Friday 4 January 2013

Volatility still on the slide

The VIX closed lower for a fourth consecutive day, losing a further 5%, to settle @ 13.83. This is the lowest close since mid August. Across the week, the VIX lost a stunning 39%, and this is perhaps the largest weekly decline...ever, and that's with a shortened four day trading week!





Just reflect where we were at the Friday close last week. We saw a brief spike to VIX 23.23, and since that AH spike, its been a devastating drop. The weekly drop of 39% is probably a record drop.

Considering the indexes - especially the monthly index charts, since it seems sp'1490/1510 will now be hit across the next month or two, it would seem likely the VIX will see even lower levels.

VIX 12s or 11s seem likely, the only unknown is whether we'll see VIX 10..or even single digits, which would certainly make the clown finance TV networks get hyper bullish.

More later...on the those bullish indexes.

Closing Brief

The market closes the week on a high, and is the highest close since 2007.  With the VIX back in the 13s, the market is back in a state of mild hysteria. Near term term trend - as suggested by the big monthly charts, would be somewhere in the sp'1490/1510 zone.





Well, Monday morning's open of sp'1398 feels like some 'weeks ago', but suffice to say, I'm surprising content with how this week went.

We've seen pretty much a hyper-ramp after the relief of some form of fiscal cliff delay, but that will again rear up in Feb/March  - along with the debt ceiling.

It looks like we'll proceed to sp'1490/1510...maybe even 1520/30 in February, with a VIX in the 12/10 zone.

Talk about a deluded market.

Have a good weekend

*there will be a weekend posting, late Saturday, probably on the world index monthly cycles

3pm update - closing hour churn?

The market is still stuck under 1465, but just keep in mind we were trading @ 1398 at the Monday open. We've come a long way this shortened 4 day week, and even if we flat line all of next week, the broad trend will still be to the upside - as the monthly charts now all support.


sp'monthly2 - Keltner


Unquestionably, ALL cycles are now bullish. All that is missing is a break of the SP/Dow/Nasdaq above the mid-September highs.

As has been the case on many occasions, it is the Transports and Rus'2000 small cap indexes that lead..and they sure have lead the way this week.

*looks like the VIX will close in the 13s, which would be the lowest level since last August.

3.25pm UPDATE

Well, we have 1467..and in my view, thats it for the bears..

 sp'1490/1510..seems very likely now, sometime in the next few weeks.

Incredible to think that sp'1500s..with VIX 12/11..perhaps even lower...real soon.
Isn't it great that the global economy is fixed..not least the US/EU fiscal issues!

back after the close.

2pm update - closing the week on a high

It won't take much this afternoon to break above sp'1465, and then we could even close in the low 1470s. With the R2K and Transports showing very important further strength, there is no reason to believe why we won't now just keep pushing higher into early February.




I can understand if some would knock my end year bearishness, but I managed an exit @ 1398..and despite missing out on a hyper-rally, at least I didn't get nuked by holding short.

Frankly, I'm more than content to sit back and watch, and see how high the 'maniacs' wanna push this.

There are STILL, rumblings of trouble out there...for those who can hear.

I can just imagine going long VIX @ 12/11 early Feb..yeah..that'd be a very good level indeed.

12pm update - awaiting a break above sp'1465

On balance, it would seem we'll break over 1465 later today or Monday, and that will open the way to the Sept' high of 1474. I don't expect that to hold, and it looks like the bulls will be able to push to somewhere in the 1490/1510 area, within a few weeks.




More than anything, I believe it is the Transports and R2K that are showing the way, and with the recent breaks higher - way above the Sept' highs, that is highly suggestive the Sp/Dow will similarly follow.

We could easily be looking at sp'1490/1510..with Dow'14,000.

I would still expect some sort of turmoil when the debt ceiling issue needs to be dealt with in Feb/March.

*those VIX April $25 calls sure look tempting today, but they'll be a whole lot cheaper if sp'1490/1510.

Patience...will be paramount.

Notable stock mover....transocean (RIG) which I hear has settled a closing payment for the Horizon' disaster. 

*ignore those downside least for now. Trend for RIG is clearly UP..on huge buying volume no less!

back at 2pm

11am update - morning chop

Mr Market remains stuck 1455/65. For the bulls, even a retracement down to 1440/35 would not wreck hopes of sp'1490/1510 within the next month or two. Transports/R2K remain strong, and suggest sp'1474 will be broken.




A somewhat quiet end to the week...and I will sit this out until there is some clarity.

VIX is very weak, and 13s look set to be hit today.

The only issue is whether 12s..even 10/9 - if sp'1490/ the 2-6 week time frame.

AAPL is weak... as expected (see my post on FVS from yesterday)...

Could easily floor around here

10am update - no sign of a turn yet

The market seems so be stuck around sp1455/65. A break either side of that range will be important to recognise. Anything over 1465, and we'll likely test the 1474, and I'd assume break through it - as the R2K and Transports would suggest. Another day or two stuck <1465..would be suggestive a retracement at least to 1440/35.




Interesting action in Gold..and the dollar.

I remain content to do nothing... on the sidelines. At least for now.

Pre-Market Brief

Good morning, Futures are largely falt, we're set to open around sp'1459/60. Once again, the most notable aspect of the day is the Dollar, +0.4% @ 80.69. We're within a day or two of breaking into the key 81s. Gold/Silver are naturally getting the hammer, Gold losing around $28/30.

Monthly jobs data: +155k, 7.8%, still lousy, considering the US Govt. are overspending by 50%.




Its possible we might see the daily MACD cycle start to level out today, and that will be somewhat termpting to launch a re-short.

Lets see how the price action is this morning.

*as an options trader, it'd be better to wait until after the weekend anyway.
Good wishes for Friday trading


Futures are slightly higher now sp+2/3pts...we're set to open @: 1461/62

It will be somewhat difficult for the market to break 1465, and it gets stuck into the afternoon, I will be sorely tempted to short, with a target of 1440 - at least a small retracement for early next week.

If we break >1465, then I'll absolutely sit it out, and I'd assume 1474 will be viable for Monday.

Monthly charts..outright bullish

With the hyper-ramp from sp'1398 to today's high of 1465 in just 3 trading days, the monthly indexes are now nothing less than outright bullish. With the R2K breaking to new historic highs, and the Transports in the 5500s earlier today, it would now be surprising if the sp'500 did not break the Sept' 1474 high.


sp'daily7 - fib levels


The various 'rainbow' charts are all sporting green candles, and a test of the upper bollinger band...this month..or next..somewhere around 1490/1510 seems very viable.

A minor retracement seems likely across the next few days. Fib' levels are suggestive of a pull back somewhere in the 1440/35 area, where the daily 10MA is also lurking.

Due for the trash bin


Well, I suppose its not officially 'busted' yet, but anything >1474, and it has to get thrown out.

Could it really be another back test, a mere 9pts shy of the first high? I noted just yesterday that the July wave'2 was a mere '9 pts shy' of the wave'1 high..before the 12 day down cycle.

Yet, things are surely different now to then, yes?

The fact the R2K and the transports are already over their September highs, leads me to indeed believe we'll see sp'1474 taken the near term.

So, the only way this chart gets back on track is if we stay below 1474...and then 'quickly' take out the 1398 low.

Looking ahead

We have a few pieces of key econ-data tomorrow, including the big monthly jobs number, although I will be more interested in factory orders. At least the latter is not subject to 'seasonal adjustments' and birth/death issues.

Goodnight from London

Daily Index Cycle update

Most of the indexes closed a little lower, but the declines were indeed nothing less than 'mere noise' compared to yesterdays massive gains. The underlying momentum remains to the upside, and there is no sign of anything changing.





So..we didn't get a third giant up day, but neither have we seen any significant reversal.

It looks like sp'1398 was indeed a key floor, and that we're going surpass sp'1474 within the next week or two.

This outlook is especially supported by the R2K - which once again hit a new historic high today, and the Transports which still managed to close 0.6% higher. The earlier break into the 5500s was certainly important to recognise.

Underlying momentum - see MACD (blue bar histogram) is still ticking higher, and even if prices are flat for the next few days, the cycle still won't be rolling over.

Bears can't be re-shorting this market.

What is clear, the only 'safe' (if there is such a thing) short trade right now, is with a short position being taken, if the market breaks below the 1398 low. Until we break that low, bears are shorting into what is a very strong multi-month rally..from the 1343 level.

A little more later