Tuesday 19 March 2013

Volatility jumps again

With the main indexes failing to hold opening minor gains, the VIX flipped from 12.92 to 15.40. However, with the indexes clawing higher into the close, the VIX cooled down, closing +7.7% @ 14.49 Near term trend is suggestive of a VIX testing the 17/18s.




The daily MACD (blue bar histogram) was ticking higher yesterday, and I was really not giving it enough credence.  Despite the VIX closing well off the highs, the daily MACD cycle is still due to go positive cycle at the Wednesday open.

From a bearish perspective, I am still concerned that we'll see a final index wave higher, with a VIX back in the low 12s, even the 11s.

So, for now, I'm not meddling with any VIX long positions, certainly not ahead of the FOMC announcement.

VIX explosion due?

There remains a very reasonable chance of the VIX hitting the 17/18s this week.

If the 'Cyprus' thing starts to spiral and cause some upset this Friday..VIX has a real chance at breaking 20..and then that's where the real fun starts.

On a break of 20. first soft target would be the Dec'28th high of 23.23

More later..on the indexes

Closing Brief

A pretty dynamic trading day, with the market losing minor opening gains, and slipping from sp'1557 to 1538. The closing hour action was moderately bullish, but bulls are now under sustained downside pressure. Who wants to be buying >1563?



Market closed just under the hourly 10MA of 1549. If bulls can gap over that tomorrow, then an attempt to take out the 1563 high is VERY viable.

The daily index and VIX cycles were warning of possible trouble, and today we saw a little bit more of it.  Tomorrows action is probably going to be pretty wild. Got seatbelt?

Many in the mainstream seem somewhat concerned that QE is going to end soon, as if! No way will the Fed end QE after just a few months. The POMO nonsense is surely going to continue into the summer, if not spring 2014. The latter would be a major problem for those seeking any significant waves lower this year

*I am holding a small block of USO - long Oil, overnight. The precious metals remain surprisingly muted in recent days, so I am merely watching those.

more later..on the VIX

3pm update - crawling higher into the close?

The main indexes look like they've found a floor at sp'1538, although 1545 looked 'secure' yesterday. VIX is cooling off from its earlier mini surge. Metals are on the slide, whilst Oil is trying to floor. For the bears, there is near term significant risk from the FOMC.


USO' 15min

SLV' 15min


Its certainly not boring, thats for sure.

The news from Cyprus just keeps on going, I'm not sure whether to call it a comedy show..or a horror story. I guess, it really has to be the latter, but some of the developments really are comical.

I'm holding to the original outlook, for a final wave V higher. With the FOMC tomorrow, I'm guessing the Bernanke will at least 'console' the market to some extent, with a little rally.

Such a wave higher need not break the recent 1563 high, as I'm sure most realise.

*I will hold a small position, long USO, overnight.

UPDATE 3.20pm Bulls should be seeking a close over the hourly 10MA @ 1549.

back after the close

2pm update - choppy and weak market

The main indexes have broken yesterdays lows, and the Cypriot news is still unsettling quite a few out there. Yet, the Fed is tomorrow, and there remains a significant chance of a stupid ramp. Oil is noticeably lower, metals are somewhat weak, the higher dollar is not helping.




Hmm..what to say?

Certainly, the VIX has hit the first target zone ahead of schedule. I'm still guessing there is a significant chance it will pull lower tomorrow. I'm not chasing it higher at these levels.

*I am long USO, the smaller cycles look pretty floored

USO, 15min

A few flooring spikes...the MACD cycle is VERY low....and HUGE volume.

UPDATE 2.13pm  market trying to battle higher. First resistance will be the neckline of 1550 when it snapped earlier. 1552/53 will be difficult to close above, but then..its a pomo day...like every day.


Lets see what the maniacs can do with still over 105 mins left of the day. 

12pm update - minor snap lower

The indexes are seeing a minor snap lower. Yet, with the Fed announcement due tomorrow at 2pm, there is little reason why this market will do anything much..despite the ongoing unravelling situation in Cyprus.




Its a bit of a mess.

Minor moves so far today, nothing really of any use for trading. I'm certainly not going to bother to meddle in this nonsense today.

Target remains a final blue V up...to around 1575/80..on the markets 'relief' that QE will continue for a significant time to come.

I will short any such spike higher.

VIX update, from Mr T.

VIX may have just maxed out in the low 15s, but we won't know for a few hours if thats the case.

Tricky morning.

UPDATE 12.50pm

Something I noted yesterday on my 'fair value' page...AAPL...its currently offering an initial fail at breaking declining resistance.

Not pretty !

back at 2pm

10am update - opening gains

The market opens moderately higher, and we're already making a run for the sp'1560s again. Bears have real problems across the next few days whilst the market awaits reassurance from the Fed that QE will not end any time soon.




VIX opens 2-3% lower, but its only a minor drop after yesterdays 18% jump.

Underlying MACD cycle on the VIX is warning of a possible snap higher into the mid teens tomorrow. I suppose thats viable after the Bernanke has spoken.

Similarly, MACD cycle on the indexes is likely going negative tomorrow.

Certainly, the daily cycles are warning of 'trouble' for Wednesday.

*Metals open a touch lower, but the moves are very minor noise so far.

I'm content to watch.

Awaiting a rollover

The weekly index charts are all looking like a rollover will be underway later this week. Once we get the next FOMC meeting out of the way, the bears have their first opportunity of the year to whack the market at least 6% lower, back to the sp'1470s.



sp'daily7 -fib levels


The FOMC meeting starts tomorrow, with the announcement on Wednesday @ 2pm.

It is always going to be difficult to predict how the market will react to the Fed press release /comments. Considering the price action of the past few months, you'd have to assume the market will have a very reasonable chance of briefly breaking above the recent sp'1563 high.

Best guess..we see a brief spike to around 1575/80 late Wednesday/early Thursday.

If my micro-count is correct, we should see a multi-day down cycle begin..first downside target is key channel support in the sp'1520s.

Bonus chart... Dr Copper.. weekly, 2yr

For the deflationists out there, todays action was significant. If we close this week in the 3.40s, that would bode pretty badly for the broader market.

That's all for today...

Goodnight from London

Daily Index Cycle update

The main indexes closed somewhat higher than the opening declines, but more importantly, much higher than the overnight levels. Near term trend looks to be upward for one final tiny up wave into Wed/Thursday, before a major down cycle begins - target sp'1470s.





A pretty interesting day to be part of, not that I was trading the indexes, and I am now entirely content to be on the sidelines until after the FOMC announcement on Wednesday @ 2pm.

It would appear sp'1545 was the low of a tiny wave, and there is just one little up wave left to go.

The last small wave should be complete by late Wednesday or early Thursday.

I will be looking to launch a major re-short of the indexes, looking to ride a broad wave lower from the 1570s to the 1470s. Whilst QE continues - along with the mainstream delusion that 'everything is just fine', that decline will likely be choppy, and will probably take 4-6 weeks.

a little more later