Wednesday, 24 April 2013

Volatility on the turn

With the market having a rather flat day, the VIX was similarly unchanged, closing +0.9% @ 13.60. If the near term index/VIX count is correct, a sub'3 wave is set to begin, and the VIX will have its first real opportunity of breaking the key 20 threshold since last December.




The down trend appears to be over for the VIX, and it closed with a very appropriate small doji candle - arguably a very good candle to suggest a turn/floor.

The underlying MACD cycle is still ticking lower though, so it will probably not be until Friday or next Monday that we'll get some solid confirmation that the recent decline was merely a wave'2 retracement.

First target are the low 15s, which is viable as early as Thursday morning. The primary target for Friday is VIX 17s, but if the market gets rattled (GDP data?), VIX 20s are a possibility into the Friday close.

more later, on the indexes

Closing Brief

There was a touch of weakness into the close, and the three day bounce looks to be concluded. If the count is correct, a very sharp decline down to the sp'1490/80s should begin, with VIX breaking the key 20 threshold. It could be a pretty exciting few days ahead.



It seems the algo-bots managed a few short-stop runs against the bears today. The little push to 1583 no doubt saw some bears get scared away, and maybe even a few bulls were chasing it higher.

If this 3 day bounce was indeed just a sub wave'2 - after last weeks '1 down, then the 3 is next, and that's where the real action will be.

I am somewhat looking forward to Friday.

the usual bits and pieces across the evening

*I hold heavy short overnight.

3pm update - tired market

We're probably seeing a late afternoon short-stop run by the algo-bots to sp'1582, but we're still due for weakness in this closing hour. Near term target remains sp'1560/55, with VIX in the low 15s. The big question is how will the market react this Friday to the Q1 GDP data.



Today has turned a little tedious, but perhaps we can see some weakness in this closing hour.

Regardless, I hold heavy short into Thursday.

GDX is seeing a bounce, but mid/long term trend remains dire.

Metals themselves are higher, but with the key multi-year support broken, further downside seems likely into the summer.

UPDATE 3.21pm bears should be seeking a close under the hourly 10MA @ 1579. Anything under that, would be a bonus.

VIX wants to close least a little...

VIX in the 15s seems viable early tomorrow, on any index gap lower.

3.37pm... sp'1579s...and VIX is creeping higher...looking okay..especially for Friday.

2pm update - bots want to do another stop run?

Market still looks tired after its 3 day bounce.There remains the usual threat that the algo-bots might want to do another stop run before the close. Regardless of any minor upside spike, things look okay into late Friday. A VIX close in the 14s is still sought today.




Market is essentially flat lining, but those hourly charts are warning of weakness in the remaining two hours.

..other bits...

-AAPL sure doesn't look good. After the spike into the 420s in Tuesday AH trading, a daily close in the sub 400s looks due.

-Oil has reached the target range of WTIC 90/91 - with USO in the mid 32s. Arguably, a very obvious is 29...and then 28/27 by late May - which would be Oil <80.

USO,  60min

I'm not short USO right now, but will likely chase it lower within a few days.

1pm update - bears are ready

Market looks exhausted after a three day bounce. Hourly charts remain highly suggestive of significant weakness into the close, and at the Thursday open. Initial target is sp'1560/55, with VIX 15.25. Precious metals have lost most of their gains, with Silver already red. Oil is strong.




Its looking rather good right now for those bears who have been building short positions since yesterday.

Hourly charts look good for index weakness, and a VIX that 'should' close in the 14s.

*I remain heavy short, will consider a 'brief' exit at the Thursday open, if we gap into the sp'1550s - with VIX 15s.

VIX update..from Mr T.

stay tuned

1.37pm - micro-chop/rally, back sp'1580.  Doesn't do anything to negate the turn that is due.

12pm update - just...waiting

Market looks maxed out in the low sp'1580s with VIX in the mid 13s. Bulls have had a good three day bounce. Its time for the bears to swing things back lower, and take out that 1536 low. Seeking the first initial sign of a turn lower, by the close of today.




Things look stuck here. The question would be...who wants to go long at these levels?

What still bemuses me is the notion that Q1 GDP will come to meet market expectations of 3.1%. 

VIX update coming...

11am update - choppy morning

Market is seeing some moderate chop so far today, a little dip to 1575, but the bull maniacs have kicked it back to 1580. VIX is back to flat. Hourly charts still suggesting market downside in the late afternoon. Precious metals and Oil holding gains.



Current ETA on the indexes showing conclusive trend changes remains - the 2-4pm time frame, certainly before the close of today.

Long day ahead...a close <1570, with VIX 14s, would really clarify things.

11.42am  VIX looks like its made a good floor in those mid 13s..and the only issue now is how high might it jump in the next up cycle.

10am update - as far as the bears can tolerate

The market has managed a morning open in the low 1580s, a mere 1% from the April'11 high. Despite the moderately higher open, the VIX is largely flat. Hourly charts are highly suggestive of index weakness, increasing across the day, with a VIX close in the 14s




So, Durable Goods Orders data was a real lousy number, but that still hasn't stopped the market breaking to new highs in this cycle.

Bears really can't sustain a daily close in the 1580s in my view, or the 1597 high will be in imminent danger.

Maybe the best the bears can hope for today is another hacked twitter news account?

Regardless, I ain't too concerned...yet. Next up..the EIA report at 10.30am.

**at current rate, the hourly charts suggest the indexes will see the first real weakness in about 3-4 trading the close of today. VIX looks to have the same kind of time frame.

So...lets see if this nonsense gets stuck..and rollsover (significantly) into the close.

10.10am ...looks like we're done. finally. Now its just a case of waiting.

Pre-Market Brief

Good morning. Futures are a touch higher, sp +2pt, we're set to open around 1580. Today will be important, bears need to restrain the bulls from achieving a fourth daily close higher. Bears need a close <1570.  Precious metals are almost 1% higher, Oil is largely flat.




Well, futures have been largely positive all night, but they are off the highs.

The hourly charts are pretty clear, we've due a new index down cycle, the only issue is how low. If it doesn't take out 1536 within 3-5 days, then bears have a real problem.

Considering the weekly charts though, I'm holding to the original outlook. We'll see find out if I'm right..or not.

Good wishes for Wednesday !

*I remain short, and looking to hold until late Friday afternoon, with an exit in the 1550/40s.

*Durable Goods orders: -5.7%  vs -2.8 exp. not pleased!

Ohh, I just noticed..AAPL - $11 @ 394.... after Tuesday AH high in the 420s. 

Weekly charts still warning of trouble

The main indexes are making a play to take out the sp'1597 high. Yet, a fail here would be equally possible, and would likely mean we will be trading <1536, with a swift move to break the big 1500 level in subsequent days. The remainder of this week will be very important indeed.


sp'weekly2, rainbow

sp'weekly5, fib retracements to the Oct'2011 low


So, a third day I was seeking. Yes, we closed a little high for my liking, but I'm not going to get too obsessive about a few tenths of a percent above my RS target zone of sp'1573.

The obvious question remains, is the current market still possibly building a larger H/S formation ?

sp'daily5a - H/S formation

The break/snap levels are very clear. Bulls need >1597, whilst the bears need to take out 1536. From a trading perspective, its simple, and for those using tight trading stops*, risk can be made very limited.

*although today's mini flash crash of sp'15pts in barely a minute, was again a reminder of the fragility of the current market. A lot of traders were stopped out, only to see prices higher than their exit a mere minute or two later.

For the moment, baring a daily close in the 1580s, I'm holding to the above scenario in the days ahead.

**Bonus chart...

Copper, monthly2, downside Fib levels

For those who are especially bearish out there, take a few minutes to stare at the above chart. Its arguably hugely important. A break below the key $3 level opens a swift move down to the low $2s, where there is support around 2.15/2.00. If Copper breaks, I'd have to expect the precious metals will follow in a secondary..and much deeper collapse wave - one that very few are considering.

Looking ahead

Wednesday we have a few things for the market to cope with. First, there is Durable Goods Orders @ 8.30am, and then there is the EIA oil report @ 10.30am. It will be interesting to see if we have any further signs of econ-weakness out there.

Market is still expecting GDP Q1 of 3.1%, which I find unfathomable, but then, maybe there are some reasons I am not taking into consideration. I am still looking for a negative number, but then..I'm an econ-permabear.

So, lets see if the bears can break under the lower (hourly chart) channel - which by the Wednesday close will be <1570. That's not asking much, barely -0.5% on the indexes, with VIX in the 14s. 

*I will likely hold heavy short into Friday afternoon. Best bear scenario right now are the sp'1540s late Friday with VIX back in the high teens.

Goodnight from London

Daily Index Cycle update

The main indexes closed higher for a third consecutive day, with the sp' @ 1578. We're again just 1.3% from the April'11 high of 1597. It will be critical for the bears to see a market reversal before this week concludes. If the bulls can break 1597, then we would be back in the twilight zone.





So, another day higher, but then, that was broadly as I was expecting. The early morning bounce into the 1570s was indeed as expected, and I took a major short position.

All things considered - not least the weekly charts, I would be VERY surprised, and somewhat dismayed if we break above the recent 1597 high. Frankly, I'd also be surprised if we get any daily closes in the 1580s this week.

Sure, we could open a little higher tomorrow, but I'd most definitely be seeking a close in the 1560s. Further, bears will need a VIX back in the 15s by Thurs/Friday.

*I remain heavy short overnight, seeking an exit in the sp'1550/40s by the Friday close.

a little more later...