Thursday 23 May 2013

Volatility up a little more

With the indexes opening around 1% lower, the VIX managed gains of 8%, but with the indexes battling back higher, the VIX slipped broadly lower across the day, closing +1.8% @ 14.07. Near term daily trend is suggestive of somewhat higher levels, the 16s look viable for Friday.




So, VIX did manage to break into the 15s, which was a good sign for those seeking lower index levels for Friday, and into next week. Yet, 15 is still a very low VIX, and even the high teens really wouldn't get me too excited for June.

The hourly index charts are actually offering a wave'3/C as low as sp'1600/1590 in the next day or two. I suppose it could be argued that would surely kick the VIX back into the low 20s, won't be easy.

Daily VIX candle is a giant black/fail candle, but...considering the hourly index charts, I'm inclined to dismiss this black candle.

more later..on the indexes

Closing Brief

The main indexes recovered most of their opening declines, with the Trans/R2K closing broadly flat. The sp' close of 1650 has no doubt got many of the bulls pleased, but more likely, its merely a wave'2/B bounce, and Friday looks set for considerable declines, perhaps even to sp'1600.



An interesting day to be part of. Certainly, it was always an unknown as to if we'd just gap lower or higher. At least I wasn't long overnight!

We have seen what is arguably a very natural wave'2 bounce, although of course, it was partly inspired/fuelled by a QE of 3-4bn today.

As for tomorrow, it could be pretty memorable for the bears.  There is no significant QE to be concerned of, and the daily price momentum is increasingly swinging in favour of the bears - despite today's bounce.


*I am heavy-short the indexes overnight, via IWM. Seeking an exit in the sp'1630/25 zone by the Friday close.

3pm update - weakness into the close?

The main indexes have seen a considerable multi-hour bounce, but it does nothing to change momentum on the daily charts. The closing hour is a tough one to call, but who wants to hold long into tomorrow, with Asia opening later this evening?




Looks pretty good overall. I suppose the maniacs might manage a spike in the closing hour, but there is awful lot of resistance from 1655/60.

*I am now heavy short the indexes, via IWM. Seeking an exit around sp'1630/25, by the Friday close. If Mr Market gets upset though, those declines could be 1600/1590.

As they risk no gain.

I for one...prefer the edge.

3.01pm..a close <1645 would be a real bonus..and break what is arguably just a large 4-5 hour bear flag.

Regardless, with no QE (of significance) tomorrow...I feel pretty comfortable with holding short overnight. Will be an interesting Friday.

3.15pm..back to sp'1654/55...hmm. I guess 1660 still possible, but if I'm 5pts out on the top...I can live with that.

Daily charts look least in terms of the channel break, and general momentum...


1600 this cycle?

3.25pm... NYSE under Thunderstorm...ohh the humanity!

sp'1650....bears should seek a close <1645..that'd really help!

3.40pm ..sp'1650...hmm, just another few pts lower would be kinda nice.

back at the close.

2pm update - last micro wave to come?

The market has had a good bounce this morning, and we've seen a moderate wave lower again. The issue is whether we get one final lunge higher this afternoon, before a much stronger wave lower tomorrow.  Oil is weak, -1%, USD -0.7%.



I still think there is a very real risk of one final up cycle, something to really annoy those bears who already re-shorted.

Right now, best upside target is 1655/57, perhaps by 3pm.

I remain...waiting.

UPDATE 2.07pm... on standby.  sp'1650....another 5-7pts...

2.10pm...1652s.... oh yeah!  Come on Mr Market...keep pushing.

eyes on the VIX...seeking a secondary wave lower..and then UP!

2.20pm..might only be 10-20mins away from the VIX cycle complete..and indexes maxed.

Looking good...IWM by.

2.25pm..well, we're approaching the magical time of day... 2.30pm...OFTEN the time when an afternoon bounce completes.

Eyes..on the VIX..for a floor.         Meanwhile..sp'1652...just 3-5pts shy of where I'd like it.


Could be real close now.

2.32pm... I'm now HEAVY short indexes, via IWM.

There is small possibility I am still early, with a last hour ramp, but I think..that is it.

I will hold short overnight, and seek an exit near the Friday close in the sp'1630/25 zone.

 2.35pm... secondary target is indeed around sp'1625....tomorrow.

I suppose 1600/1590 is viable if Asia gets upset again overnight.

1pm update - still broadly climbing

A little micro down wave, but the broad trend is still to the upside today. There is probably a little of the QE money still out there.  Daily cycles are highly suggestive of much lower levels by the Friday close..perhaps as low as 1600/1590s. First things first though...still bouncing.



*I've added a vague 2 type count. Impossible to know until near the close.

What does seem fine to target is a hit of sp'1660. There is multiple resistance there, and I think thats where I will start hitting buttons.

Looking to go short IWM.... long VIX....probably around 2.30pm.

UPDATE 1.35pm...the down wave continues, but I still think its a B.

1660 remains viable...but going to need some real kick in the next 60-90 mins.

12pm update - partly QE inspired bounce

This mornings bounce is natural, but is no doubt also being fuelled by the latest 3-4bn dose of POMO. That market looks set to battle higher for another 2-3 hours. Best guess is sp'1655/60, by 2-3pm, and by then, the VIX will be red. USD is very weak, -0.8%



Everything looking on schedule.

First upside resistance, the 15min'  10MA of 1568..but that is falling fast.

VIX update from Mr T.

Market continuing to rise...

12.33pm... sp'1660 looks just about possible, I'd be very surprised if we manage anything >1665. A close in the 1670s would be.. problem, but the daily charts all suggest Friday could be market carnage.

I remain hurry..yet.

12.40pm.. minor down cycle..could be a B wave.

The patient bear..gets the better price (usually)

11am update - market trying to battle higher

The main indexes appear to have floored, at least in the immediate term. VIX has already strongly pulled back from its earlier leap into the 15s. The QE money is probably helping, and we're due a natural guess...sp'1655/60, by 2-3pm.




Suffice to say, bounce looks underway, and we could cruise higher for a good 3-4 hours.

Its possible we'll rally ALL the way into the close, but I'd still be bearish for Friday.
time for an early dinner

UPDATE 11.34am...everything on far.

A re-short sometime after 2pm....I'll be going for IWM...but I might also pick up a VIX call block.

10am update - time for another QE

The main indexes are lower, but there is a QE of 3-4bn due, and the smaller 15/60min cycles are in an oversold state. Precious metals are higher, but starting to fade again, Oil is lower, but looks set to bounce into the late morning.




*There is an awful lot going on today, I'll do my best to cover it!

The declining hourly 10MA will be first resistance on the next bounce - currently 1667..but falling fast.


I remain on the sidelines, seeking a re-short later today. I expect half of the declines to be recovered, but it seems a little unlikely that indexes will turn green.

10.05am.. here comes the turn..I believe. No excuse for the bears with short positions not to be exiting now.
*No QE tomorrow, hence my confidence in a re-short later today...and into the Friday close.

10.20am... sp'1660...@ 2pm?

Thats the guess

10.30am... pomo money is probably kicking in about now.  15min cycle due to go positive in about an should be 'general' upside until 1pm..if not a bit longer.

Pre-Market Brief

Good morning. With the Japanese market falling 1150pts (7%) overnight, the US futures are somewhat concerned, sp -14pts, we're set to open at 1641. Precious metals are sharply higher, whilst Oil is -1% or so. USD is -0.5%




So...Japan is upset, and we're seeing an immediate gap lower, and one which will decisively break the accelerated upward channels on ALL daily index charts.


I will NOT be chasing this market lower at the open.

First, we have the 3-4bn of QE at 10am, and second, we're due a natural cycle higher, at least 'a few hours'. Third, there are a few pieces of econ-data between now and 10am, some of which the market might use as an excuse to bounce.

So, if the market finds a floor by 10/11am...a rally into the late afternoon would be very normal.

What is now clear, the 4-5 weeks of algo-bot melt are over, the near term upward channel is busted, and volatility is on the rise.

Could be another wild day, but as noted..bears should be VERY concerned about the QE this morning.

UPDATE 9.21am ... Oil is especially weak, -1.6%.

**more than anything this morning...bears BEWARE..of 10am QE. Nevermind the fact that the smaller 15/60min cycles are oversold, and due at least some level of bounce.

Good wishes for today!

Keeping things in perspective

Today's reversal was very impressive, and for the bears, the first decent down day in over a month. Yet, the weekly index charts are still hugely bullish. The mid-term targets remain unchanged, and it would still appear sub sp'1600s do not look viable any time soon.

Trans'weeky3 - outlook/count


sp'daily3 - fib levels


Today was indeed a good day for those who bravely shorted the morning Bernanke ramp. A reversal day is a very important day to recognise, and it is highly probable that we will see some follow through across the next 2-3 trading days.

Best guess, Thursday 'moderate bounce' into late morning, maxing out somewhere in the 1665/70 area. On any basis, a re-short >1665 looks pretty good, and the downside target for late Friday would be 1640..perhaps the low 1630s, the latter of which would equate to at least the VIX 16s.

Weekly charts still bullish

Transports have strong support @ 6200. That is around 3.5% lower, and might equate to the sp'1630/20s. The rising weekly lower bollinger band on the sp' is 1450, that would normally be the natural downside target I would look for. Yet, the QE-pomo continues most days, and I simply can't see such a multi-week down wave happening.

*Bears should similarly be concerned about the big QEs next Wednesday and Friday. A new rally looks very likely from next Wednesday onward...and to continue across June and July.

Looking ahead

We have the usual weekly jobs data, but also two pieces of housing data at 9 and 10am. More importantly though, bears should be aware that Thursday is a 3bn QE-pomo day.  All things considered, I think there is one further index-short trade viable, between now and the weekend.

Goodnight from London

Daily Index Cycle update

The market saw a very strong reversal day. The opening gains of around 1% were fully reversed, and most indexes closed down 1%. Trans/R2K saw the strongest swing, both closing -1.6%. Near term looks in favour of the bears, at least into the Friday close.





Some very bearish reversal candles on all of the index daily charts. Its been a very long time since we have seen that degree of bull failure.

We have some good topping spikes, and the close for all indexes were at least moderately lower.

In terms of the accelerated up channels, its arguable whether we have broken the lower rising channel line. I'd have to say 'not quite yet'. Another 1% fall will confirm it, and that opens up much lower levels.

Downside targets?

The sp'1620s look viable within a few days, but it must be noted the bulls will have extremely strong support in the 1600/1590 area. All things considered, I don't believe the bears have any realistic hope of consistently trading <1600 for another few months.

a little more later...