Saturday, 29 June 2013

Weekend update - World Monthly Indexes

June was a very rough month for most world indexes, with severe declines of 16% (Greece) and 14% (China). Yet once again, the heavily QE-supported US and Japanese markets only slipped by 1.4% and 0.7% respectively. July looks set for at least some further downside.


Lets take our regular look at ten of the leading world markets:

Greece


As many recognise, the Greek economy has already collapsed. It is merely living on the fumes of ECB bailout funds. The May spiky candle was indeed confirmed with a severe drop of 16%. This was the first monthly close under the 10MA since last September.

Downside support? There really isn't much until 800/775, that's another 5% or so lower.


Brazil


Perhaps the most important of the BRICs, the Brazilian market collapsed through support in June, closing -11%. The issue now is whether Brazil is headed back to 30k - the 2008 low, or if it'll manage to find support at an intermediate level. Arguably 40k looks likely to be hit, and that's around 15% lower.


France


France continues to increase the strangle hold on those with money, and thus they are seeing a persistent outflow of funds. There is little reason to expect the current policy direction to change, indeed, it'll likely get much worse.

In terms of the CAC, the monthly drop of 5% is interesting, but its not big enough to confirm a trend change yet. Equity bears should seek downside to 3250/3000.


Germany


The powerhouse of the EU slipped 4.7%, far less than other world indexes, and that is entirely appropriate, considering it remains one of the strongest European economies. Equity bears need a monthly closing <7500, and that's still another 4/5% away, so how we close July will be important.


UK


With continuing underlying econ-weakness, the FTSE slipped a rather significant 5.6%. The fall confirmed another classic topping spike in May. Equity bears need a monthly break of rising trend support, currently @ 6000. If July closes under that level, the next target is a rather more severe fall to 5500/5250.


Spain


Arguably, the EUs ugliest PIIGS member, Spain fell a significant 6.7%. The monthly price pattern is a rather clear rollover that began at the start of this year.

Next downside target for the IBEX is 7k, that's another 10% lower. Any monthly closes <7k, and then the collapse door is open to 5k. For those doomer bears who are seeking a multi-month decline in the style of 2008, the obvious target is 3k.


USA


With continued QE of $85bn a month, it is no surprise that the US held up better than just about all other world markets. Even though there is now significant fear that the Fed will eventually end the printing, for now, the QE does indeed continue at full speed.

The monthly decline of 1.4% for the Dow was clearly a major disappointment to those bears who were watching huge declines in other markets.


Italy


The second of the big EU PIIGS, Italy fell a severe 11.5% in June. There really isn't much support until 13500/000 this summer.

We have a clear rollover on the MACD (green bar histogram) cycle, and unless prices sharply rebound in July/August, the cycle is set to go negative no later than September - when the low 13000s would likely be hit.


Japan


Japan was the strongest market in June, down just 0.7%, although it did see some initial downside in June. The QE continues in Japan, with the JCB effectively outright buying bonds, stocks/ETFs (just about anything they want). It is no wonder that the Nikkei remains largely in hyper-bullish mode.

Those seeking an inflationary 'moon-shot', should still be seeking a monthly close above key trend resistance in the 16000s. If the main world markets/economy at least 'hold together for the rest of this year, the Nikkei will break above 16k, and then there really isn't any limit as to how high the JCB can make it go.


China


The rising empire of the world saw its market smashed 14% lower in June,  with the lowest monthly close since Dec'2008.

Equity bears seeking a new 'global financial shock', should look for the China market to put in a monthly close <1600. If that is achieved, there is pretty obvious downside to the ultimate psy' level of 1000 - taking the China market back to the 2005 and 1999 lows. 


Summary

So, broadly speaking, we saw most indexes down rather significantly in June. It was the first major downside in about a year.

Depressingly, we have clear evidence that the QE-fuelled markets of the USA and Japan, are holding up much better. With no sign that either of their central banks is going to ease down, there is little reason to expect that either will see 'significant' falls, even if the other world markets collapse.

Right now, even if the Dow fell to 14k - with sp'1500, we surely won't go any lower from there, and will then merely battle higher again into the late summer/early Autumn.


Primary target remains unchanged

Since the Bernanke 'reversal day' high of 1687 on May'22, the target for this wave lower has always been the lower weekly bollinger.


Each week that level continues to rise. As of the Friday close it was 1497, but at the Monday open it will likely jump to the 1505/10 area. By mid-July, we'll be looking at the 1530/40s.

Its kinda interesting that mid-April low is a key level that many have been touting for some weeks. Also, probably important to keep in mind is that by mid July, the 200 day MA will be in the 1520s.

On any basis, by late July, a break <1500 looks effectively impossible.


Looking ahead

First, its important to keep in mind that next week will be a very shortened week. Not only is Thursday closed entirely, but the market will close early on Wednesday @ 1pm.

There is rather important econ-data every trading day next week. ISM manu' on Monday, Factory orders on Tuesday, and ADP jobs Wed. Of course, what the market will really be focusing on is the monthly jobs number on Friday, market is seeking 161k gains, with a slightly lower rate of 7.5%. Those are not bold targets, and look likely to be hit.

As ever, it will be how the market interprets the data as to whether it will mean the QE will continue (in full) into 2014.

*there is significant QE on Monday and Wednesday.
--

The Friday close was a bit of a mess. How will we open Monday? Certainly, equity bears 'best case' outlook is a morning break <1590. Yet, the QE will be a serious problem, not least on the shortened Wednesday session.


One chart I'd like to close with...

VIX, monthly


Certainly, this is an odd chart to highlight (who else looks at monthly VIX ?), but the point stands, the market is becoming somewhat more volatile. We closed June with the first green candle since last May.  Next upside target is the upper bol', with VIX 24/26. I think its something to keep in mind into mid July.

back on Monday :)

Uncertainty into July

The bulls managed to turn the week in their favour, with the sp' +13.8pts (0.87%). The weekly close of 1606 was a significant 46pts above the Monday low. The multi-week down cycle is still broadly continuing, but the lower weekly bollinger target now looks a long way down.


sp'weekly7- count'1


Summary

A simple 'rainbow' (Elder impulse) weekly chart to conclude the week.

As I have been highlighting every day this week, I wanted to see another red candle by the Friday close. We came within 2/3pts of that candle turning red (as it was in the early morning).

So..a blue candle..but..at least its not green, and the bulls did not manage a close above multiple resistance in the sp'1620s.

-
I hold heavy short into next week, so...I sure hope we see some renewed weakness in the early part of next week!

Goodnight from London
---

*next main posting, late Saturday on the world monthly index charts.

Daily Index Cycle update

The main indexes closed the week on a marginally bearish note, with the Dow -114pts (0.7%), sp -7pts (0.4%) @ 1606. Near term trend is possibly a multi-day bear flag, bears will need confirmation with a daily close next week, with <sp'1590.


sp'daily5



Dow



R2K



Trans


Summary

A bit of a messy day to end the week, and first half of the trading year.

The little sell off in the last few minutes of today is not entirely to be trusted, not least for 'month-end' issues.
--

Broadly, all the indexes are offering what might be a 3/4 day bear flag, but we'll need a significantly lower Mon/Tuesday close to have confidence in that scenario.

*I remain heavy short the indexes across the weekend, seeking an exit in the sp'1580/70s by next Wednesday.

a little more later...

Friday, 28 June 2013

Volatility closes the week flat

Despite some weakness in the main indexes in the early morning, and in the closing hour, the VIX failed to show any real strength, and closed unchanged @ 16.86. Across the week, the VIX declined by a rather significant 10.8%, but that still made for a higher high..and higher low.


VIX'60min



VIX'daily3



VIX'weekly


Summary

The VIX weekly candle sure doesn't look pretty for those seeking lower equities in July, yet...we have put in another set of 'higher highs and higher lows' for the sixth consecutive week. In many ways, that is perhaps the most bearish aspect right now.
--

VIX looks floored on the hourly chart, and I will be seeking the low 18s next week. VIX 20 looks possible next week, but it sure won't be easy. It seems to take a real scare in this market to even briefly hit the low 20s.

more later..on the indexes

Closing Brief

The main indexes closed somewhat mixed, with the sp' settling @ 1606, after the Monday low of 1560. With next week being a 3.5 day trading week, it is difficult to call whether the bulls will get the opportunity to melt the market higher, or whether bears will see at least a small wave lower.


sp'60min


Summary

..and thus concludes the first half of 2013.

Frankly, I'm burnt out. Thank the gods its the weekend.
---

Have a good...and restful weekend everyone!

--
bits and pieces across the evening to wrap up the week...

*next main post, late Saturday, probably on the world monthly index charts

3pm update - slight weakness to conclude Q2

The smaller 15/60min cycles are suggestive of a little weakness in the last hour of Q2 trading. A close <sp'1600 looks out of range though, and the bulls should be relieved at this weeks considerable ramp. Bears still have the weekly cycles on their side though, ..just.


sp'60min



vix'60min


Summary

Well, its been a long week, and a tough quarter for the bears, and unquestionably, the first half of the year has been vastly on the bullish side.

I can only hope the market sees some serious volatility in Q3/4, if only to offer some good cycles to trade.
--

*I will hold heavy-short across the weekend.

Something for the bears to look to, as possible indication of weakness early next week...

Oil...weak


Oil has often been a leading indicator, and so far, its still failing to break the big $100
--

3.11pm..well, there is a touch of weakness...sub 1610.

Arguably, anything <1610 should be enough to at least calm those bears terrified of closing >1625/30 (including yours truly).
 -

3.35pm.. sp'1614s, hmm, a ramp into the close to 1620s would be a real annoyance.

Who wants to hold long across the weekend? Although I realise, the same can be said to those on the short side.

2pm update - back to flat

Its turning into something of a dull end to the week. The market is back to flat, and there is simply very little going on. VIX has no consistent power, and is melting lower, -2% in the mid 16s. VIX 20s look very difficult for next week, not least with the market closed for 1.5 days.


sp'15min


Trans' weekly


Summary

Despite the weekly gains, the Trans is still holding a red candle on the week, so there is still some hint of weakness for next week.
--

Overall though, its been a week for the bulls, from 1560 to the low 1600s, no doubt helped by 3 mid-sized doses of QE-pomo.


2.22pm, a touch of weakness, but until <1610, its still all...noise.

Metals sharply higher, but on the month..Gold is -$153, and Silver -$2.50

Anyone getting hysterical over todays rise is going to be just as disappointed as those calling a floor in mid-April.

1pm update - battling it out at sp'1610

We're stuck in the sp'1608/13 zone, the break from this will be important, although we could merely trundle sideways into the close. A weekly close of sp'1610 would be the most unclear situation, and give everyone a great deal to ponder across the weekend.


sp'60min



sp'daily5


Summary

What is clear, we did indeed break the 3/4 day up channel on the indexes this morning, so the bears do have that to tout.

Further, we've certainly not seen a ramp straight to the mid 1620s, and with multiple resistance, the longer we fail to break it, the harder its going to be for the bulls.

--
An interesting afternoon ahead. I sure would like to see another minor wave lower, taking out 1600.

1.40pm.. market getting squeezed..its gonna break..one way or the other..



Bigger cycles would suggest..somewhat lower.

12pm update - bears struggling

Despite an early morning sell off, the sp' held the big 1600 level, and the bulls fought back pretty impressively. It remains a very borderline situation on the daily charts. A Friday close in the 1620s would do serious damage to the still moderately bearish weekly cycle.


sp'daily5



sp'weekly7


Summary

With the morning bounce, we're back to a blue candle, and that IS a real problem.

Need <1604 to get red.

If we can close <1600, I won't have too much concern about holding into Monday.
--

time for lunch !


VIX update from Mr P.



back later

11am update - where we close, is what matters

The bulls have already launched a pretty fierce bounce from the opening low of sp'1601, and are no doubt relieved that 1600 held. VIX has lost all the earlier gains, back to flat. Bears should remain somewhat 'desperate' for a Friday close <1600.


sp'daily5



vix'daily3


Summary

Ignoring the minor 'noise', and keeping in mind the bigger daily charts.

Bears sorely need a close <1600 by the close, but even then, they will need strong downside on Monday, just to have a chance of breaking to the original weekly cycle target of 1530s by mid-July.
-

How we close today is a tough one to call. Considering the weekly charts, I'm still inclined to the downside, but it sure doesn't look so great this hour.
 --

I suppose it could be worse, I could be long BBRY


URghhh

11.26am..well, indexes slightly green, and we're around 12pts from the gap-fill that seemed near impossible on Monday.


11.40am..they sure are battling it out at 1612/13.

10am update - increasing weakness into the afternoon

Hourly index/VIX charts are suggestive of a market rollover, with weakness increasing into the afternoon. With a weak PMI number, bulls look set to struggle to hold a daily close >sp'1600. VIX is higher, but so far, only by 3% in the mid 17s.


sp'60min



vix'60min



Summary

Up channel on the sp' is BROKEN.

That is a good early victory for the bears, but those on the short-side should seek a break <1600 by 11am.

Lower bollinger on the hourly chart offers a Friday close of sp'1590.
--

*I am heavy short the market, but would prefer an exit ahead of the weekend, even though I see stronger opportunity of weakness next Monday.


10am.. this is what I will be focusing on in the bigger picture...



The weekly candle has flipped back to red, and a close <1600 will open up a 50/100pt fall by mid July.

10.03am.. I'm looking for VIX 18.50 by early afternoon.


10.43am..urghh, bears just powerless again, no follow through, and we're almost back in the sp'1610s.

Worse case, hyper ramp to 1625/30, that'd be a brutal end to the week.
--

Pre-Market Brief

Good morning. Futures are flat, we're set to open around sp'1613. With no QE today, the bears should have a better chance of ending the current rally. Bears should seek a weekly close back under sp'1600, bulls should be content with anything >1600..


sp'60min



vix'60min


Summary

*PMI number:, due @ 9.45am
--

Well, its the end of the week, month, quarter, and indeed, first half of the year.

The bulls are still unquestionably in control of the main market, but if the bears can close this market back under <1600, I'll still very much be open to a hit of the original primary target, currently @ sp'1497 (but rising to 1510s next week).

Hourly index/VIX cycles suggest market weakness, especially in the latter part of today, and that should carry through into Monday.

--
Oscar posted a new video, but frankly, I'm not in the mood for  watching it. However, for those that do...



...awaiting the PMI number.

--

9.16am.. Futures have swung moderately lower, sp-4/5pts,

It will get interesting if the PMI comes in <53, and if that will be enough to tip the sp' <1600.

Frankly, as an options trader, I want OUT ahead of the weekend, but the hourly charts are suggesting weakness on Monday.  Hmmm


9.35am..Everything rolling over...bears have a real chance here!

Hourly charts suggest the stronger downside in the second half of the day.

9.45am PMI:  51.6 ....a clear miss.

Bears should seek weekly close under sp'1600

Despite the recent weakness, its been another quarter for the bulls, with the sp' rising from 1569 to hitting a new peak of 1687 on May'22. For the permabulls out there, a Friday close in the mid sp'1620s would be the ultimate way to end the week, month..and quarter.


sp'weekly7


VIX, weekly


Summary

Its been a tiresome day, so this will be somewhat short.

In order to get the weekly candle back to red, bears need to close Friday <sp'1603 (approx).

On any basis, if the bulls close >1625, I will be VERY concerned that next week will be equally bullish.

So..bears need <1603...preferably sub 1600...and bulls should be seeking >1625, although frankly, they should consider anything >1600 a bonus, considering market was trading 1560 on Monday.

Equity bears should also be seeking signs of some power in the VIX, a weekly close in the low 18s would still be a net decline on the week, but it would at least open up the 20s again for Mon-Wed'.


Looking ahead

Friday has the latest Chicago PMI number, market is seeking 55. Sub'50s (recessionary) look somewhat unlikely. Arguably, the bears should merely look for anything in the 52/51 area. There is also consumer sentiment data at 9.55am.

*There is no sig' QE to end the week. The new POMO schedule for July is issued by the Fed in the afternoon.
--

Well, lets see how we close the quarter..and indeed, the first half of the year.

Goodnight from London

Daily Index Cycle update

The main indexes climbed for a third day, with the sp +0.6% @ 1613. The R2K was much stronger, +1.7% @ 979. Near term trend is certainly to the upside, but bulls will need a weekly close in the sp'1620s to confirm that the 1530s are no longer on the agenda for early July.


sp'daily5



R2K



Trans


Summary

So, a third day higher, and the bulls are back. The recent scare that the Fed might reduce the monthly QE of $85bn is again fading. After all, that's all settled again, yes?

How we close tomorrow - which also happens to be the end of Q2, will be important. Certainly, there is the issue of 'window dressing', and that most definately favours the bulls.


SP'1700s within a week or two?

The market has seen a rather disturbing straight up 60pt ramp in just 3 trading days. The really scary thing is at this rate, we'll be breaking new historic highs by the end of next week. Considering the last four years of mainstream delusion and market manipulation via QE, you'd have to at least consider sp'1700s as a viable scenario within 3-5 trading days.

Personally, I still think we cycle another wave lower, hence I'm still holding short, but if we do close tomorrow in the 1620s, I'll seriously consider bailing.
--

a little more later...

Thursday, 27 June 2013

Volatility down a bit more

With the main indexes rallying for a third straight day, the VIX was weak across the entire day, closing -2% @ 16.86. Near term trend still favours the equity bulls. Those on the short side should be seeking a weekly VIX close in the 20s, but that does seem very unlikely now.


vix'60min



vix'daily3



Summary

*perhaps most interestingly, we closed with a small reversal candle on the daily chart - right on the rising channel line, that goes all the way back to the mid May low.
--

VIX has already been effectively smashed down, and is now in 'trundle' mode. The only issue now is when will the next up cycle begin, and can it take out the recent high in the 22s?

Considering the power seen in the past 3 days, VIX 22 will be difficult to hit, and indeed, even if equities break a new low to the sp'1530s, the VIX could put in a divergent lower high.

Its certainly something to watch for next week.
--

more later on the indexes

Closing Brief

The market climbed for the third consecutive day, with most indexes now 3-4% above the Monday low. Near trend remains bullish, hourly charts are warning of a possible rollover to end the week. VIX is failing to show any market concern, with a close in the upper 16s.


sp'60min



vix'60min


Summary

A very frustrating day for those on the short side.

The obvious question is how long will this latest nonsense continue? Certainly, end-month 'window dressing' might be another excuse for Mr Market to at least 'hold together' into the weekend.

The problem for the bears is that any weekly close >1605 bodes badly for those seeking a further wave lower to the 1530s. Any weekly close >1620 effectively obliterates any real chance of further declines.
-

yours...  tired..and partly-drowned

(will the PMI number be a life-raft to the bears tomorrow morning?)

3pm update - weakness into the close?

The bulls have had a very strong 3 day climb of 60pts from the sp'1560 low. Hourly index charts are looking maxed out, and are offering initial signs of a rollover. Bears need a daily close <1610 for initial confirmation that this latest nonsense has concluded.


sp'60min



vix'60min


Summary

*VIX remains relatively stable, a daily close back in the 18s will open the door to the 20s again, but that seems very unlikely until next week.
--

So...the closing hour to what has been a pretty annoying day. For many out there, this was one day to forget.

*I will hold heavy short overnight..and most likely into next week.
--

re: next week. It has to be noted, its a 3.5 day week, with an early close on Wednesday (1pm), and Thursday closed.


3.22pm, borderline break of the rising channel....



Bears need a close <1610 to make things a bit clearer

3.33pm...well, no power on the bear side...everything is back on another micro-rally.

At this rate, R2K will close up 2%, with VIX stuck in the 16s.

Bulls only have to break 1625 in the next push, and that would negate the weekly outlook.

Lousy end to a lousy day. Urghh
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