Monday 18 March 2013

Volatility jumps

With the Cyprus event giving the indexes the excuse to sell lower, the VIX spiked 20% higher at the open..yet faded across the day. The closing hour action was for a strong VIX, but it put in a lower high, closing +18.2% @ 13.36. VIX 11s seem viable Wed/Thursday




My index outlook is for sp'1575/80 by late Wed/Thursday, If that is the case, then we should see the VIX back in the 11s.

However, the key issue would be to look for a higher VIX low, whilst the indexes put in another higher high.

So..near term down....latter part of the week..opportunity for a mini VIX explosion into the 15/17s.

more later..on the indexes.

Closing Brief

The main indexes saw some weakness in the closing hour, but still, the daily close was a lot higher than many had expected last night. USD continues higher. Most notable recovery of the day was Oil, which fully reversed the gap lower. Precious metals look weak, despite a higher close.



Certainly an interesting day, and the Cyprus issue will linger on for the rest of the week, if not 'quietly' for a few months.

Have no doubt, the PIIGS of Italy, Spain, Portugal and Greece (not Ireland) will be seriously looking to skim a few percent of the bank savers money in the mid-term...for the 'benefit of the greater good'.

As for market land, despite the weak close, it still looks like blue IV is floored @ 1545.

I seek one final Blue V higher, with a target of 1575/80 by early Thursday, at which point I will consider a major index short.

more later...on the VIX, Indexes, and the weekly index charts...which are now rolling over.

3pm update - closing hour chop

We've now seen most of the indexes claw back most of the opening declines. That puts in a secure floor for blue IV. The only issue is how high do we go in blue V. Best guess, 30/35pts..sp'1575/80, no later than early Thursday, with VIX 11s



Not much to say, other than 'at least I wasn't shorting the opening decline'.

I wonder how many bears were...urghh.

back after the close.

2pm update - waiting for the Fed

The FOMC meeting begins tomorrow, with the usual announcement on Wednesday. Bears should probably (at least) be sitting back until early Thursday. USD remains higher,  metals are stuck...Oil is flat after earlier declines of 1% VIX is higher, but a close in the 12s seems likely.




I'm guessing that we are now in Blue V, the very last tiny wave of  big blue 5,  that itself will complete a large wave that began last November.

I am looking to launch a major re-short later this Thursday.

For the moment, I'm very content to sit back..and watch some minor chop until the Fed announcement - Wed, 2pm.

Lets be clear, we could easily jump (briefly) to 1570s..even 1580s. the latter of which would be a much better short level.

12pm update - afternoon chop

The market looks like its put in a spike floor, and will probably now churn for the rest of the day. Oil is significantly above the lows, but the precious metals remain relatively weak. Dr Copper is warning of 'trouble'.


USO, daily2


I'm holding to the original outlook from last week.

Blue V to come..which will complete by late Wednesday/early Thursday..and that will complete the large wave from last November.

*weekly charts are rolling over.  More on that later.

RE: Oil. I'm guessing USO will get stuck in the low 34s Wed/Thursday..and I will consider shorting that too!

VIX update

back at 2pm

11am update - blue IV complete

The morning declines are quite possibly complete. If the count is correct, this was the blue IV, and now we're just waiting for a blue V to complete the multi-month wave since the November low of sp'1343. We should done by Thursday.



Obviously this mornings recovery rally is annoying many of the bears out there.

Yet, its not exactly something we've not seen a thousand times in the last four years.

Oil has expected.

*I dropped SLV a little earlier... that turned out to be a very frustrating trade.

10am update - morning bounce?

We're off and running, and the main indexes are barely down 1%. The VIX jumped 20%, but its only in the 13s. There is indeed a great deal of 'buy the dip' mentality out there, so today won't likely be a great one for those in bear land. Oil is well off the lows already.




VIX doesn't bode well at all for the bears.

We should see a floor by lunch time..and start battling our way higher into FOMC - Wednesday afternoon - a final wave, blue V.

Pre-Market Brief

Good morning. Sp is -12pts, we're set to open around 1548. Clearly, this is nothing too dramatic, and many of the doomer bears are going to be very disappointed at these opening levels. USD is comfortably in the mid 82s. Oil is lower, but the metalsre higher!




I'm still holding to the original outlook from last week.

A blue IV down...across Mon/Tuesday, and FINAL blue V up Wed/Thursday. We might make a new high..might not. I don't think thats too important anyway.

What is important is that all this nonsense should be putting in a key top by the end of this week.

Good wishes for the week.

*updates;..across the day!

10pm update - interesting week ahead

There is increasing concern, bemusement, and utter contempt for the plans of the Cypriot Government. Whenever the Banks in Cyprus do decide to open this coming week, one thing is for will be a long queue.

sp'daily5 - Monday morning outlook


The notion that any Government can just skim a given percentage from European bank accounts when 'the mood takes them', is beyond a dangerous precedent. Its outright crazy.

Are they actively trying to cause a state wide, even European wide bank run?

As things are, I don't expect a move under the 20 day MA of sp'1530 tomorrow.

I'd guess the VIX might jump 20/25%. into the 15/16s..before a decline back to the 13/12s Wed/Thursday.

The 60min micro-count was seeking a Blue IV wave lower of 20/30pts across Mon/Tuesday, and it looks like we will indeed see one.

See my weekend posting for my broader outlook on where we might be headed.

Goodnight from London