Volatility levelling out

With the indexes closing lower for the second consecutive day, the VIX was battling to hold minor gains..but still closed moderately lower, -1.2% @ 13.62. However, the daily charts are highly suggestive a VIX floor is being put in.


VIX'60min

VIX'daily

Summary

The sixth consecutive daily decline for the VIX, but despite the fall, the daily trading range is narrowing, and we're surely getting close to flooring.

A brief spike to at least the low 16s seems very likely, and that might well equate to the sp'1435/25 zone.


The bigger picture...

It would seem after a minor retracement - somewhere between sp'1440/25, the market will continue to rally into February, primary target would be 1510/20. If that is the case, then VIX in the 12s, if not 11/10, seems the likely mid-term outcome.

more later..on the indexes.

Closing Brief

A second consecutive daily decline for the main indexes. The declines were only minor, but they have helped produce a clear rollover on the daily charts. First initial target zone remains 1440/35, although 1425 remain possible, especially if VIX can spike into the low 16s.


Dow'60min

SP'60min

Trans'60min

Summary

The day went broadly as expected, and for the bears, the key issue is that we didn't break the recent high of sp'1467.

What still seems VERY unlikely, is a break <1415, never mind the even more critical 1398 low.
Bears had their chance - with VIX 22/23..and they failed.

--
As at 3.30pm, I am short from sp'1457, I'll be content with an initial exit @ 1445/40, whether that's tomorrow or Thursday.

*please be clear, I am still holding to a significant move higher into the sp'1500s in Feb/March.

The usual bits and pieces across the evening.

3pm update - awaiting Alcoa

Q4 earnings begin at the close with AA. In particular, future guidance will probably be especially important to the market  The indexes continue to struggle, and currently look set to close lower for a second consecutive day. The VIX appears floored, and near term upside would be 16.


sp'15min

vix'15min

Summary

VIX looks especially floored right now on the smaller 15/60min cycles.

*consumer credit data @ 3pm, its possible we could get a last spike on the upside from that.
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UPDATE 3.15pm..standing for a re-short around 1457/59....

*watching Dent on CNBC...omg, I thought I was the doomster !

UPDATE 3.33pm ..short...from sp'1457.

first target is the low 1440s

I think we just have another baby bear flag, much like yesterday.

2pm update - moderate weakness

The market is holding onto moderate declines, despite repeated attempts to climb back into the 1460s. The VIX on the 15/60min cycles is trying to floor, and there is a very reasonable probability of a near term spike into the low 16s later in the week.


sp'15min

vix'15min

Summary

The declines are only slight, but it sure does look like last weeks hyper-ramp is exhausted @ 1467, and we're now cycling lower - as most clearly seen on the daily charts.

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I'm very tempted to launch a re-short this afternoon.

*we have consumer credit data @ 3pm, lets see how the market copes with that.

...not forgetting AA earnings at the close.

AA has a warning black fail candle today. Yet, its a high risk trade ahead of earnings.

I sure am not meddling with it, it'll be one to watch in after hours though.

UPDATE 2.25pm.. VIX still not floored yet..although SP' seems stuck @ 1455/56

Its that time of day when we often see a floor/ceiling..so..if we're going to see a turn..now would be prime time.

UPDATE 2.35pm ...top of the channel is 1459... I

I've still not hit any buttons yet.. but its mighty tempting..not least with a very basic target of sp'1440.

1pm update - flooring at 1440?

We have two days of slight weakness, and the market is decisively turning lower. The VIX looks set for a brief spike into the low 16s.


sp'60min'4 - retracement

Summary

A possible down channel is taking shape..and it would suggest that we'll only get down to 1440 by the end of this week.

I only have low confidence though in the channel...it won't take much to increase the rate of descent.

Many better than me are still touting sp'1425...before the next big lurch higher.
--

Market awaits Alcoa earnings at the close.
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UPDATE 1.30pm,... a micro rally, I think we get stuck around 1458/59 across the next hour.

Its getting real tempting for a re-short, not least since the daily charts ARE rolling lower

12pm update - retracing

Market seems to be in a straight forward retrace, the only issue is where it floors, somewhere between 1440/25, by the end of this week. VIX is higher, but only by 2%, a gap fill @ 16.0 seems very reasonable to target.


sp'daily5

Summary

We're seeing a rollover on the daily MACD cycle, its pretty conclusive now.

Bulls can sustain a decline to sp'1420/15 without doing any damage to the primary trend.
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UPDATE 12.10pm - VIX

You can see the big gap from 16-18. Thats very likely to be filled, at least a hit of 16..later this week, yes?

The move from 22s down to 13s remains an incredible sight (I had bailed around VIX 22.10, that New Years Eve, Monday morning).

I'd like to pick up a VIX call block, but..if I'm right about sp'1510/20 in Feb/March, there is no point in doing that. VIX would probably hit the 12/11s by that time.
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11am update - retracement..underway

Well, it looks pretty decisive now, a retracement from last weeks gains is underway. First target is sp'1440/35, that is easily within range by tomorrow or early Thursday. VIX could do a simple gap fill at either 16..or even 18, although the latter seems pretty unlikely, even if we hit sp'1425.


sp'60min4

sp'daily5

Summary

So..we're on our way down, and now the only issue is how far down.

I don't see anyone touting anything <1425, other than the usual 'omg, we're going to crash' people.

On any basis, 1435/25 is a very reasonable place to build new longs, for a February/March hit of 1510/20.
-

Considering the smaller cycles, I'm simply not comfortable re-shorting this nonsense.

If somehow we rally back to 1460/65..and get stuck again, ...maybe.
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10am update - opening minor chop

Mr Market is looking to take a new direction. The daily chart is highly suggestive we are rolling over, yet the hourly offers a new up cycle. Its a bit of a conflicted mess this morning. The Transports and Rus'2000 are already green, no sign of any down turn there.


sp'60min4

sp'daily5

Summary

Despite the lower open, the VIX is red again, and there just seems lack of 'bear power' right now.

Yet, Q4 earnings start later today, and that could easily be the excuse the market needs for a limited downside move.
-

As things are, I'm sitting back..the hourly chart in particular is not in a good place to re-short..at least until late today.

If I miss out on a retracement lower, I can easily cope with that. Surprisingly, I'd much rather go long at 1430/25 this Thursday/Friday.

Urghh..  a doomer bear looking to go long. The ultimate contrarian sell signal ?
-

Pre-Market Brief

Good morning. Futures are a little lower, the sp -3pts, we're set to open @ 1458. The $ is a little higher..as are the metals. Q4 earnings start today, with Alcoa at the close of trading.  The market could easily use this as an excuse to sell down..if only 2%.


sp'60min'4 - retracement

sp'daily5

Summary

The underlying MACD (blue bar histogram) hourly cycle is suggestive we'll generally crawl higher, although there is only low confidence in that outlook.

Note that the daily cycle is yet to conclusively rollover yet.
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In general, I'm looking  - as many seem to be, for a retracement, at least down to sp'1445/40, possible 1425, by the end of this week.

Depending upon the price action today, I may take a brief re-short, seeking that move from 1460/65, down to 1440/25.

Good wishes for Tuesday!

Primary target is sp'1510/20

Despite some lingering talk from some in the doomer bear camp, with the sp'1398 low holding, the big weekly and monthly cycles are unquestionably now outright bullish. The low sp'1500s seem very much within range, and could easily occur as early as February.


sp'weekly

sp'monthly2, Keltner

Summary

Despite being a self titled 'doomster', the market is...what it is. Right now, this market is BULLISH.  I could write endlessly on how 'stupid' this is, and how the fundamentals don't support it, but no.

The market..is...what it is.
--


Sucking in a few naive bears?

The market still looks prone to a retracement across the next 2-4 days, and we could easily be trading somewhere around 1440/30. A fair few others 'out there' are suggesting a gap fill @ sp'1425.

The rising channel - seen on both the daily/weekly charts, as at this Friday will be 1415. So, even a move into the low 1420s would do NO damage to the bullish outlook.

--
I'm considering a 'brief' re-short sometime Tuesday...but I might just sit it out..and wait to take the default trade..which is now to go long.

If we're somewhere around 1435/25 later this week, that will be a 'close your eyes, and hit the long button' moment, even for yours truly.

*Keep in mind that Tuesday we start Q4 earnings reporting, with Alcoa (AA) at the close. So, Mr Market will have a lot to consider across the next few weeks.

Goodnight from London

Daily Index Cycle update

The indexes closed red, but the declines were very minor, and as expected, we saw a latter day recovery. The transports and Rus'2000 are comfortably holding within their breakout territory, and it still seems likely we'll be trading in the sp'1500s within the next 2-6 weeks.


IWM, daily

Sp'daily5

Trans

Summary

All things considered, the bulls are very much in charge. The gains from last weeks hyper-ramp are holding, and even if we retrace lower to 1440/25 later this week, the near term trend is still to the upside. It would be very surprising if we break the ascending channel support - which by this Friday, will be @ sp'1415.

With the weekly and monthly charts both pushing higher, the default trade is now most definitely to the upside.

A little more later