Tuesday 9 April 2013

Volatility down again

With the headline Dow and SP'500 indexes breaking to new highs, the VIX struggled across the day. Opening minor gains failed to hold, and the VIX closed -2.7% @ 12.84. This remains close to the recent floor in the mid 12s that held for over a month.




As a fair few have also noted - not least TraderDan, this market remains utterly..and unbelievably complacent.

RE: hourly VIX count.   Its just a vague idea, and certainly, we've almost retraced right back to where we started. The only backup evidence is the Trans/R2K indexes which are still considerably below their recent highs.

Near term targets remain unchanged...

Secondary....19/20... the latter of which looks very difficult, without a break <sp'1500.

more later...on the indexes

Closing Brief

The market opened with what appeared to be a brief spike high, but as we moved into the afternoon, it again became clear, new highs were possible. The Dow and SP' indexes broke new highs, but notable laggards are the two market leaders - the Trans and R2K.

*I've been neglecting to highlight the R2K and Transports hourly charts in recent weeks. Most notable is the fact that both counted as a near perfect 5 waves down, and now a 50% retrace of wave'1. They are both suggestive of a wave'3..to begin within 1-2 days.





A somewhat weak closing hour.

So, we have a possible double top on the sp @ 1573, although the Dow certainly made a very clear new high.

The next market issue is the FOMC minutes to be issued tomorrow at 2pm.

The bears have experienced far worse than today, but as always, days like today are very annoying.

Lots more across the evening

3pm update - new highs for the headline indexes

With the bears still utterly powerless, we've now seen the Dow and Sp'500 break to new highs. The one remaining bearish aspect is that the two original leader indexes - Trans and Rus'2000 remain well below their highs. VIX is back in the 12s, with the precious metals holding gains.





So...what now?

We've got the two big headline indexes breaking to new highs..and there is NO sign of this ending. Sure they are now arguably overbought, yet a new high..IS a new high..and that sure ain't bearish.

*Poster HighRev notes the A/D ratio, of 1/2 today, which sure ain't supporting the current mild hysteria out there.

As it is, I clinging to the fact that the two indexes that lead the way up - Trans/R2K, are still well below their highs..and look like a 50% retrace...at least so far.

updates..into the close...

Rather than watch clown channel in the closing hour..why not instead see a little talk from the Schiff?


3.10pm..is the VIX finally done? Its amazing to see it this low....again.

For the TVIX, and other VIX long holders...difficult day, but perhaps..its floored.

3.25pm..it remains ironic that despite the ramp, the SP' has still failed to break the Oct'2007 high of 1576.

3.35pm...is that it..finally?

A double top on the sp @ 1573...whilst the leader indexes Trans/R2K failed to claw back more than 50% of wave'1 down. hmmm

3.42...VIX looks like it will be closing in the low 13s.

back at the close.

2pm update - rough day in bear land

With the break of the opening spike higher, the bears are on the run, and no doubt a lot of short-stops are getting triggered. The Dow breaks a new high. The Transports and Rus'2000 remain weak, and are the last bearish aspect right now. VIX is back in the 12s.




After what seemed like a spike high opening, it would seem the algo-bots are doing a short-stop run of every bear available.

I'll note again, the Trans and Rus'2000 remain WELL below their highs from last week, but that really is all the bears have got left to tout.

If we close at current levels, it will make for a rather stinky end to the day.

Here is the R2K hourly chart...the original decline counts good as a 5 wave.

Will have to keep an eye on Trans and R2K. They remain the leaders. 

2.25pm...here is the Trans..60min...

It also counts much better than the Dow/SP/Nasdaq.. as a 5 wave down..then a bounce - 50% retrace of the original wave.

Both are suggestive that the rally in the headline indexes is suspect.

1pm update - the two leaders...still below the open

The sp' just broke above the opening spike high of 1566, yet the two leading market indexes are still below the open. Transports and Rus'2000 are stilll weak, although, they are admittidly the last real bearish hope. VIX is weak, whilst the precious metals remain strong.

IWM, daily

Trans, daily



Are the algo-bots just doing another stop run on the headline Dow, SP, and Nasdaq indexes, before a big rollover?

For the big money, the last short-stop line is of course sp'1573. Anything over that, and its white-flag time.

VIX...bears need a close back in the 14s, which looks a difficult task for the next 3hrs

1.27pm..well, its almost time to start waving the white flag of surrender.

Bulls break a new high on the Dow, and the sp' is only 3pts from the high.

The Transports and R2K are still well below their recent highs, and still below their opening levels, but this is starting to look pretty ugly.

For the big/serious money, they'll be getting the kick around these levels. 

1.39...for the sp' bear players, a 'double top' or back test is all thats left to suggest.

Dow breaks new high...but Trans/R2K still well below their highs.

12pm update - watching and waiting

So long as we don't break above the opening spike of sp'1566, bears can be reasonably comfortable that a wave'2 top is in. The rest of today will be very important, and a late day sell off would likely be enough to confirm the price action for the rest of this week.




The opening minor gains would no doubt have really shaken a few of the weaker bears out of their positions. One issue is, how many bulls were chasing the open higher?

*precious metals are holding good gains, but they'll surely get stuck below key resistance, and again break new lows.

VIX update...from Mr T.

more later...

12.20pm..the question you have to ask yourself...

who wants to go long at sp'1565/66 ?

12.31...well, there goes the earlier spike high of 1566....a lot of short-stops gonna get hit now...urghhh.

*special note, both Trans and R2K both still well below their opening levels. Right now, thats all the bears got left to claim.

11am update - double spike top

Mr Market has had a strong bounce from the Friday opening low of 1539. We are seeing some very strong resistance now, and the market looks vulnerable. VIX looks primed to surge across the next few days. Mini H/S 'theory' would suggest sp'1505..within days, with a VIX of 17/19.




It remains a key day in market land. Certainly, its the most important one since the 1573 top.

Bears need a close in the 1540s to really offer clarity that this two day bounce was indeed...just that..a wave'2 bounce.

If the standard theory is correct, extrapolating lower..we get sp'1505, and that probably equates to a VIX in the high teens.

VIX 20 will always be a tough threshold to hit.

For the doomer bears out there, a weekly VIX close of 21 is the ultimate target.

11.20am...we're seeing some good confirmation here...no one is buying above the opening spike.

Will be interesting to see where we close. I'd personally like somewher in the 1540s, that seems viable.

10am update - spike..and a fail ?

Good morning. Market is possibly putting in a classic brief opening spike higher - a touch above resistance, and then a major reversal. The next few hours will be critical. Bears should be seeking a close in the sp'1540s, which is a clear 1% lower.





Well, lets see if the spike was indeed a tease to the bull maniacs.

As for the VIX, it looks floored, and has a great deal of upside potencial across the next few days. A long day ahead.

stay tuned !

10.01am...spike fail...confirmed. A close in the 1540s now very probable.

10.15am  for the big/serious money, this is a really simple situation. Short, with a stop at the top of that spike @ 1566/67.

We'll know within an hour or two if the bears are going to see a wave'3 down..which 'in theory' would target 1505 within days.

1574 or 1537 - that is the question

With the indexes having rallied for the past 13 trading hours, the bears are understandably concerned. The sp' is a mere 10pts from breaking new highs, yet..the weekly charts are still warning of trouble. Best guess right now remains unchanged - sp'1480/70s are coming.

sp'daily5a - H/S formation idea

sp'daily3 - fib levels


sp'weekly2, rainbow


Today was particularly rough in the permabear bunker, since I've run out of chocolate again. Clearly, I will need to visit the retail sector this Tuesday. Bullish XRT ?

Seriously though, today was difficult, and were it not for the fact that I am more focused on the bigger weekly and monthly cycle charts, I'd really be on the edge of waving the white flag of surrender.

Daily charts are obviously looking a bit of a choppy mess. The sp'500 chart remains one of the stronger indexes, and is still holding within the November upward channel. Bears really need to put in some daily closes in the low 1530s to decisively break it.

Weekly charts still warning of trouble

The MACD (blue/green bar histogram) cycle on the weekly charts is pretty clear. The US markets are losing the bullish price momentum, and having put in a secondary (and crucially lower) wave/tower, we're all set for much lower price levels.

My near and mid-term outlooks are thus unchanged, primary target is the 1480/70s...with a secondary one of 1430/00 in mid-May. The latter of which is only viable if we break <1500 this month.

Well, lets see how Tuesday opens, and more importantly...where it closes.

A close to a new high >1573...and the bearish outlook will have to be put back on hold.

In many ways, the bears really can't get confident now until we take out the Friday low of 1539..and the March'19 low of 1538. The 50 day MA is lurking @ 1532..that remains a very valid intra-day target later this week.

A mini H/S...within a H/S

I was churning on the hourly charts, which a few out there (Wavaholic, Daneric, and I'm sure a few others I've not noticed) are looking at a possible mini H/S.

Now, as I posted for chart daily5a - at the weekend, I'm considering a bigger H/S formation, one that breaks lower into May...

Here is the combination of the two, and perhaps is something that will be very useful in the weeks ahead.


Of course, if we break over sp'1573, this will have to get trashed

I think the key point is that a break of sp'1538 should open up the 1505s, and perhaps more naturally the key low from late Feb of 1485 - which also lines up with the 38% Fib' level.

That's all for today.....

Goodnight from a resolutely bearish... London

Daily Index Cycle update

The main indexes all closed moderately higher, once again lead by the Transports and the Rus'2000, both higher by around 0.9%. We are now within 10pts (0.6%) of the recent sp' high, a very important few trading days are ahead. VIX confirmed the utter market complacency.





We are now very much on the edge again, great huh? Bulls are easily within range of breaking the recent high of 1573. Yet, the hourly index and volatility charts are looking stretched.

If the index (hourly cycle) count is correct, then we won't go more than a few points above today's closing level of 1563.

*indeed, how we trade overnight in the equity futures market will be important, and even more so..how we trade in the opening 30 minutes of Tuesday.

Bears on suicide watch?

In many ways, the bears should now be VERY desperate to get back under the Friday morning low of 1539..and indeed, the even more important low of 1538 from March'19

Until we're back in the low 1530s...I'm admittedly concerned. Yet, the weekly charts are still saying what they were saying a few weeks ago....we're rolling over, and due a multi-week down cycle.

I realise..the bigger picture - even if correct, is little comfort to those on the bearish side this Monday evening.

a little more later