Volatility climbs into the close

With the indexes seeing further weakness, the VIX climbed into the close, +10.4% @ 13.99, although is still below the spike highs of early Tuesday. Bears need to break >15.50, which will likely need sp<'1538, the latter of which won't be easy in this QE-POMO fuelled market.


VIX'60min

VIX'daily3

Summary

Suffice to say, Friday will be particularly interesting to watch.

Will the market gap straight under the recent sp'1538 low, or will it instead battle higher and take out the sp'1563 high?

I'm still holding to the original outlook, and that is highly suggestive we'll at least be briefly trading in the sp'1570s. If that is correct, then VIX will likely once again fall back into the 11s.

On the bigger outlook, I do certainly look for much higher VIX levels, and some sort of VIX explosion, probably breaking above the key 20 threshold in April.

More later..on the indexes

Closing Brief

The main indexes closed somewhat weak, but certainly nothing too major. The one bearish aspect was the VIX, climbing 9% into the 13.90s. Near term index count/cycle is suggestive we'll break the recent 1563 high, but clearly, this market is looking increasingly tired.


sp'60min

Summary

It was an interesting market day to watch. The market is still reacting to every little development in Cyprus.

If some kind of compromise/agreement can be reached, it'll be a major excuse for the market to take out that 1563 high. I'm guessing that we do.
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*I'm merely holding USO (long Oil) overnight, seeking an exit in the 33.50s by the Friday close.
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More later on the VIX, indexes, and other things

3pm update - closing hour recovery?

A rough day for the bulls, but its very possible we've put in a floor @ 1543. VIX is starting to cool down, a close <13.25 would be particularly bullish for the main indexes tomorrow. Precious metals looking strong, Oil is battling back higher.


sp'60min

VIX'60min

Summary

Bulls should be seeking a close above the hourly 10MA @ 1553. Anything over that will set up a break of the 1563 high tomorrow.

*I'll hold USO (long Oil) overnight, seeking an exit in the 33.50/60s.
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back after the close

2pm update - one wave only

Market has seen a secondary minor wave of weakness, and has taken out the morning low. Similarly, VIX is on the edge of a breakout. How we close today will be vital. Can the bulls get their usual latter day recovery wave? Precious metals holding gains...Oil trying to re-stabilise.


sp'60min

vix'60min

Summary

I'm still going to hold to the original count, unless we take out the recent 1538 low. Some bulls have suggested a move to the 1520s before the next wave higher, but if that's the case, it makes a real mess of the current count.
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Best guess remains..one wave up..only.




back at 3pm

UPDATE 2.18pm...looks like the bull maniacs are trying to put in a spike floor...even USO has flipped back upward.

 
Holding to original count..still seeking those sp'1570s.

12pm update - nonsense..as expected

The VIX was probably the tell this morning. Despite the sp -10pts, VIX was only +4%, and indeed..that looks to be the low of the day. Market looks set to close green, the only issue is whether we take out the 1563 high today..or tomorrow.


sp'60min

vix'60min

Summary

So, despite the ongoing Cyprus issue, the market does look to have floored, and I'm guessing we will now broadly climb higher into the weekend.

Seems no point shorting yet, and indeed the sp'1570s look almost a given.
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*I am long USO from 33.15 earlier this morning, seeking 33.50s by the close.

USO, 60min

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VIX update,  from Mr T.





UPDATE 1.37pm .hmm, new index lows...and VIX is trying to breaking out.

Bears need to take the recent 1538 low..or there remains the risk of still breaking the 1563 high. Bears need to keep this momentum this afternoon.
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11am update - a green close...probably

Despite the occasional sporadic Cypriot news report, the market will probably close at least marginally green. Taking out the sp'1563 high will be difficult, but as we've seen so many times, a latter day recoverys is more than likely. Why would today be any different?


sp'60min

vix'60min

Summary

The opening declines certainly didn't affect the VIX much, which maxed out with gains of just 4/5%.
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*I am long Oil (via USO) for a near term trade.

Underlying pressure for both Oil and the precious metals is still upward, although I'm leaving the metals alone. I'd rather trade them on the short side in April/May.

back at 12pm

10am update - morning weakness

Good morning. The market is opening moderately lower, but it'd seem we'll likely see a latter day recovery. Precious metals snap higher in pre-market, Oil on the slide - in line with the indexes. VIX is moderately higher.


sp'60min

vix'60min

Summary

All things considered, I'm don't think we're done yet in this up cycle.

There is significant risk of Cyprus filing for bankruptcy, and ditching the Euro over the weekend, but...even if that was the case, the market looks comfortable enough to melt higher into the weekend.

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I have eyes on USO - long, Oil,

There just doesn't seem any point shorting...yet.
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UPDATE 10.30.... am Long Oil (USO).

Market is still a little shaky from occasional Cypriot news, but generally, there is of course underlying upside.
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VIX trying to rally, but its only managing small gains of 4%..that doesn't bode well for the close.

sp'1570s remain viable by the Friday close.

Watching and Waiting

We've come a long way in a short time, the November low of sp'1343 to sp'1563 in just 18 weeks. For the bears, this rate of increase is disturbingly bizarre, but the grander picture is highly suggestive that a multi-week down cycle is about to begin.


sp'weekly3 - Keltner

sp'daily7 - fib levels

Copper, monthly

WTIC, monthly

Summary

Another day higher for the main indexes, but that was as expected. Indeed, I am guessing Thursday will open higher, and if we break the recent 1563 high, we could see a brief final burst into the sp'1570s.

Right now, considering the recent 'shaky' price action, and the ongoing horror story in Cyprus, I don't think this cycle can go any higher than the sp'1570s. Certainly, the sp'1600s look out of range for the current multi-month up cycle.
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Both the Fibonacci and Keltner charts are suggestive that by end April/early May we could be trading in the 1470s..perhaps a little lower.

I can not envision any 'reasonable' scenario where the big sp'1400 leve is breached in the near..or even mid term. Whilst QE-POMO continues, the market has a constant bid underneath it.

*I have the small hope that the Fed will cut down the POMO program sometime in July/August, but that remains a 'vain hope'. I have the real suspicion/fear that the POMO nonsense will instead continue into spring 2014, in which case we'll be looking at sp'1700/1800s by year end.


Dr Copper warning of trouble

Despite the continued rally in equities, Copper prices are weak. Yes, Copper rose today, but its still down on the week and month. How we close March will be pretty important for those of the deflationary persuasion.

Meanwhile, WTIC Oil closed higher today, but breaking above the big $100 looks out of range near term. Deflationary bears should be seeking a weekly/monthly close <$90. If that is achieved, then a challenge of the June 2012 low of $77 is back on the table.


Looking ahead

The market will probably see some upside early Thursday, not least if the latest jobs data issued from the Dept of Disneyland Statistics is 'better than expected'.

The more cautious bears could easily wait until next week to consider re-shorting this market. I will try to keep an open mind, and will have eyes on the VIX. Once the VIX floors, and starts turning back up on the daily charts...it'll be time for the bears to come out and play...at least for a little.

Goodnight from London

Daily Index Cycle update

The main market opened moderately higher, and then saw mild chop across much of the day. The Transports did noticeably fall for the fourth consecutive day, the longest decline since Dec'2012. Near term trend is still upward, but the bigger cycle looks like it is about to complete.


IWM

SP'daily5

Trans

Summary

So, another day 'broadly' higher. Its certainly important to recognise the weakness being seen in the 'old leader' Transports ( go check the daily close in FDX today!), but the main market itself is still generally climbing.

My best guess..we max out tomorrow or Friday. Considering the Cyprus issue - which has NOT gone away, the market remains very vulnerable to a major gap lower..especially next Monday.
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I am sitting on the sidelines, and waiting to launch a major index re-short /Long VIX.

First downside target is the rising support @ sp'1520, although I think sp'1470s are very viable on a multi-week down cycle.
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a little more later.