Thursday 28 March 2013

Volatility ends Q1 in the 12s

The VIX closed the shortened week on a weak note, -3.4% @ 12.70. Across the week, the VIX lost 6.4%. Near term trend looks like VIX 11s are viable, especially if the market can put in a few closes in the sp'1570s. VIX will surely break back into the 20s, sometime in Q2.





The market is almost maxed out (on any basis), and the VIX is similarly likely very close to putting in a key multi-month cyclical low.

Best guess, we see the indexes briefly higher Mon-Wed, and then a rollover should start to become clear by the end of next week.

First upside on the VIX is 15/16, and then 19/20. A weekly close >20 would be extremely significant, and bode for something more 'interesting' than just an ordinary 4-6 week down cycle.

For the bears, the latter part of next week is arguably VIX shopping time.

more later...on the indexes

Closing Brief - Q1 complete

The market closed at levels not seen since October 2007. Clearly the recovery is now complete, and the Bernanke can be fully pleased with himself! The sp' closed just a touch under the key 1570 target zone.



So, that's it for the week, month..and the quarter! expected.

Next week will likely be prime re-short time.

*the usual bits and pieces to wrap up the week.

*next main post, late Friday, on the US monthly charts

3pm update - a close in the target zone?

The sp'1570s have been a primary target for some weeks, and its even possible - with a little algo-bot help, that we'll close the week there. Clearly, a lousy Q1 for the bears, I have some considerable belief Q2 will be 'somewhat better'.



Place ya bets..on whether we close in the 1570s!

back at the close

2pm update - holding onto moderate gains

Just two hours remain of the week, month..and trading quarter. A close in the sp'1560s looks assured, and that sets up a further day or two higher to begin Q2. VIX is a touch lower. Oil is +0.5%. The precious metals are weak, Silver is trying to rebound..yet again.



Suffice to say, its going largely as expected. A POMO fuelled end to the quarter, and there is no reason to believe why we won't close around the current level.

sp'1570s look viable next Mon/ which we should look for a possible sharp intra-day reversal from a grand 13 year triple top.

12pm update - new highs

The main market is holding onto moderate gains, and we're now a mere 3pts from a break into the target area of the sp'1570s. VIX is a little lower, back in the 12s. Oil is again higher, whilst the precious metals are again weak, despite a lower dollar.




Not much to say, but the hourly cycles are probably going to churn for much of the day now.

Bears haven't any real hope of a red close, on a 5bn POMO day.

*precious metals remains weak, although its nothing 'significant'. yet.

VIX update from Mr T.

back at 2pm

10am update - morning chop

The econ-data keeps on coming in, Chicago PMI was 52, not quite recessionary, but the market is not entirely pleased. Despite the weak market, VIX is still red. Precious metals are trying to put in another morning reversal.




Not the most exciting of starts, but the econ-data is certainly warning of 'issues' out there. All those bull maniacs looking for 2-3% growth in 2013....thats going to be real difficult to hit now.

*I am (as ever) watching the metals, which are again offering a morning reversal.

Pre-Market Brief

Good morning. Futures are back to flat after overnight moderate declines. The sp +1pt, we're set to open around 1563/64. The dollar is a touch lower, as Euro rallies on a little 'Cyprus relief'. Precious metals though are a little weak, with Gold -$6 and Silver -10 cents.




Its tough to call how we'll close today, but all things considered - not least the POMO of 4-5bn, I'd have to think we'll close at least moderately on the upside.

We have some key econ-data today, and if Mr Market likes that, we could even close in the sp'1570s.

Its week/month/quarters end, so it could be a little volatile this afternoon.

*I'm merely looking to drop my first SLV (silver long) block ahead of the long weekend. I won't be picking up any index shorts this side of a long weekend.

UPDATE :  GDP Q4 (final revision) 0.4%..   not exactly an inspiring number to conclude 2012, is it?

Jobless claims, 357k, although I now place very little respect for the weekly numbers.

*awaiting Chicago PMI @ 9.45am.

Awaiting the Easter Bunny

Another day where the indexes saw a latter day recovery. For the bears, this remains a bizarrely sick and twisted market. Yet, we are probably just solidifying what is a 3-6 week top - as is often the case. Weekly charts are rolling over in momentum...but not yet in price.

sp'weekly3 - Keltner

sp'weekly2, rainbow


Just a few short notes on two of the weekly charts that I like to regularly highlight..

First, Keltner. If there is going to be a down cycle in the coming weeks, first target will be NO lower than the lower band, which is currently @ sp'1439 and rising. By mid April, this will be around 1470/75.

Second, my somewhat infamous 'rainbow' chart. Lower bollinger on here is still all the way down at 1359, but that is going to battle higher..and will be around 1425 by late April.

No hope of sub sp'1400s

The bears can NOT expect this market to be trading under sp'1400 any time soon. Its just so very unlikely..arguably near impossible. The weekly charts are all generally saying the same thing, by late April/May, the bears will be lucky to see the 1470s....perhaps the 1430/25 zone.

It really depends on how long it takes to churn out a top. If you look at the previous 3 cycle tops on the rainbow chart, we generally put in 3-6 candles before putting in a consistent close under the weekly 10MA.

My best guess from all this...we do cycle lower across April/May (not least if Q1 earnings suck), but..probably only to the sp'1470s - which interestingly, was the old resistance high from Sept'2012.

Looking ahead

Thursday will likely be more busy than today. We have some key econ-data, in particular the GDP and Chicago PMI data. If those are somewhat lousy, it'll give the market another excuse to sell off early.

The Cypriot banks open Thursday, and Mr Market is going to be keeping a close eye on any civil disturbances. I'm guessing the populace (or should that be ignorant Sheep?), will line up very politely though.

Finally, it should be recognised that Thursday is not only the end of a short week, but end of the month..and quarter. The late afternoon will probably be somewhat unstable, yet we have a large 4-5bn POMO to placate the HFT algo-bots.

That's all for today.

Goodnight from London

Daily Index Cycle update

The market opened lower, but almost immediately started to battle back upward. The main six indexes closed mixed, Trans/R2K closed higher, with the Dow/SP closing a touch lower. Near term trend looks moderately to the upside, key target remains the sp'1570s.





Another very frustrating day for those bears who are still shorting the indexes. Although those using super tight stops at the open should have got kicked for at least some degree of profit. Anyway, the market indeed battled higher, and it was once again the usual 'latter day recovery'. Sure we didn't close green on the Dow or Sp'500, but it doesn't matter, does it?

Bears face a major problem across the next few days. Underlying MACD (blue bar histogram) cycle is now starting to tick higher on a number of indexes, and there is a good 2-3 days to the upside viable.

So, in the near term, we could easily be looking at a market that is crawling higher into the middle of next week.

With a long weekend ahead, there seems absolutely no point in launching any index shorts this side of the Easter break.

a little more later