Thursday 25 April 2013

Volatility a fraction higher

With the indexes slipping in the late afternoon, the VIX battled back from moderate declines of 3.5%, to close +0.07% @ 13.62. VIX looks to have secured a floor in the low 13s. Daily charts offer imminent upside to the 17s. Key weekly resistance remains the 20/21 zone.





So, the VIX closed a fraction higher, but it failed to close in the 14s - which had been a late day hope of mine.

Despite another close in the 13s, the VIX daily chart looks like a turn is very likely to be confirmed within a day or two. First upside is the upper bollinger zone area in the 17s.

The ultimate issue in the next down cycle is whether the VIX can break into the absolutely important 20s. A daily close in the 20s would be something we've not seen since last December.

If the market gets upset at deeply disappointing US growth (lack of) tomorrow, then the VIX could easily make it into the 17s by late afternoon.

more later...on the indexes.

Closing Brief

The market was just 5pts shy of fully retracing to the recent sp'1597 high. The moderate weakness in the late afternoon is 'interesting', but bears can't be confident until we're back in the sp'1560s. Even then, the mid-term bearish picture needs that 1536 low to be taken out.



Seeing the market break into the 1590s was a really disturbing sight today, and it sure started to feel like a capitulation day for the bears.

Tomorrow will be massively important. We have the big Q1 GDP data, with the market on the edge of either a major new cycle lower - <1536, or...breaking into the historic 1600s.

Which will it be...well, the weekly charts are now bullish, but the econ-permabears (inc' yours truly)... are looking for a negative growth number tomorrow. If that is the case, I'd have to believe we see a major Friday drop, turning those weekly charts back to neutral.  We shall see.

The usual bits and pieces...across the evening.

3pm update - day of capitulation?

Regardless of how we close today, the bulls have to be pleased with themselves. The break into the 1590s is a major achievement after last weeks downside action. Bears need an hourly close under the 10MA, but that is 1585, and won't be easy. VIX is vainly trying to hold the 13s.




No matter how we close, anyone on the bearish side will be glad to hear the looming closing bell.

Friday could be very different from today..or much worse. I guess its laughable, but that's how it is. Time to revel in this latest cycle of delusion?

Precious metals and Oil remain VERY strong, the latter I am especially surprised to see back in the USO mid 33s.

UPDATE 3.01pm  sp'1587s.. hmm, thats the strongest hourly down candle (not counting the flash lower), since this rally started last Friday.

VIX almost green.

3.05pm...MACD hourly cycle about to go negative cycle, first time since last Friday. 

Oil cooling down.....VIX to go green. hmmm

Market breaking the hourly air down to what is arguably still a valid channel @ 1580.

3.11pm..VIX is only +1%, but its looking like it wants to break a lot higher than that tomorrow.

Its turning out to be a little interesting today after all. Any close <1590 would be something.

VIX wants to close in the 14s, and that will open up 17s tomorrow. A very interesting candle on the VIX daily charts.

3.20pm... 40mins to go... VIX holding 1% gain..a close in the 14s would be some major consolation after whats been a lousy day.  SP' can't hold the 10MA @ 1585.

Best case for the close,  sp'1580..vix 14.25

3.30pm.. somewhat amusing to see the cheer leaders on clown TV get a little concerned about this late day sell off. After all, we're only 'allowed' to go up, right?

VIX still wants a close in the 14s

3.35pm.. Bulls suffering from a case of full moon madness? Lunar eclipse this evening, go look to the east... or see

VIX looking good into Friday...

The daily charts offer 17s tomorrow, but yes, thats a 'best case' scenario

3.45pm... A giant pink moon rises over the city, its quite a sight! Meanwhile the bulls/bears are battling it out, certainly a daily close in the 1590s looks out of range for the bulls.

Bears really need a close <1585, with VIX 14s, that is still just about viable.

2pm update - weekly charts back to bullish

With the market holding onto the sp'1590s, a quick look at the bigger weekly charts should further concern those bears with a mid-term outlook to the downside. Gold and Silver continue to build gains of $30 and $1 respectively. Oil is similarly strong, +1.5%. VIX 12s now look viable.

sp'weekly2, rainbow


Suffice to say, its about as simple a chart as you'll ever see, but it does summarise whats happening..and that is, a clear turn back to the bullish side.

First target is obviously the 1597 high.

After that, the psy' 1600 level, with the upper bollinger in the 1620s.

I'm aware of a number of chartists who have been seeking a wave higher into May with targets in the low 1600s.Unless we strongly rollover into the weekend, it'd seem those chartists were right after all.

Gold/Silver now in confirmed breaks above the recent strong declining trend. GLD to 148, seems a very valid target by mid May.

GLD, daily

SLV chart is weaker than GLD, but still, the trend is now starting to also turn higher.

UPDATE 2.18pm stuck at 1591/92, but thats a mere 5pts from the recent high. If the market wants to boot the last set of bear stops, it won't take much.

Metals and Oil accelerating to the upside as the chasers come in.

A pretty nasty day. Tomorrow can not be worse...?

1pm update - incredibly over-stretched

On any basis, this market is now in the over-stretched zone. The bull maniacs have managed to retrace almost all the declines of the last down cycle, and now they are threatening a breakout into the sp'1600s. Yet...tomorrow..might be somewhat different.

sp'60min - bollinger/Keltner bands



The hourly charts will be offering the low 1570s tomorrow, but anything under that will be pretty difficult.

Yet, the VIX looks arguably floored in the low 13s. As they say, 'the only way is up from here'.

Oil has effectively back-tested the old busted floor.

USO downside target remains 28/27.

12pm update - rough morning in bear land

With the market breaking back into the sp'1590s, bears are obviously dismayed, and its understandable that talk of sp'1600s is again back. Yet, despite the index gains, VIX is only down 1-2%. Is this merely a fierce and nasty capitulation bounce?




*I've meddled with the micro-count. Is it really a 5 wave up? Its just a vague guess, and it all gets thrown out if we break >1597.

I am merely sitting back, and wondering just what sort of index action we shall see tomorrow.

Even if GDP data comes in bad (although thats a very subjective issue), will the market just rally into the sp'1600s, on the notion that 'QE' will continue, and thus is good for all asset prices?

*as it is, I'm holding short, am obviously getting scorched, but will hold into Friday. Reckless, or just 'overly tolerant' decide.

12.20pm. What is absolutely clear, until we're back <1570, bears should have little confidence in the immediate term.

For those who say 1560..or even 1550s are impossible by the Friday close, I would refer them to April 15'th...a mere ten days ago.

11am update - bears getting burnt

Opening minor gains are being built upon, and the market is disturbingly back in the sp'1590s, with VIX in danger of losing the 13s. Notable mover is the USD which has strongly rallied from opening declines after expectations by GS of an ECB rate cut. Metals holding strong gains.




Its really starting to get ugly out there, and if we start breaking new index highs - not just on the SP'500, then a LOT of charts will have to get trashed at the close of today/tomorrow.

I suppose this could just be one of those extreme capitulation moves before a big turn, but still, for those bears still out there, today is really starting to get annoying.

*Oil is kinda flat again...

A full back-test of the original H/S neckline @ 33 seems the highest it can go. Unless you think Oil is going to ramp >$100 this summer, this is arguably in the re-short target zone.

11.27am... we seem stuck at 1589/90.   Oil is still rising though, and coming up to test the old USO neckline of 33.00 

10am update - seeking a morning reversal

Opening moderate gains for the indexes, but its very minor and could fail at any time. The USD is starting to recover, and both the metals and Oil are showing some weakness. VIX is flat..but  it appears the VIX is currently offline.

*CBOE seems to be having 'issues' see CBOE STATUS




*Unless I'm mistaken - and the price movement in VIX is ZERO, VIX quotes are currently offline.

Bears really need to see a strong reversal today..with a close <1570.

10.05am.. VIX is on the resolved (if there was one), but 30mins of zero movement is odd, especially at the open.

10.19am.. sp' 1586..a mere 11pts from the high. This is getting real crazy. I guess some of the wave counters will all be re-numbering now.. Lets just see how we close.

Despite the index gains, VIX is only -1%, which is arguably mere 'noise'.

10.29am..well, this is clearly starting to get real ugly, and we're a mere 8pts from breaking a new sp' high.

Now it comes down to personal conviction on the mid-term bigger picture.

Mr Market is probably asking the bears 'have you capitulated yet?'

Pre-Market Brief

Good morning. Futures are moderately higher, sp+6pts, we're set to open @ 1584. The USD is significantly weaker, -0.7%, and this is no doubt helping to take the lid off precious metals which are over 1.25% higher. Oil is set to open flat.




So, we're set to open higher (yet again), and I can understand if some of the bears are now really getting rattled, and wondering if a new cycle high >1597 is about to be put in place.

Arguably, the bears need to see a STRONG intra-day reversal today, with a close in the sp'1560s. That is possible, but I realise to many that now looks improbable.

We shall see.

*awaiting weekly jobs data from the dept of lies.... 339k  vs 350 exp.

Isn't it great that everyone in the USA is employed now, along with all of those in southern Europe.

9.22am... I'm not sure why, but Oil just snapped lower, from +0.2% to -0.5%.  Sp' still set to open in the mid 1580s.. a mere 10-12pts away from breaking the April'11 high.

9.34am...indexes UP... VIX...holding flat.

I think the VIX is the tell.

Baring a ramp across the morning, I'm still holding to the original outlook. 

9.40am... Is the CBOE even open ? I mean, the VIX is utterly flat...problem with the VIX quotes?

Falling into the weekend?

The US equity market closed rather mixed. The hourly index charts offer general downside into the weekend. An equity rollover at this point would be highly suggestive that a sub wave'3 is underway, which would probably equate to sp<1500 and VIX back in the 20s.




It turned out to be a bit of a quiet day. The little doji candle on the sp' daily chart appropriately summarises the day. Perhaps it does indeed signal a 'minor chop' top..and Thursday will see day'1 down of the next wave.

Bears should be seeking a weekly close under the 10MA - currently @ 1554. That's only 1.5% lower across the next two trading days, so its easily viable. So long as the recent high of 1597 is not taken out, I will hold to the original outlook.

As for the 'best guess', well, we'll know soon enough if that needs to be trashed, or has any chance of occurring. Bears need to take out last weeks 1536 low, and proceed at least down into the 1490/80 zone. A few weeks bounce into mid May, and then something special ?

Oil, also ready to rollover?

I'll close tonight with two charts on Oil - via the ETF of USO. Oil has seen a significant bounce back into the low 90s - as I was expecting. The only issue now is when will it get stuck, and rollover.


USO, daily2

Primary downside target -as based on weekly charts in May is 28/27, which would be suggestive that WTIC will break <80. That is quiet a bold outlook, so, it will be interesting if it turns out to be right. Certainly, Oil back in the $70s would surely mean the equity market is back in the mid/low sp'1400s.

*I'm not short USO right now, but probably will be within the next few days.

I am heavy short the indexes, looking to exit late Friday..on the next VIX daily spike, 17+

Goodnight from London

VIdeo bonus to end the day...from Oscar

Daily Index Cycle update

The main indexes closed somewhat mixed. The Dow -0.3%, the sp' flat, with the Trans and R2K rising by around 0.5%. Near term trend suggest further upside, but if last week was a key cyclical top, then the current wave higher should be ending at this time. The market remains utterly complacent.





Many of the index charts are still broadly offering potential H/S formations. Of course, we won't have that confirmed until the neckline is broken below, which for the sp' is the recent 1536 low.

Best guess remains that sp'1597 was a key cyclical multi-month top. In particular, the power of the VIX last week in my view is good evidence that 'something has changed' since the last intermediate low last December.

It is difficult to ascertain how we might open Thursday, perhaps there will be brief opening gains, but latter day weakness?

More than anything, the hourly charts are highly suggestive that the bears have a chance at knocking the market lower, all the way into the Friday close.

a little more later...