrap up the week.

*next main post, late Friday, on the US monthly charts

3pm update - a close in the target zone?

The sp'1570s have been a primary target for some weeks, and its even possible - with a little algo-bot help, that we'll close the week there. Clearly, a lousy Q1 for the bears, I have some considerable belief Q2 will be 'somewhat better'.



Place ya bets..on whether we close in the 1570s!

back at the close

2pm update - holding onto moderate gains

Just two hours remain of the week, month..and trading quarter. A close in the sp'1560s looks assured, and that sets up a further day or two higher to begin Q2. VIX is a touch lower. Oil is +0.5%. The precious metals are weak, Silver is trying to rebound..yet again.



Suffice to say, its going largely as expected. A POMO fuelled end to the quarter, and there is no reason to believe why we won't close around the current level.

sp'1570s look viable next Mon/ which we should look for a possible sharp intra-day reversal from a grand 13 year triple top.

12pm update - new highs

The main market is holding onto moderate gains, and we're now a mere 3pts from a break into the target area of the sp'1570s. VIX is a little lower, back in the 12s. Oil is again higher, whilst the precious metals are again weak, despite a lower dollar.




Not much to say, but the hourly cycles are probably going to churn for much of the day now.

Bears haven't any real hope of a red close, on a 5bn POMO day.

*precious metals remains weak, although its nothing 'significant'. yet.

VIX update from Mr T.

back at 2pm

10am update - morning chop

The econ-data keeps on coming in, Chicago PMI was 52, not quite recessionary, but the market is not entirely pleased. Despite the weak market, VIX is still red. Precious metals are trying to put in another morning reversal.




Not the most exciting of starts, but the econ-data is certainly warning of 'issues' out there. All those bull maniacs looking for 2-3% growth in 2013....thats going to be real difficult to hit now.

*I am (as ever) watching the metals, which are again offering a morning reversal.

Pre-Market Brief

Good morning. Futures are back to flat after overnight moderate declines. The sp +1pt, we're set to open around 1563/64. The dollar is a touch lower, as Euro rallies on a little 'Cyprus relief'. Precious metals though are a little weak, with Gold -$6 and Silver -10 cents.




Its tough to call how we'll close today, but all things considered - not least the POMO of 4-5bn, I'd have to think we'll close at least moderately on the upside.

We have some key econ-data today, and if Mr Market likes that, we could even close in the sp'1570s.

Its week/month/quarters end, so it could be a little volatile this afternoon.

*I'm merely looking to drop my first SLV (silver long) block ahead of the long weekend. I won't be picking up any index shorts this side of a long weekend.

UPDATE :  GDP Q4 (final revision) 0.4%..   not exactly an inspiring number to conclude 2012, is it?

Jobless claims, 357k, although I now place very little respect for the weekly numbers.

*awaiting Chicago PMI @ 9.45am.

Awaiting the Easter Bunny

Another day where the indexes saw a latter day recovery. For the bears, this remains a bizarrely sick and twisted market. Yet, we are probably just solidifying what is a 3-6 week top - as is often the case. Weekly charts are rolling over in momentum...but not yet in price.

sp'weekly3 - Keltner

sp'weekly2, rainbow


Just a few short notes on two of the weekly charts that I like to regularly highlight..

First, Keltner. If there is going to be a down cycle in the coming weeks, first target will be NO lower than the lower band, which is currently @ sp'1439 and rising. By mid April, this will be around 1470/75.

Second, my somewhat infamous 'rainbow' chart. Lower bollinger on here is still all the way down at 1359, but that is going to battle higher..and will be around 1425 by late April.

No hope of sub sp'1400s

The bears can NOT expect this market to be trading under sp'1400 any time soon. Its just so very unlikely..arguably near impossible. The weekly charts are all generally saying the same thing, by late April/May, the bears will be lucky to see the 1470s....perhaps the 1430/25 zone.

It really depends on how long it takes to churn out a top. If you look at the previous 3 cycle tops on the rainbow chart, we generally put in 3-6 candles before putting in a consistent close under the weekly 10MA.

My best guess from all this...we do cycle lower across April/May (not least if Q1 earnings suck), but..probably only to the sp'1470s - which interestingly, was the old resistance high from Sept'2012.

Looking ahead

Thursday will likely be more busy than today. We have some key econ-data, in particular the GDP and Chicago PMI data. If those are somewhat lousy, it'll give the market another excuse to sell off early.

The Cypriot banks open Thursday, and Mr Market is going to be keeping a close eye on any civil disturbances. I'm guessing the populace (or should that be ignorant Sheep?), will line up very politely though.

Finally, it should be recognised that Thursday is not only the end of a short week, but end of the month..and quarter. The late afternoon will probably be somewhat unstable, yet we have a large 4-5bn POMO to placate the HFT algo-bots.

That's all for today.

Goodnight from London

Daily Index Cycle update

The market opened lower, but almost immediately started to battle back upward. The main six indexes closed mixed, Trans/R2K closed higher, with the Dow/SP closing a touch lower. Near term trend looks moderately to the upside, key target remains the sp'1570s.





Another very frustrating day for those bears who are still shorting the indexes. Although those using super tight stops at the open should have got kicked for at least some degree of profit. Anyway, the market indeed battled higher, and it was once again the usual 'latter day recovery'. Sure we didn't close green on the Dow or Sp'500, but it doesn't matter, does it?

Bears face a major problem across the next few days. Underlying MACD (blue bar histogram) cycle is now starting to tick higher on a number of indexes, and there is a good 2-3 days to the upside viable.

So, in the near term, we could easily be looking at a market that is crawling higher into the middle of next week.

With a long weekend ahead, there seems absolutely no point in launching any index shorts this side of the Easter break.

a little more later

Wednesday 27 March 2013

Volatility..a little higher

The VIX jumped moderately higher at the open, back in the low 14s, but with the indexes rallying across the day, the VIX lost over half the gains, and closed just 3% higher @ 13.15. Hourly charts offer upside early Thursday, but daily VIX charts suggest downside.




There are indeed a few conflicting signals between the daily and hourly cycles.

Certainly, the more important daily chart is sporting a very clear black/fail candle, and that is highly suggestive of at least 'some' VIX downside Thursday and perhaps into next week.

Yet, the hourly MACD cycle looks somewhat primed for upside early Thursday.

Perhaps we'll see the VIX jump 5% early tomorrow, but still close red?

Regardless, seems no point in picking up any VIX call blocks ahead of the long weekend, and besides, the indexes could easily yet battle higher into the sp'1570s, which might equate to VIX 11s.

more later on the Indexes

Closing Brief

The market opened lower, but the bears are still lacking any persistent downside power. With the daily charts suggesting short term momentum to the upside, bears face more pain tomorrow. USD held gains into the close, along with Oil and Gold all higher.



*special note on the hourly count...

The hourly count is something I am now VERY uncertain of. The current sideways chop is something I'm really not sure what to make of. I've not highlighted, but Transports is still significant below the recent high of March'15, and could even be a sloped H/S formation.

What I can say though, is that the daily charts are warning of 2-3 days of upside, which gets us into next week. Bears also need to keep in mind there is a rather large POMO to conclude the week..and month.

If the indexes can get stuck next Tue/Wed, whether its sp'1565, 70 or'll be prime time to start launching some index shorts.

the usual bits and pieces across the evening.

3pm update - closing in the green

It would seem Mr Market is indeed going to close marginally higher. Those opening declines now seem a long way down, and the bears have major problems ahead of the 3 day weekend. Oil has picked up some gains, Gold is higher, Silver fully reversed, now a touch higher.




Interesting day, and I'm glad I'm still managing to restrain myself from shorting the indexes.

I'm somewhat surprised at the strength in Oil, its now above my best bullish outlook of 34.40s. It can get stuck for 2-3 days next week, it might become a good short across April/May

RE: silver,. I'm still holding one block of SLV (long), and remain seeking an exit in the 28.25/50 zone, perhaps a gap higher tomorrow morning. Hmm

back after the close

2pm update - afternoon chop

Mr Market is still battling to go green, and I'm guessing it will manage it. USD is still holding opening gains. Oil looks stuck at key resistance. Gold is creeping higher, and Silver continues to recover after a sharp gap fractionally higher.




Not much to add, aside that I'm pleased I was 'bold' (or is that reckless) enough to pick up a second SLV block at the open..which I just exited for 35% gains... :)

That is yet more $ to short these stupidly over-priced indexes.. for some time next week.

The good bears need to remain patient..and wait to meddle in indexes/VIX..after the Easter break.

back at 3pm

12pm update - latter day...melt

Market is now only 0.2% lower, and looks set to close marginally green. VIX is still a touch higher, but will surely close red. Oil is lower, and resting around key resistance. Gold is moderately higher, whilst Silver is trying to rally, after a sharp opening gap lower.



SLV, daily2


VIX presenting a large black/fail candle, very suggestive that the main indexes will indeed close green. 

There is no reason to be short ahead of the Easter weekend, is there?

Silver is somewhat stable above the opening lows, but metal bulls will want to see the 27.90s late today/early tomorrow.  Weekly charts continue to warn of upside, at least a challenge of the declining resistance, which is in the low 29s.

VIX update..from Mr T.

back at 2pm

11am update - here comes the recovery

Initial market declines are failing to hold, and bears are somewhat 'on the run' again. We could easily close green, and the sp'1570s remain viable at any point. USD is holding opening gains of 0.4%. Oil is moderately lower, Gold is higher, and Silver has seen a strong opening reversal.



Summary is trying to battle back I feared. VIX is also a tell, black opening candle on the hourly charts, thats never a good thing to see in bear land.

No point shorting the market here..ahead of a long weekend.

*Silver seeing some strong moves after what had been a quiet three days.

10am update - another tease?

The market opens with moderate declines of 0.6%, but why would they build or hold into the close? USD is again higher, Oil is lower, Gold is flat, but Silver opens down 1.4%. VIX is 7% higher, but its already sporting a black/fail candle in the opening 30mins.




I certainly won't be trying to chase this market lower, this side of the Easter break.

The key problem the bears face is underlying momentum is shifting back to the upside, at least for a few days.

Thursday is big POMO, that's also going to make it real difficult.

SLV, 15min

Possible reversal underway in Silver, will need to see the low 28s to be confirmed.

Mixed Signals from Copper and Oil

Whilst the main equity market continues to rally, there are some very mixed signals in commodity land. The hugely important industrial metal of Copper is still looking very weak, yet WTIC Oil is battling higher, and closed especially strong today.

Copper, weekly, 2yr

Copper, monthly

USO, weekly, 2yr

USO, daily3


I'm not sure what to make of the current action. I suppose both should be treated as independent things, but if the economy is slowing/weak, you'd have to expect to see at least some equivalent weakness in the Oil market.

WTIC Oil is back in the $96s, and across the next few days we're going to see the market start to wonder if the big $100 is possible in the next week or two.  I just don't think that's viable though.

As for Copper, it does indeed look really weak. Underlying MACD (blue bar histogram) on the weekly cycle is still ticking lower, and there is a clear breach of key support - on what was a giant triangle. No sign of a turn/levelling phase for Copper.

Looking ahead

There isn't too much data tomorrow, aside from the usual EIA oil report, and some home data. Thursday will be far more important, with GDP/PMI data.

I have to believe the bulls are going to hold the market together into the long 3 day weekend. A test of the sp'1576 high looks viable as early as tomorrow, but maybe they'll take until early next week to do it.

Regardless, I won't be shorting any indexes - or picking up VIX call blocks, until next week at least.

Goodnight from London

Daily Index Cycle update

The main indexes closed higher, with the sp' settling at the recent high of 1563. Near term looks moderately bullish, and the sp'1570s look viable, with a brief spike to challenge the Oct'2007 intra-day high of 1576. A moderate decline of 5-7% is expected across April/May





The daily charts should really concern the bears who were getting moderately excited just yesterday morning.

The underlying MACD (blue bar histogram) cycle is complete - on the downside, and we're now starting to tick higher again.

On any basis, I'd have to guess we tick upward for the next 2-4 days...minimum..and that gets the bulls to next Tues/Wednesday.

It would seem the market will test the Oct'2007 high of sp'1576, where we could see a VERY sharp intra-day reversal. On the flip side, I suppose we could still break into the 1580s, but who is going to be buying at those levels? Right now, I'm guessing we'll see the reversal scenario.

For the patient week looks to be somewhat promising as a key cyclical top.

a little more later