Friday 1 March 2013

Volatility fails to hold opening gains

With the indexes seeing a fast decline in the opening hour, the VIX spiked 8% higher - back into the high 16s. Yet the bulls quickly turned it around, the VIX failed to hold all of its gains, closing slightly lower, -1% @ 15.36





The VIX jumped into the close yesterday, and this mornings follow through of a further 8% was kinda interesting, but the fact those gains failed soquickly was a very strong signal this market is not going any lower in the near term.

The weekly chart is still kinda bullish, having gained over 8% across this week.  Yet, from a momentum cycle perspective, the bulls could justifiably say its merely a failed spike...which it is.

No VIX 20s for at least a month or two

My outlook is for the sp' to climb to 1550/60 - no later than end April, and that very likely means the VIX will decline back into the 12s..if not the 11s. In fact, if the media - and the market gets a touch of bullish hysteria in March/April..perhaps we will briefly see single digit VIX.

...and that would make for a very nice multi-year cyclical VIX floor.

more later..on the indexes.

Closing Brief

A choppy start to the month..a choppy start to end the week. Some pretty significant intra-day swings, from 1514 to 1501..then 1520 to 1513. Highlight of the week was Mondays brief spike in the VIX to the 19s. It will probably be 6-8 weeks until we're back at those levels.



Another week ends, and it was certainly at least not boring!

All things considered, it looks like we're getting another wave higher to 1550/60. So..the bears need to be patient until we're well into the spring.

The usual things to wrap up the week across the evening.

Have a good weekend!
*next main posting, late Saturday, on the World Indexes

3pm update - choppy close to the week

Market remains a real mess today, although for day traders, this sort of price action is no doubt a good thing. Dollar will close the week will some good gains, whilst Oil and Gold remain under pressure.



So long as the bulls can hold this market above 1501, there really is nothing for them to be concerned about.

I'm sitting it out across the weekend. I might take a small long position next Monday, and try to ride this nonsense to around 1550 by mid-March.

Regardless, its been an interesting week.

back after the close

2pm update - mini H/S forming ?

Mr Market is again on the slide, bulls need to hold the recent low of 1511/10..or at least 1501. USD is holding significant gains..and this is keeping the pressure on Gold and Oil.



You can kinda see a mini H/S on the 15min index chart, with the neckline around 1511/10. If we do see 1509 this afternoon, that wouldn't be the best end to the week for the bullish maniacs.

Or maybe we're just stair stepping higher?

Regardless, I ain't trading into the weekend, certainly not a good thing in options.

*every Monday so far this year has been a winner for the bears - not least this past Monday. Will be interesting to see if the next one is the first Monday the bulls can close green.

back at 3pm

12pm update - shaky bounce

The bounce off the morning low is looking a little weak, and we're seeing something of a further push lower. USD remains the highlight of the day so far, up around 50bps @ 82.45. This is now becoming a serious problem for Oil, a weekly close <$90 would be significant.




Certainly, things can't be said to be boring. The price action is arguably pretty good across the last week or so.

As ever though, the underlying pressure is UP...fuelled by POMO $.

Unless the bears can break the earlier low of sp'1501, this decline is merely another buying opportunity.

I'm sitting back..I ain't in the mood to hit buttons at these levels.

VIX update..

*I've drawn it on yet.. but you could argue there is a H/S formation on the VIX hourly chart.

It does look like VIX will not break into the 20s for some weeks, if not even a few months.

All those doomer bears seeking a 'real' VIX explosion into the 30s..even 40s....first chance for that seems to be May.

Mr T..on the VIX...

back at 2pm

11am update - just another bear tease

Market seeing a significant bounce after ISM econ-data comes in better than expected. Most important to note today...the USD, 82.45 +50bps. - that IS very significant, and bodes especially badly for the commodity market this spring.




Still no turn on the underlying hourly MACD cycle, but it'll doubtless be confirming it this afternoon.

VIX, black candle on the daily...classic bear fail.

We ain't likely going any lower for some weeks.

10am update - Friday Gloom

Good morning, and welcome to March! The main market is selling off to begin the month, but its nothing significant yet. After the 40pt wave higher, we're still holding onto much of that. USD is again higher...Oil is in imminent danger of losing the $90 threshold - where the monthly 10MA is lurking.




My outlook remains that we have one major wave higher yet to come..into the sp'1550s.

I will be focused on the hourly MACD cycle today, if we can see that level out by 2-3pm, I may even go long today, so long as the price action looks like we've put in a floor. Gods help me.

*VIX is higher, but the 19s look unreachable.

UPDATE 10.03 am  econ-data comes in pretty good, and the market jumps back higher.

A bit of a real mess for those bears shorting the open, most getting short-stopped.

I'd still like to see at least another 3-4 hrs before taking a long position. 

Mr Dollar is Strong

The USD closed +0.43% @ 81.95 today, but did briefly hit 82.00 -  a level we've not seen since last August. Near term dollar trend looks over-extended, but the monthly charts are offering a spring/summer surge as high as 88/90

USD, daily

USD, weekly

USD, monthly2, rainbow


There is no doubt about it, King Dollar remains the least dirty piece of FIAT paper out there. Despite the Fed printing at the rate of 1 trillion a year, the dollar remains the reserve currency of the world, and that sure doesn't look likely to end any time soon.

An update on a few key dollar denominated commodities...

WTIC Oil, monthly2, rainbow


You can clearly see significant declines for both Oil and Copper in February. No doubt, the strength in the USD is becoming a real hindrance to those seeking an inflationary break to the upside.

Looking ahead

We have a fair few pieces of econ-data tomorrow to begin a new month. In terms of index levels, so long as the bulls can hold the big sp'1500 level, I don't think they have anything to be concerned about. Indeed, any Friday morning decline would arguably be a dip-buying opportunity - in anticipation of the usual latter day recovery.

One sixth of 2013 is now complete..I remain hopeful the bears will have a real chance at a major multi-month decline this year..but not....quite.....yet.

Goodnight from London

Daily Index Cycle update

The main indexes saw some noticeable weakness in the closing hour, closing slightly red. Yet, the sp'500 did break above the declining trend line of 1520..and the daily cycles are suggestive of further upside across March, perhaps even April.





From a MACD cycle perspective, today was day'3 of this new up cycle. With the Fed throwing 85bn a month (45bn of which is POMO) at the market, surely we'll break the recent high of sp'1530?

I have to think so. My original downside target for this cycle was 1490/80. The fact we hit 1485..and have since soared, confirms my fear. The big decline that many doomer bears are seeking is still some weeks..even months away.

Bears need to continue to look for some kind of 'hysteria' blow-off top. Yet, if the Fed keep printing, why would it stop at 1550/60 anyway?

On the counter side, today's revised GDP of 0.1% should not exactly be inspiring for those on the 'recovering economy' train. 

At some point, this nonsense will go significantly lower. I'm guessing that will start in April/May.

A little more later..especially on the USD, which hit 82.00 this afternoon.