Thursday 17 January 2013

Volatility a little higher

Despite the indexes opening above the key sp'1474 high, the VIX opened fractionally higher. Considering the market reached sp'1485 in the early afternoon, it was a little surprising that we did not see VIX in the 12s. The VIX closed just over 1% higher @ 13.57.




So...indexes higher..and VIX higher.

The one aspect to note is the daily chart. The MACD (blue bar histogram) cycle continues to climb back higher. At the current rate we'll go positive cycle in about 3 or 4 trading days.

Perhaps a VIX 'brief' spike into the 16s at the end of next week?

Yet...if the indexes keep on ploughing higher, VIX could simply remain trundling along..flat...for weeks..if not months.

More later..on the indexes.

Closing Brief

Today's move above sp'1474 was confirmation of what the Transports and the Rus'2000 have warning about for some weeks. The mid-Sept' 2012 highs are conclusively broken, and much higher levels are likely in Feb/March. A minor retracement is of course very possible at any point, but the point stands..the old busted.





Incredible strength in the transports, it is a relentless 200,000 ton oil tanker..nothing can stop it,  well, except maybe a small rebel gunboat... perhaps?

A minor retracement to sp'1450/40 is of course viable, but with the SP' joining the Trans/R2K in breaking the Sept'2012 highs, I think today was indeed very clear about the mid-term.

I still see a few noting the giant gap on sp @ 1425..but that now seems completely out of range, considering the strong upside on the bigger weekly/monthly charts.

the usual bits and pieces across the evening.

3pm update - closing hour chop

With the break to sp'1485, this is strong confirmation of what the Trans/Rus'2000 have been warning about for weeks. The highs from last September have been decisively broken through, and there is now a great deal of empty air into the sp'1500s.




I suppose it can be said the VIX is holding up, but really, the indexes are all battling endlessly higher.

What is clear, even if somehow we pullback - and that seems like a distant hope right now, with the break  over1474..we are most definately going to be trading in the sp'1500s in Feb/March.

Yes, there is the fiscal cliff 'delay' that still needs to be agreed, along with another debt ceiling hike, but we know those will be way or another.

This market is going higher.. a lot higher, and it was indeed the Trans/Rus'2000 that were the early warning.

A little reading...highly recommended

'Secrets and lies of the bailout' - rolling stone

A thoroughly depressing..but interesting read on the 2008/9 bailout of the banks.

back after the close

2pm update - 84pts in 13 days

It is remarkable to reflect on the fact that a mere 13 trading days ago we were trading sp'1398..and seemingly on the edge of a very large drop.. but no. The bears had no power..and we snapped higher. Despite now trading in the low 1480s..there is still no sign of this nonsense stopping. The VIX is merely it could do...for months.




Its relentless, and there is simply no sign of any levelling phase - which in itself would likely take some days to develop.

We're now barely 1% away from the big sp'1500s, which even I thought would not be viable until February.

As it is, we could gap straight into the 1500s tomorrow, it won't take much for a major wave of bullish hysteria to sweep the US markets. Besides, the Bernanke $ are probably finding their way into institutional hands now.

1pm update - relentless transports

The price action in the Transportation index remains the most impressive aspect of the last few weeks. A massive breakout..and it just keeps on going. No sign of sign of stopping. The metals are accelerating..after their morning reversal.

trans, daily



I see a few people out there adding to shorts, but really, there is nothing that would suggest this nonsense it ending. Quite the contrary in fact.

With the trans/R2k,..and now the SP' above their mid-Sept' highs, a lot of the old 'doomer' charts have to get deleted.

GLD, daily

Still within a bear flag..but clearly, the action today is very strong.

12pm update - market holding together

With the sp'500 now also above the mid-Sept' 2012 highs, a great deal of damage has been done to any mid-term bearish outlook. The Transports and Rus'2000 just keep on battling higher.


VIX, daily


So we're holding around 1480, although the VIX is surprisingly holding the low 13s.

Time for lunch..

*standing by for heavy snow in London city

11am update - holding above old resistance

Mr Market is holding comfortably above the old 1474 resistance. Even the VIX is now red, after opening fractionally higher.  Metals have strongly reversed higher, with the $ a little weaker.  The transports and Rus'2000 are again putting in new highs...its relentless.





Its a bit of a mess this morning, not least for those on the short-side. There is empty air now all the way into the low sp'1500s. There really is nothing to stop this nonsense.

The daily chart upper bollinger is now offering 1495 'at any time' there is plenty of available upside if we can close above 1474.

The metals have seen a very strong reversal this morning..with Gold flipping from $-10 to +8

It remains a bear flag formation though, probably fourth wave..before one final low.

10am update - black candles..everywhere

The market breaks the mid-Sept' high of hit 1478, but is that it? There sure are a lot of black doom/fail candles out there in the opening 30 minutes. If this was a brief spike to the upside, bears should seek a close in the mid 1460s. VIX opened a touch higher...surprisingly.




Its a very tricky situation.

We have the break higher, but there is already a little weakness out there, and the VIX is not confirming the break higher at all.

*some individual charts coming..on what might be an opening failure



Will be interesting to see how both close.

UPDATE 10.20am.. so much for that is 1479..and climbing again.

Trans/Rus'2000 are especially strong..and cruising to new highs.

This market is a freight train...and nothing appears to be able to stop it.

Pre-Market Brief

Good morning. Futures are higher, the sp +8pts, we're set to open above key resistance @ 1480. There is now nothing but empty air until sp'1510/20. The VIX will doubtless open in the low 12s. Metals are significantly weaker, with the $ a touch lower.




So....a lousy open is due for the bears, and the big 1474 level will be busted on a gap higher.

This might be a brief spike higher..but really, there is only a small probability of that.

All those who were still touting the 'its a wave'2'.....will need to throw those charts in the trash this morning.

USD - H/S formation ?

The US Dollar closed fractionally higher, +0.03%, settling @ 79.80. The weekly charts are offering a very clear head/shoulders formation. If this formation pans out, then we'll see a break below the key 79.0 level. The monthly lower bollinger band is around 74, so there is considerable downside room into the spring.

USD, daily

USD, weekly

USD, monthly2, rainbow


The various cycles are certainly mixed right now. The daily is arguably due an up cycle into next week, and even the weekly would tolerate 80.60 in the near term, without breaking too high.

That sure is a pretty clear H/S formation on the weekly chart, and you can kinda see it on the monthly rainbow chart - where we have two red candles warning of serious weakness.

Those equity/commodity bulls seeking a move into the sp'1500s this spring should indeed be very mindful of the dollar. If I'm right about the H/S formation, and we eventually break into the USD 78s..and lower, it'll certainly help to kick higher - or at least maintain current price levels.

As for tomorrow...

Perhaps we can finally see some decent dynamic price action. No more of this 5pts lower at the open, and then closing flat. I think even the algo-bots are growing tired of it!

The levels are clear. Bears need a break below the recent 1451 low..whilst bulls merely need a daily close >1474. With the VIX already having fallen from the 23 spike-high to the low 13s, I have to believe we'll at least see a minor decline to the low sp'1440s in the near term.

As it is, I remain short, and seeking an exit in the low sp'1440s. As an options trader - with Monday closed, I'd much prefer to exit before the extra long weekend.

Goodnight from London

Daily Index Cycle update

The main indexes remain stuck, and despite a number of micro-rallies, the sp' failed to break the important 1474 level. Meanwhile, the Transports put in yet another new high, continuing a remarkable run from 4838 to 5647 in just eight trading weeks.





So, another day stuck in a very tight trading range, just under the 1474 level. It really is the case that we're now waiting for one of the following...

a. brief spike higher..that results in a sharp intra-day reversal
b. renewed wave higher..pushing into the 1490/1500s
c. failure to break 1474..and at least a moderate decline to the low 1440s into next week.

My best guess is C. Yet, I've seen so many times, 'a' occur. It really annoys those with short-stops to get the kick, only to see the 'real move' to the downside mere hours later.

The transports charts remain a sight to behold...simply...relentless. Along with the Rus'2000, the Transports is surely showing the direction into the spring.

A little more later.