Wednesday 10 April 2013

Volatility slips lower yet again

With the sp'500 breaking into the historic territory of the 1580s, the VIX naturally was pressured lower. The VIX closed -3.7% @ 12.36. Near term trend looks weak, and there is a minor gap in the mid 11s that might yet get filled.




The VIX briefly went fractionally green a few times, but was generally -2% across most of the day..and this is clearly not surprising considering the ramp in the main indexes.

Near term, we do have a small gap in the 11s that might get filled before the next up cycle (thanks to poster roxie' for the reminder).

Lower bollinger on the daily is 11.33..and bears should perhaps look for a reversal candle somewhere in the mid 11s in the coming few days.

What is most notable from the last few months on the VIX, the spike highs are getting ever lower.. 23 in late Dec, then 19, and most recently, the 15s.

It remains a fearless market...but it won't forever be so...even with the Fed out there.

more later..on the indexes

Closing Brief

Another day - which for the bears, was nothing less than a waking nightmare. The sp' decisively broke the Oct'2007 high of 1576, and closed comfortably in the upper 1580s. The daily charts are offering upside into the weekend. VIX tried to rally...but still closed in the 12s.



Today was a tough one. If you reflect back to how we opened Friday, and where we are now, from a mood of 'omg, the jobs number is dire!', to one where....I guess I should merely say.... 'normal service has resumed'.

After all, since when did the US economy need net job growth, when it has the Bernanke who will gladly print ALL the dollars necessary to fund the Federal Government?

Strange times, and one day...they will become legendary, and perhaps even mythical. The financial historians of the late 21st century will find it hard to imagine how we kept repeating the same bubble nonsense..over and over.

As for the indexes, the hourly charts look insanely over-extended - moving from RSI 30 to 70 in just 4 days, but hey, the daily and the weekly charts are back to a bullish outlook.

more later..on the VIX - which remains one notable issue in that its not breaking new lows.

3pm update - closing hour to a rough day

With the sp'500 breaking through 1576, and comfortably holding the upper 1580s for some hours, regardless of how we close today, it was another rough day for the bears. Meanwhile, dollar holds moderate gains, VIX is still 2% lower, and the metals (esp' Gold) look weak.



USO, daily2


I think I speak for many, when I say that today felt like the market went parabolic. Its almost true, at least for the morning session.

That's the scary thing now, there is no ceiling any longer on the sp'500, its gone. The big 2007 top has been taken out, and bulls have infinite open air to the upside.

*I'm going to refrain from meddling in the indexes for 'some time'. I'll certainly follow them, but for now, I'm reverting back to Oil and the metals (short side only).

I hold USO (short) overnight.

The updated Fibonacci chart for the sp'...

There is a count on there still, but I'm really not sure about that anymore.

What is disturbing is that even 1500 now looks a long way down. Hell, we couldn't even break 1538 last Friday, how we gonna do it on the next cycle from yet another higher level?

UPDATE 3.20pm...

You can see the VIX is TRYING to coil back upward.

A close outside of that down channel in the 13s should be the aim for bears tomorrow. VIX 13s would still be a lousy way to close this week though. Until we're in the 16s, bears face a fearless market...lost in delusion.

3.40pm...Did you notice the miners, see GDX..almost -4%....headed for 25/20 across the months ahead..assuming the precious metals remain weak.

What a train wreck of the sector.

back at the close.

2pm update - daily charts support the bulls

Whether we see a minor late day pull back now seems irrelevant. The daily charts are still offering at least a few more days to the upside - this is especially now the case, even for the lagging Trans and R2K. VIX remains weak, as do the precious metals.



USO, daily2


With the weekly 'rainbow' charts now flipping back to outright bullish, its now arguably plain stupid to call for any bearish possibility.

Arguably, the bears can only get confident if we take out that 1538 low, and right now, that's a good 3% lower..and looks just so far out of range.

re: Oil. There is likely upside into the close today, but its an interesting one to consider as a short from the 33.90s.

*a late VIX update... from Mr T.


2.15pm..USO spiking into the target short zone of 33.90s...standing by for short of that (will hold overnight).

Am short USO...lets see how that plays out early tomorrow.

Meanwhile..main indexes look stuck around sp'1588

1pm update - bears waving white flags

Market remains comfortably holding the morning gains of over 1%. Both Transports and R2K are leading again, both with gains of 1.6%, but still below recent highs. VIX has briefly gone green, but its arguably to be dismissed as noise. Bulls are clearly back in control.




Even if today was merely the last part of a capitulation wave higher, its still zero consolation.

The short-stop levels were clear, for the big/serious money, 1573/74 was an obvious 'get out' level..and we're already almost 1% above it.

Daily charts offer NO hope in the immediate time frame for the bears.

Its time for bears to wave the white flag of surrender.

*I just exited a SPY put THERE is your capitulation.

Congrats.. bulls.. you win.

1.30pm... a look at Oil , via ETF of USO

I'm tempted for a 'brief' short from the 33.90s., maybe before the close.

12pm update - to the proverbial moon

The markets brief relapse from the 'everything is okay' delusion last Friday morning now seems like a very long time ago. Mr Market is comfortably trading in historic territory, in the sp'1580s..and is showing NO sign stopping. Precious metals are very weak.



SLV, daily


What to say? Bears have again seen what seemed like an initial down cycle, rip back upward, and we're now in record territory on another headline index.

Yes, the transports and Rus'2000 small cap are still lagging, and below recent highs, but...the main market is simply ignoring it.

VIX is trying to floor, but again, the daily charts aren't showing anything good for the bears now.


Worse of all though, the weekly index charts are back to an outright bullish trend.

Baring a break of that 1538 low from mid March, bears have nothing to look to.

Time for lunch.

*VIX update coming...

11am update - bears back in the twilight zone

Once again..all hope seems lost for those in bear land. The snap lower last Friday now seems like months ago, and bulls are filled with hysteria on new expectations of sp'1600s within weeks, if not days. For the bears...this is nothing less than a waking nightmare.




Daily MACD cycles for the indexes/VIX are telling the story..and are simply just ticking higher/lower respectively.

NO sign of a turn yet...and indeed, all else being unchanged, it doesn't look like the bears have any hope of a turn for another 2-3 days at least.

So...this week is now arguably a write off.

*With yet another day higher, the sp'weekly (rainbow) chart has just flipped to an outright bullish green candle.

It should be noted the upper bollinger is now @ 1610..which is almost 2% higher from where we currently are.

A lousy can't get much worse..right?

ohh, thats right..of course it can.....sp', its almost going parabolic like Bitcoin.

This could just be one sub' wave of a much large wave, that even stretches into next week.

11.22am...If I'm reading it correcting, the NYSE advance/decliners ratio is a bizarre 0.3..

roughly 3-1 AGAINST the bulls.

Can someone out there confirm this please? I really don't follow that aspect much, and I'm unsure if I'm reading it backwards, although I think I'm right.

10am update - early FOMC release

Good morning. With the FOMC minutes being released early, bulls are getting an early boost. After all, there is again no sign that QE will end. The sp' breaks the Oct'2007 high of 1576.09, by the narrowest margin of 0.01pts. Precious metals and Oil open somewhat weak.




Its difficult what to make of the current action. I suppose you could call it 'bear capitulation', but what is clear, we ain't down.

The only indexes that still count well are Trans and the R2K.

I suppose some might count the recent drop as a sub' wave'4, and this is the 'final fifth', but who knows. Its frankly,,getting messy.

The transports and Rus'2000 continue to remain well below their recent highs, but I'm starting to wonder if this disconnect is not something that might last weeks..rather than just a few days.

As many realise, we could trundle sideways or slightly higher for much of April. May remains the primary month for significant downside, and even then, how is that going to happen whilst QE-POMO is continuing?

I suppose the one thing bears no longer need be concerned about later today, is what those printing maniacs at the Fed have to say.


UPDATE 10.23am... sp'1579..and still no sign of stopping.

In fact, if you look at the daily MACD (blue bar histogram) cycle, its not even positive cycle yet..and could easily battle higher for another few days.

So, all those who were touting sp'1600s before a significant pull looks like they were right after all.

10.35...Metals look weak...GLD is a lousy long, unless its >158

SLV is even worse of course, always moving 2x the amount of GLD

Sp'1480s remain primary target

Another day where the bulls can tout new index highs for the headline Dow and SP'500 indexes. Yet, as some are noting, there are still some signs that we're due a significant multi-week down cycle. The last two days have done nothing to negate the mid-term outlook.

sp'daily5b - best guess

sp'daily5 - mini H/S formation, with larger HS


I've adjusted my 'best guess' chart a little. I'm making the assumption that the Trans and Rus'2000 indexes are telling the real story. They both look like they are completing a wave'2 bounce - from the Friday low, and thus a wave'3 is STILL due.

I realise that to extrapolate from one index to another is not always a good thing, but right now, that's the best I can come up with.

A wave'3 - especially when taking into account a possible mini H/S formation, would be suggestive of sp'1505..if not even 1485 in the very near term.

Yet, I have to admit, when I look at daily chart '5, that sure looks a 'bold' and overly bearish outlook, but then, that's what wave'3s are meant to be, right?

Weekly chart...still bearish blue

I will again highlight the overly simplistic, but still useful weekly rainbow chart....

Despite the last two days, we still have a blue candle - the fourth consecutive one, and it is still a very important warning that we are probably at a key cycle top.

*For the record, I'm still short from the sp'1550s, and seeking an exit in the next 3-5 trading days, preferably <sp'1530

Looking ahead

Wednesday is again quiet in terms of econ-data, but we have the FOMC minutes @ 2pm. Mr Market will be very much focused on that. Its hard to call how the algo-bots - and mainstream media will interpret what might have been said at the last Fed meeting.

What is clear, price action will likely be more dynamic than today.  Considering the hourly index  and VIX cycles, I have to believe we'll see a market snap down.

Video bonus - from Gordon T Long, with guest Ty Andros. It is somewhat serious macro-economics chat, but highly recommended for those interested in where we are headed.

Goodnight from London

Daily Index Cycle update

The market is now split in two. The Dow and SP' have broken to new highs, yet the two leading market indexes - Transports and Rus'2000, are both still considerably below their recent highs. Considering they lead the way up, traders should be very mindful of those two laggards.





What can we make of today?

The Dow unquestionably broke to a new high, whereas the SP' merely put in a fractionally higher high..which in itself is arguably a double top formation.

Meanwhile, the two main powerful bullish leaders from winter 2012 - Transports and Rus'2000 are still well below their highs.

I have to place more respect in those indexes that lead the way higher, than the more media/mainstream indexes of the Dow, SP, and even the Nasdaq - although the latter is ironically the biggest laggard of all.

Underlying MACD (blue bar histogram) ticked higher again - to be expected, but is still in negative territory. Bulls need to keep pushing here, or the snap lower could be fierce.

As I noted last evening, if what we are seeing is a mini-H/S formation, then it is suggesting we'll be trading in the sp'1505/00 zone within the very near term..and other daily charts support the idea of sp'1480/70s within a few weeks.

a little more later