Saturday, 31 August 2013

Weekend update - US monthly indexes

The US indexes saw rather significant declines for August, with general declines of around 3%. Nasdaq slipped just 1%, whilst the Dow -4.5%. There looks to be a relatively easy 3-4% further downside in September, before the next bounce.


Lets take our regular look at six of the US indexes...

sp'500


The sp'500 lost 3.1% across August, the biggest closing monthly decline since May'2012. Certainly the decline is nothing major, but it could be the start of something much bigger.

Underlying MACD (blue bar histogram) cycle ticked lower, but there is no bearish cross yet, and bears can't get overly confident until we have a monthly close below the 10MA, which will probably be around 1570 at the Tuesday open.

For those seeking a significant drop this autumn, the key level is the 1560/30 zone - the June/April lows. Any monthly close <1530, and the door will be wide open to the low 1400s by late November.

It is probably important to note, that by the end of this year, the lower bollinger on the big monthly chart will have risen to around 1350/75. On any outlook, I can't conceive of any price action under that level for another 9-12 months.


Nasdaq Comp'


The Nasdaq was the strongest index for August, declining by just 1.0%. No doubt, the broad rally in AAPL helped prop up this index. Bulls should find strong support in September, in the 3400/3300 zone. A return to the Nov' 2012 lows of 2800 (equating to sp'1400/1350), looks just about viable in Oct/Nov. Clearly though, we don't have a trend break yet though.


Dow


The mighty Dow got somewhat whacked in August, and was the weakest index, slipping a rather significant 4.45%. Bears have a pretty secure four month castle top (as I like to call it) in the 15500/600s. I certainly don't expect Dow 16k any time soon.

There is very important trend support around 14400 in September. Any break of 14400 will open up 14000/13900. Perhaps most importantly, the MACD cycle ticked lower, and there is a chance we'll see a bearish cross in September (briefly) before the next bounce. The bigger bearish target would be around 12500/250 in Oct/Nov.


NYSE Comp'


The master index fell 3% in August, and was indeed very representative of the wider market. Near term target is around 9000/8900, which is around 4% lower (again, that would equate to around sp'1570). Despite the August declines, the broader trend remains upward, and bears will need a break of 8800/8700 to offer much lower levels this autumn.


R2K


The Rus'2000 small cap lost a rather significant 3.3%, and the Friday close was particularly bearish, closing right at the lows. However, it must be said, having ramped so much in the first half of 2013, the R2K can fall a lot, and even then, it won't break the broader upward trend.

Bulls can sustain the 950s in September, and that will do nothing to break any key level. For those seeking autumnal weakness, the bigger downside target is 800/750, a very significant 20/25% lower.


Trans


The old leader remains in close step to the R2K, and slipped 3.3% for August. Near term downside to 6000/5900 looks very viable. Yet, that will do nothing to break the broader up trend. Bears need <5700, and that will open up 5000/4750 by November.


Summary

So...August turned out to be pretty good for the bears. Certainly, the bull maniacs have seen the indexes get seriously stuck since May, with the Dow pretty much unable to clear the 15600s.

Unquestionably, the broader monthly trends remain strongly to the upside, but we're also well overdue some kind of multi-month decline, much in the style of July-Oct' 2011.


The stuff of dreams

I remain resolutely seeking further downside in the first half of September. Primary downside target remains the lower weekly bollinger, which at the Tuesday open will likely jump to the low 1570s - for statistical reasons.

If we can hit the 1570/60s before the next FOMC of Sept'18, I will keep an open mind on the following uber-doom scenario.


sp'weekly9d - most bearish H/S outlook


In my view, bears need to see not only a hit of the lower weekly bol, but then for the subsequent bounce to be contained under the recent sp'1709 high. If the market gets stuck in the 1660/90s in October, then things get 'real interesting'.


Looking ahead

Tuesday starts with ISM manu' and construction (both 10am), so the market will have something to begin the shortened week. Wednesday has vehicle sales, intl' trade, but more importantly..its time for another Fed 'beige book'. That will no doubt inspire a lot of taper on/off chatter.

Thursday is packed with data - ADP jobs, weekly jobs, productivity/cost, ISM non-manu, and factory orders, along with the Oil and Nat' gas reports.

However, the week concludes with the big one..the monthly jobs report. Market is expecting 175k net gains, with a static headline rate of 7.4%. Those targets look relatively easy to hit, and as ever..the issue will be, does the market consider 'good news as bad' or 'good news as good'.

*there is sig' QE-pomo: Tuesday $5bn, Thursday $3bn.
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Special note on Syria

It would seem his highness, Obama has declared he will take military action against Syria. However, he will also call for a congressional debate and vote, to support such action. I am of the understanding that Congress won't return until Sept' 9, so..we're looking at least another week or two before any military action. I also believe it is fair to say that he will turn the launch keys regardless of the vote outcome. No doubt, if the vote is no..and he fires anyway, that will really rile up a lot of people.


Video - A history of Syria

The following is something I saw a few days ago. It is a pretty fair historical summary of Syria. In particular, highlighting a few of the key reasons for the ongoing civil war. Not surprisingly, it was the imperialist British and French who critically fractured the middle east by drawing arbitrary lines on a map.




Awaiting a shortened week

In terms of how we open next Tuesday, considering the hourly index/VIX charts, I'm guessing the market will try to rally, if only a little..and briefly. The fact we have a large dose of QE to start the week will no doubt help.

All things considered, I will be looking to launch another index short/VIX long, the only issue will be finding an acceptable entry level..depending on the style of price-action. To be clear, I am very much holding to the original outlook, sp'1570/60s, and VIX (briefly) in the low 20s.

As ever, all comments most welcome. Enjoy the long weekend

*next post, probably something on Monday.
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Video update from Walker (which I think is his last free update for some time).



The comments on the big monthly charts are particularly interesting, although dare I say, Walker is arguably even more of a permabear than yours truly.
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Best 'bull case' bounce

sp'daily4b


Considering the MACD on the daily charts, and a significant number of chartists out there touting 5 waves down (which does look pretty clear)...perhaps we'll get a multi day wave'2 ABC bounce.

With military action probably a few weeks off, I'm also a little concerned the market might start battling higher on spurious news reports that a 'no' vote is possible.

Anyway, the above 4b outlook will get dropped if we break below 1627. If that is the case, I'll just chase it lower.
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UPDATE, Sunday 7.30pm EST.

Futures.. sp+10pts, that should concern those holding on the short side. Obviously a lot can  happen between now and the Tuesday open, but still..all those hoping for some kind of major Tuesday gap lower...err..no.

Finviz is not updating..but Bloomberg is.

I think we can look to the action of mid June as a clue. Maybe a few days higher..then a sharp  B' wave drop..before a C' wave higher the following week.

At this rate..another two weeks of chop/retacement, and the lower weekly bol' target will be 1580/85.

Oh well, as ever...one day at a time.

Another week for the bears

A weak end to the week for US equities, and indeed, August as a whole saw some rather interesting declines across all indexes. With the monthly charts starting to turn lower, the equity bears are starting to build some downside momentum for the coming autumn.


sp'weekly7


Summary

For the weekly rainbow chart we actually managed to close with a red candle, the first since mid June. The current target remains unchanged, I'm seeking a hit of the lower weekly bollinger...currently 1563, although I expect that to jump to around 1570 at the Tuesday open - for statistical reasons.


Monthly declines

I'll do a full monthly report this weekend, but suffice to say, we did indeed see some interesting declines, although the broader trend is still unquestionably to the upside. The closing blue candle is a initial sign of weakness, but we've seen plenty of blue candles in the past fail to have follow through.


sp'monthly3b - things the bears need


Bears should be seeking a hit of the monthly 10MA, currently 1557, but that will also likely jump into the 1570s at the Tuesday open.

In many ways, the 1570s look a very obvious..and natural target for the first half of September, before the next rally. The only issue is whether the next rally puts in the first critical lower high..<1709.

*I exited VIX-long near the close, but will seek an index short/VIX long, sometime next Tuesday. I'll actually be hoping the market manages a brief 0.5% gain to start next week, if only to get a better short-entry level.
--

Well, its been a long week...so...I'll end things there.

Goodnight from London
--

*next main post, late Saturday, probably on the US monthly indexes

Daily Index Cycle update

The US market saw some weakness to conclude the month, with the sp -5pts at 1632. However, the two market leaders - Trans/R2K, saw rather significant declines of 1.1% and 1.6% respectively. Near term trend remains weak, with a primary downside target of sp'1570/60s.


sp'daily5


R2K


Trans


Summary

I have to say, I'm a bit bemused at the large discrepancy between the headline indexes - sp/dow/nasdaq, and the two market leaders - Trans/R2K

As ever, I think its important to keep in mind that whilst the main media-friendly indexes only saw moderate declines, the two leaders were very weak indeed.

Regardless of whether there is any military action across the long 3 day break, the US indexes look broadly weak.

Any Tuesday bounce is one I will be seeking to short...all the way down to 1570/60. I actually think there is a very reasonable chance of that target being hit by the end of next week..along with VIX in the low 20s.

a little more later...

Friday, 30 August 2013

Market volatility continues to increase

With further equity weakness concluding the month, the VIX naturally climbed a little further, settling +1.2% @ 17.01 - having earlier spiked to 17.81. Across the week, the VIX gained a very significant 21.7%. Near term target remains VIX briefly in the low 20s.


VIX'60min


VIX'daily3


VIX'weekly


Summary

For the equity bears out there, the VIX is highly suggestive of more market downside to come.

Just a look back at some of the recent multi-week VIX up cycles, offers the 200 MA as a very valid target..and right now that is VIX 20.13

Underlying MACD (blue bar histogram) on the big weekly chart is now positive cycle, and it would be very surprising if we don't at least briefly break into the VIX 20s in the current cycle.


*hourly VIX cycle is suggestive of a lower VIX early Tuesday, but on any fair outlook, I can't imagine the VIX <15 for some weeks.

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more later..on the indexes

Closing Brief

The market closed weak, with the headline Dow/SP/Nasdaq all moderately lower. The two market leaders - Trans/R2K, both much bigger declines of 1.2% and 1.6% respectively. Near term outlook remains weak, with a primary target of sp'1570/60s.


sp'60min


Summary

Well, a bit of a mixed and choppy day..although most notable..the VERY strong discrepancy between the headline indexes, and two market leaders.

I have to think there remains broad downside next week, that view is strongly supported by the bigger weekly charts..even the monthly charts are now offering an initial rollover.
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*I closed out a VIX-long position near the close, am back to fully on the sidelines.

I will seek an index short/VIX-long..next Tuesday.

Downside target remains 1570/60s..with VIX briefly 20s.
--

Have a good weekend everyone.

*the usual bits and pieces across the weekend....


Next main post..late Saturday...probably on the US monthly indexes

3pm update - last trading hour of the month

The market is seeing continued minor chop, and seems stuck around sp'1634/35. The daily/weekly charts continue to warn of much lower levels into September. The closing hour still offers an opportunity for late day/end month weakness to appear.


sp'daily5


vix'daily3


Summary

*VIX is certainly not showing any panic or real concern yet, but underlying volatility is indeed pushing higher..in prep' for September.

The low sp'1620s look unlikely now...along with any hope of the VIX 19s.
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3.03pm... ohh lookie..its the new QE-pomo schedule...

Starting with a big $5bn next Tuesday morning.  Regardless of how we open Tuesday...that QE should at least 'concern' all those holding short across the weekend.
-

3.15pm.. well, I can't keep up with everything. Why did no one give me a nudge about the Trans/R2K ?

Trans -1%.. R2K -1.4% ...BOTH warning of trouble for the 'headline' indexes.



We have a marginal break on the Tranny...target is 6000

So..a major discrepancy between the two market leaders..and the headline sp/dow/tech.

Hmm..


*as things are..I will hold short, via LONG VIX, across the weekend.


3.37pm..a touch of weakness...and sp'1632, but still. its minor moves


3.48pm...considering an exit...to close out VIX.  hmm

3.50pm.. CLOSED VIX -long position. I'm tired, I don't want concern about stupid gap higher on Tuesday.

3.55pm.. bull rats bailing into the close...naturally.

Regardless of the Tuesday open, I'm glad to be out..will start afresh..next month!

back at the close

2pm update - battling it out

The market jumped from 1628 to 1636 on the comments of Kerry. The bull maniacs are now arrogantly touting a ramp into mid/late September. This seems unbelievably naive, and with still two hours left of the trading month, there is significant opportunity for weakness into the close.


sp'daily5


vix'daily3


Summary

I remain trying to ignore the smaller cycles, and will focus on the bigger trends.

I have to note, I find it utterly bizarre than ANYONE, no matter how hyper-bullish they might be about the mid/long term, would consider going long this afternoon.
-

I remain short the main market, - via LONG VIX, and would consider an exit in late afternoon, if sp'1622/20..or lower.


2.13pm.. bears just need 1626s..and that opens up a rather exciting close...possibly down to 1615.

As I'll keep asking...

Who wants to go long into the long (war?) weekend ?  

1pm update - afternoon scare?

The market remains moderately weak. An interesting aspect the bears should look for this afternoon is any news report/statement from the US, that could easily upset the algo-bots, and knock the market 1% lower, into the 1620/15 zone, with VIX 19s.


sp'weekly7


VIX'weekly


Summary

Ignoring the intra-day noise for this hour...everything looks fine for next week.

Target remains sp'1570/60s..although the lower weekly bol' will jump to 1570 at the Tuesday open..so..we might fall a little short of the June lows...but thats okay.


*I remain short the market, via long VIX, but will consider an exit into the close, if 18.25..or higher.


1.26pm... market spikes 6pts on Kerry opening his mouth.    sigh.

I find it bizarre that is somehow bullish, and I'm seeing more lunatic talk across the usual sites about a rally into mid/late September.
--

Well, as ever..we'll see.


1.40pm.. stuck around sp'1634. Who the hell wants to go long at this level, and hold into next week?

Makes no sense, when you consider the daily AND weekly trends.

12pm update - falling into the weekend

The main indexes are weak, and with no one wanting to go long ahead of the weekend, the market looks set to fall into the close. The only issue is whether the 1620s are broken before the close. VIX is battling higher...the 18s look very viable this afternoon.


sp'daily5



vix'daily3


Summary

Things are looking on schedule for the bears.

Broad downside into the 1570/60s next week.
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VIX update.. from Mr P



time for lunch

11am update - market on the slide

The market is weak, and there is little reason why anyone would want to be going long ahead of the holiday (war?) weekend. Bears need to take out the recent sp'1627 low...that should open up 1620/15 by the Friday close.


sp'daily5



vix'daily3


Summary

Certainly, bulls are absent..and it really could just be a case of general weakness into the weekend.

Best bear case is 1615/10..with VIX 19s..on a spike into the close.

*If that is the case..I'll close out my current VIX long position.
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10am update - weak open

The market opens briefly higher, but the indexes look weak, and moderate declines into late morning - perhaps the upper 1620s look possible. Metals are particularly weak, Gold -$13. VIX appears stuck in a bullish pennant, just under 17.


sp'60min



vix'60min


Summary

Chicago PMI: a non recessionary 53.
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Certainly, not a particularly exciting morning, and with the econ-data out of the way, any normal person should probably just turn off their screen for the long holiday weekend.

The only thing that is likely to motivate the market to break under the recent low of sp'1627 would be a news report/policy statement. Chances of that....'small'.

-
A very fair question remains though...who wants to be long across the long weekend into early September?

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Keeping in mind the bigger picture...those seeking significant weakness this autumn should look for a bit of a rough week next week.

Target would be a hit of 1580/70 ..next week.


At least we look set to close with a red candle this week, the first since mid June, and that is why I remain broadly bearish in the immediate term.

Pre-Market Brief

Good morning. Futures are slightly higher, sp +3pts, we're set to open around 1641. Precious metals are weak, Gold -$10, whilst Oil is flat. Bears need to push lower into the 1620s by the Friday close, whilst bulls should merely seek a third day higher.


sp'60min


Summary

*Chicago PMI due 9.45am
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So. no major drop at the open, and instead, bulls actually have a chance at making a higher high  this morning  >1646.

Considering the hourly index/VIX charts..I'd be surprised if we don't close at least moderately lower.


9.35am.. weak open...bulls look exhausted.

PMI number will known to some in 5mins..market will react...!

A break into the 1620s would be..useful this morning.

Mild panic into the weekend?

The main indexes closed moderately higher for a second consecutive day, but there remains some very significant underlying weakness. Primary downside target remains the sp'1570/60 zone, where the 200 day MA is now lurking.


sp'weekly7


sp'weekly5 - fib levels


Summary

So..a second day for the bulls, but the gain of just 3pts on the sp'500 to 1638 does little to negate the bigger weekly down trend.

I'm still holding to the bigger target of the lower weekly bollinger, currently 1564 - and that will be in the low 1570s next week.
--


Volatility trending back to the 20s.


VIX'weekly


Since the market peak of sp'1709, the VIX has been battling higher from the 12s, and is now primed to make an attempt to test the big 200 weekly MA..coincidentally at the key VIX 20 threshold. I don't expect a VIX much higher than 21/22 in the current cycle, even if sp'1570/60s are hit next week.


Looking ahead

There is trio of econ-data in the morning to wrap up the month. Personal income/outlays, Chicago PMI, and consumer sentiment.

*there is ZERO QE-pomo, although a new POMO schedule for Sept' is announced at 2pm.
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So how might Friday play out? Certainly, the hourly index/VIX charts are primed for the bears, and the daily/weekly charts are similarly still in favour of the bears. It is always hard to fathom how the market might to econ-data, but regardless of that, I'm guessing we see some weakness into the Friday close.

Best 'bear case', sp'1615 late Friday, with the VIX in the 19s.
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*I remain short the main market, via LONG VIX, seeking an exit ahead of the long 3 day weekend. I'd settle for anything in the 19s.
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Video update from Mr Walker (I think the last of the free postings will be the weekend update - due late Friday)





Goodnight from London

Daily Index Cycle update

The main indexes closed moderately higher, with the sp +3pts @ 1638, having earlier peaked at 1646. The two market leaders - Trans/R2K, closed +0.3% and 1.0% respectively. Near term trend remains broadly bearish, with a key target of sp'1570/60s.


sp'daily5


R2K


Trans


Summary

All things considered, despite a second consecutive daily close to the upside, the bears should be content with today.

The market has arguably worked off the oversold condition - seen better on the hourly cycle charts, and is now primed for another significant down wave.

Daily charts are offering sp'1615 by the Friday close. Anything <1600 looks unlikely until the latter half of next week.

*I remain short the main market, via LONG VIX.
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a little more later...

Thursday, 29 August 2013

Volatility creeps higher

Despite the indexes closing with moderate gains, the VIX closed a little higher, settling +1.9% @ 16.81 - having earlier floored at 15.99. Near term price action could be a bull flag, with good upside to the 18/19s..or even 20/21, on the next equity wave lower.


VIX'60min


VIX'daily3


Summary

The VIX certainly slipped lower in the morning, but there is underlying upside in volatility - as seen best on the daily/weekly cycles.

VIX looks set for another jump higher, whether tomorrow..or early next week.

First reasonable target is the 18.50/19.50 range, although if the market gets briefly spooked, a ramp into the 20/21 area looks viable - the latter of which should equate to at least sp'1615.
 -

more later, on the indexes

Closing Brief

The main indexes closed moderately higher, with the sp +3pts @ 1638. The two market leaders - Trans/R2K, closed up 0.25% and 1.0% respectively. Near term trend remains moderately weak, with downside into the long holiday weekend.


sp'60min


Summary

Well, that was an acceptable close for the bears.

Importantly, bears saw the third daily close below the 100 MA.
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the usual bits and pieces across the evening

3pm update - seeking a close in the 1630s

The main indexes are still holding moderate gains, but the closing hour should see some weakness. Equity bears should be seeking a close back in the sp'1630s. Interestingly, VIX remains holding fractional gains. Who wants to be long overnight?


sp'daily5



vix'daily3



Summary

Not exactly the most exciting of days, but at least the bulls are not seeing any kind of hyper-ramp into the 1650s.

There is no reason why we won't see at least a little weakness into the close, with sp'1630s, and VIX closing moderately higher. 

*I will remain short the market overnight, via LONG VIX.
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updates into the close... if things get interesting


3.09pm .Oil slipping, and a red close would confirm yesterdays black-fail candle. Yet...who wants to be short Oil, ahead of any Syria action?



I can only imagine futures traders having their accounts blow up in the coming days/weeks, on any military attack.


3.34pm  sp'1638...kinda good for the bears ;) Can we close now please? 

2pm update - indexes rolling over

The bulls again seem to lack any significant..and consistent upside power, and we're seeing the early signs of a rollover. Bears should merely seek any close <1639. A red close would bode pretty bearish for Friday.


sp'60min


sp'daily5


Summary

I'm just wondering if we'll set up another mini H/S formation on the hourly. In the May/June down cycle, we saw a fair few H/S formations, no reason why we can't get one now.

--
Regardless, I'm holding short the main market.

1pm update - afternoon rollover?

The hourly index/VIX charts are offering a possible turn, with a rollover this afternoon. Bears should be looking for a daily close <1639, which should confirm continued underlying weakness into the weekend..and next week.

sp'60min


sp'daily5


Summary

Its pretty quiet out there, so it won't take much of a news report of 'military attack imminent' to send the algo-bots into a panic.
-

For the moment, I'll gladly settle for any close back in the 1630s.


1.29pm... a micro H/S setting up ?



Just an idea..and a red close would arguably cancel it.

12pm update - bears need a daily close in the 1630s

The main indexes are holding moderate gains, with the sp' back in the 1640s. Without question, the bears should be desperate to keep a lid on this, with a close back under the 100 day MA @ 1639. Metals are weak, with Gold -$9...Oil is a touch lower.


sp'daily5


Summary

So...the bulls are making a play to get a second daily gain.

I think the bears can tolerate a 'small gain', but preferably back <1640 at the close.


VIX update from Mr T.




Keep calm ? I think I need another tranquiliser, urghhh

time for lunch