Wednesday 20 February 2013

Volatility surges higher

With the main indexes seeing their biggest decline of the year, the VIX surged higher..and climbed higher into the close. The VIX closed +19.25%, and settled @ 14.68 There is a major gap level of 16-18, which might easily equate to sp'1490/80.





VIX traded a little higher in the brief AH period. The 14.68 close bodes pretty well for a move into the 15s tomorrow.

The big issue is just how high can the VIX spike in this new up cycle?

*those doomer bears looking for an 'ides of March' issue should look to the VIX weekly chart. If it can hold these gains into the coming weekend, then early next week we might see the weekly MACD cycle go positive...offering major upside, with an attempt to break into the 20s.

As it is, I just don't think we'll see VIX 20s until late April/May.

Best guess...sp'1490/80 within the next 2-5 trading days..with VIX (briefly) spiking into the 17s.

Then...sp'1550/1600s into early April, with VIX 11/10s

Closing Brief

The main indexes have broken the near term upward trend. There is open air to the downside in the sp'1490/80 zone, which might equate to VIX 17s. The dollar closed strongly higher, which put added pressure on the main market, but especially Oil and the precious metals.





You can see some clear channel breaks on the hourly charts, so that does indeed open the door to more significant downside as better seen on the daily charts.

I just can't see sp <1480. Not with the Fed POMO program, and with the debt ceiling to be raised..or even abolished entirely by exec' order.

more later..on the VIX, which had the biggest move of the year.

3pm update - the slaughter

Post FOMC press release, and the market remains in a bit of a mood. The dollar is building further gains, and this is adding much pressure on the commodities market, with Oil and the precious metals getting somewhat slaughtered




VIX busting upward...I could do with 17/18..I've a 'dead' VIX call block, that I need resurrecting!

16s look difficult though, never mind that little bit extra.


*I'll post a full metals update on my other page..after the close !

2pm update - got a spare minute?

FOMC minutes are due at 2pm..and that will probably seal the fate of the market for the next 5-7 trading days. The levels are clear, a basic retracement would be somewhere around 1490/80. Metals remain especially vulnerable, not least if the dollar manages to break into the USD 81s.


sp'daily7 - fib levels



..awaiting the press release. No doubt the cheer leaders on clown finance TV are about to get a little hysterical.

Brace yourself.

ohh.. and eyes on those metals..and Oil.

Major prices snaps...

metals lower..., gold -35, silver -$1

USD.. breaks into the 81s.. this is pretty much the most important issue of the day now.
Oil -2.6%

12pm update - moody cheer leaders

Mr Market is seeing a little more weakness, but we're still holding within the near term up channel. Bears need to break <sp'1515 to offer any hope of 1500/1490 - the latter of which is where we'd very likely get stuck. Metals remain very weak, with higher dollar not helping!



GLD, weekly

SLV, weekly


The weird thing about this morning is the mood change on clown finance TV. For weeks now they've been guns blazing bullish. Barely a word of caution. Yet today..all I saw was perpetual negativism. It was as though they've been handed a new script 'we're going negative about every story!'.

Regardless of those deluded maniacs though, market does look weak, and even VIX is starting to break a little higher, but that gap zone of 16-18 looks a million miles away.

*FOMC minutes @ 2pm, thats the main event of today, and will shape how we close..especially the metals!

VIX update.

back at 2pm

10am update - morning weakness

The mood seems a little different today. Market is only fractionally lower, but..after yesterdays little burst higher, we really afe getting a little maxed out. Metals are getting slammed again, and are now approaching the lower support on the weekly/monthly charts. Higher dollar is not helping!


GLD, daily

SLV, daily


We have the FOMC minutes later at 2pm, and no doubt that will have a serious bearing on how we close today. I actually think we have a shot at closing a little lower.

Metals remain consistantly lower. We'll soon see if that lower channel - of a giant bull flag from September 2012, is going to hold.

A failure of that, and metals could spiral lower. I'm guessing support will hold though.

*GRMN, getting whacked after earnings significantly miss!

see story @ Forbes

updates..across the day

The time is not yet

We're already in trading week'7 of 2013, but its actually now the eighth week higher in market land. This is turning out to be one mighty Q1 ramp, with no sign of stopping. It is easily conceivable that we could continue in this manner into March or April.


sp'monthly6 - four scenarios


Today saw a pretty strong close for the sp' in the 1530s. With the upper bollinger on the weekly chart now @ 1546, there is a good 1% air to the upside. By late March/april, we'll likely have open air to the Oct'2007 high of 1576.

The sp'1600s look very viable before the next major down cycle.

The 1987 'ramp and crash' scenario

I've added a fourth scenario to my monthly chart. Scenario D' is something that Marc Faber highlighted lately, where we ramp into the summer..only to collapse in the autumn.

It has to be said, such a scenario would probably be an absolute nightmare to trade. Considering the fact that the market is now almost officially 'not allowed' to fall, it'd be a real surprise if we even saw a one day fall of more than 5%, never mind 20% !

*Having mentioned the infamous 1987 collapse, I should mention that the market yesterday saw the loss of Martin Zweig.

see story @ bloomberg news.

Bears need to be patient.

There will be a time when it will be very appropriate to start a post with a video like the one below, but not yet.

The bears are very likely going to have to wait until May - at the earliest, to have any ANY hope of major downside. Yet, are we only going to see 5, 7, maybe 10% lower?

As I noted a few times recently. If we get stuck around 1600, that would mean the new floor is probably in the 1500/1450 level. That's not exactly the most exciting 'bearish' target, is it?

As for Wednesday, we have a few bits of econ-data in the early morning, but slightly more interestingly, we have the FOMC minutes (2pm). The media chatter will doubtless be about when QE might end. As if.

Goodnight from London

Daily Index Cycle update

Another very bullish day for the US equity market. The Trans/Rus'2000 indexes hit new historic highs, the sp' closed in the 1530s, with the dow in the 14000s. There is no sign of any weakness, near term trend remains higher, supported by the bigger weekly/monthly cycles.

IWM, daily


Trans, daily


Another week begins with slow motion algo-bot melt higher. The close was pretty strong, and the bulls could even look for a moderate gap higher tomorrow.

Maximum downside right now would likely be 1490..which is of course entirely laughable.

It does look like the sp'1600s are a given by April.

A little more later.