Volatility higher across the week

With the main indexes battling back upward across the day, the VIX again failed to hold moderate opening gains. The VIX was further whacked lower at the close, settling -0.6% @ 13.99. Across the week, the VIX gained 12%, but remains at bizarrely low levels.


VIX'60min

VIX'daily3

VIX'weekly

Summary

So...net gains for the week of 12%, but we're still only talking about VIX in the low teens. It remains a very complacent market, with almost zero concern about ANY of the large and frankly..terrifying macro-economic problems out there.

Looking ahead to Tuesday, VIX might well open lower...hourly charts are suggestive of the 13.70/50 range. I don't think 12s are likely in the immediate term.

Best equity bear upside for the VIX, looks to be the 16s. Certainly, VIX 20s look well out of range for some weeks, if not months.

a little more later...

Closing Brief

The US indexes opened lower, and once again rallied slowly - but consistently, across the day. There was a little weakness into the close, with the sp @ 1649  Most indexes declined by around 1.3% across the week. Oil and the metals both closed weak, with the USD lower.


sp'60min

Summary

Not a bad week, one where we saw a classic reversal day, and even had some follow through early Thursday.

It does seem we are still playing out some kind of ABC /wave'2 bounce. It sure is taking its time to play out though.

Hourly MACD cycle is still ticking higher, and already went positive on the R2K.
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*I am back on the sidelines across the long weekend, and will look for a re-short early Tuesday, not least if we can get into the low sp'1660s.
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Many thanks to all those who commented this week.

Have a good weekend
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*Next main post, late Saturday, on the US weekly index charts.

3pm update - closing hour ramp?

A very tricky closing hour to come. Many traders already left for the long weekend, so its quiet, but that means another snap higher..if it comes, could be pretty fierce. Immediate upside target is the 50% fib zone of 1660/62. Downside for next Tue/Wed remains 1630/25.


sp'15min

Summary

Okay, so...I'm looking for more upside, and frankly, if I see the low 1660s, I'll be real tempted to launch a re-short.

There is reasonable chance of Tuesday gap lower - not least if Japan is further rattled on Mon/Tue.
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UPDATEs...all the way into the close..to end whats been a rather good week.

3.13pm..well, no ramp so far..and now doesn't look likely.

I remain curious for a re-short...

3.32pm...well, the sp'1647s aren't attractive as a re-short level, not least when the 1660s are viable on a brief gap higher early Tuesday.

I think I'm calling it a week, and will see how we open on Tuesday.
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3.41.. micro wave lower.. 1645....I realise we could merely fall from here.. all the way across Tuesday. Would be something annoying. Could be worse though, could be long.

3.47pm...maybe the C- wave continues into Tuesday then... 1660s still viable.
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back at the close.

2pm update - still climbing

Market is still broadly climbing from the earlier sp'1636 low. There is high risk of a late afternoon ramp into the low sp'1660s. Primary downside for next Tue/Wed remains sp'1630/25. VIX is holding minor gains, but looks set to close red, Oil looks to close moderately higher.


sp'15min

Summary

The 50% Fib' is the target for the close.
-

The only concern for those bears who might be looking to short the ramp into the close/weekend, is that of a few hours higher early Tuesday.

Lets see where we are around 3.30pm.

I remain highly open to a re-short, looking for a move from 1660 down to 1630/25.
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stay tuned!

*prime time for a snap high.. 2.15/30pm... we'll soon see!

2.20pm...right on schedule...its kinda nice to see a market acting like this.

1pm update - C wave into the close

The market should broadly rally into the close, the low sp'1660s now look viable. That should make for wave'2 complete, with a decline Tue/early Wednesday. Hourly charts will likely be maxed out within the next 4-6 trading hours.


sp'60min

Summary

*updated hourly chart. The big issue I have is what happens late next week? We have two major POMO days to end the month, so I have to assume we go up, probably 1660/70s - after 1630/20s Tue/Wed.

I remain open to a re-short into the close, if the price..is right.

UPDATE 1.22pm..sp'1647s ...target remains 1660/62...

12pm update - upside into the close

The market looks conclusively floored for today, in what was probably a B wave, and we're now in a C wave. Immediate target is the 50% fib, in the 1660/62 area. Downside target for next Tue/early Wed' remains unchanged at 1630/25. Oil recovering, whilst USD remains weak.


sp'15min

Summary

There is now high confidence that we are in a C wave higher..into the close.

The low Sp'1660s look viable, and no doubt many bears will be dismayed into the weekend.

However, The hourly and daily charts would still be suggestive of one further wave lower on Tuesday..perhaps into the Wednesday.open.

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Most important of all though, bears need to keep in mind, BIG QE next Wed/Friday.
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I will consider a major re-short near the close...if sp'1660s.


VIX update.. from Mr T



time for lunch!


UPDATE 12.33pm.  VIX rolling over on the hourly..target is 13.70/50 late today/early Tuesday.

I'd be looking for another spike to 16s by late Tue/early Wed'

11am update - dragged out bear flag

Well, the bears look tired and unable to break a new low. It now looks like we will see a dragged out bear flag stretching into the Friday close. If correct, a C wave rally to sp'1660/62 is the new target. Subsequent downside remains unchanged at 1630/25.


sp'15min

Summary

Baring a break <1635 in the next hour, it looks like we'll instead battle upward into the close.
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Well, its always good to keep an open mind, and it looks like those suggesting a dragged out bear flag were right (I shall dare cite Daneric as one of them).

It remains annoying how the market down cycles are so brief, and yet the up cycles last 2-3 times as long.
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*I was stopped out of an IWM short at sp'1639
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So..whats the plan?

I will consider a re-short into the close...IF sp'1660s. Normally, I would not take a new position across such a long weekend, but the 1660s would certainly make for a great re-short for Tuesday - which has no sig' QE.

Downside target still looks to be sp'1630/25

10am update - no QE fuel

Today is a rare day where there is no QE fuel at 10am to kick the market higher. The bulls had a good bounce yesterday, and we've already seen the bears first attempt to take out the 1636 low. There is little reason why the bears shouldn't be able to control the day.


sp'60min

sp'daily5

Summary

Daily charts are especially bearish now, and into Tuesday.

The 20day MA is next target @ 1633, I don't expect that to hold.
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I remain holding short, looking for an exit @ sp'1630/25 later today.
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10.05am.. I'm getting a bit restless, am up considering on my IWM position, and I'd like to end the week on a good gain.

stop placed, will probably get kicked soon!
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10.09am...stopped out of my iwm.

I think my week is done. I won't be looking to re-short across the long weekend, unless we get some kind of bizarre bounce to 1660s.
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10.14am...there is 'small' chance what we've seen is actually the B' wave....but really, thats VERY hard to guess.

Regardless, I'm done for the week. Now its just about watching for entertainment purposes...and seeing how the market copes with no QE.

10.20am.... 15min cycle looking like it might have put in a marginally higher low...

If so..bears need to getting the hell out here!

I still think secondary target of sp'1630/25 will be hit, but it feels like that is now likely Tue/early Wed.
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10.29am.. such a borderline situation, but it increasingly looks like the bears are done for the day.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -6pts, we're set to open @ 1644. Bears should be seeking to take out yesterdays low of 1636, that will open up the target zone of 1630/25 by late afternoon, and should equate to VIX 16.


sp'60min

vix'60min

Summary

So, we're set to open somewhat lower, certainly too dramatic, but neither is it higher!

With no QE today, bears have a window of opportunity to whack this market lower. I think there is a pretty good chance of 1630/25, which for me would merit an exit, and sit on the sidelines across the long weekend.

Those bears thinking the decline will continue much of next week, should review the Feds POMO schedule, which has very large QE next Wed' and Friday. Bears beware!
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*I am heavy short the indexes, seeking an exit into the Friday close, preferably sp'1630/25

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Durable Goods Orders come in better than expected, 3.3%, vs 1.1 expected, market rallies a few pts on it, sp' -5, 1645.

I just have to wonder, is today going to be an early minor drop and another wave to 1660 (key fib level)...or are we just going to keep falling across the day?
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Oscar video...



As ever...holiday reversal, and he will be going massively bullish next week

Everything is primed for the bears

The bears have everything set up in their favour to conclude the week. Both the 15/60min smaller cycles are arguably reset, the daily momentum is increasingly swinging toward the bears, and there is no QE this Friday. Primary target is sp'1625, secondary is 1600.


sp'60min

sp'daily5

sp'daily3 - fib levels

Summary

Its been a long day, so I'll keep this short.

Suffice to say...bears have NO excuses for Friday. The price action today was very much one of a natural wave'2 bounce, and now we're due some degree of downside - arguably equal to that of Wednesday/early Thursday.

I see little reason why the bears can't at least break the market down to sp'1630/25, but if the market gets a little rattled, there is a small chance that the big 1600/1597 zone might be tested late Friday afternoon.


Looking ahead

There is Durable Goods Orders data in pre-market, market is looking for 1.1%, so anything on the negative side should give the bears something to begin the day.

With Monday being closed for Memorial day, things could get a little quiet in the latter part of the day, but with no QE-pomo, bears should be generally okay going into the Friday close.

*I am heavy short the indexes, via IWM, now I wait, along with a fair few others!

Goodnight from London

Daily Index Cycle update

The main indexes opened lower by around 1%, but most closed broadly flat. The Trans and R2K both closed +0.2%, whilst the sp' closed @ 1650, a fall of 0.3%. It is highly arguable that today was merely a wave'2 bounce, and that a very strong wave'3 down is due to end the week.


R2K

Sp'daily5

Trans

Summary

Well, that was certainly an interesting day. The bears opened everything lower, but as expected, the market rallied across the day. No doubt this was partly due to a QE of 3-4bn, but it was also a natural bounce.

The smaller 15/60min cycles are probably now reset, and there is great potential downside across ALL of Friday.

It is important to keep in mind that if wave'1 was 50pts, if you take 50pts off today's high of sp'1655, that gives us 1605. That would make for a superb way to end the week, but yes, that is probably being too optimistic..or should that be pessimistic ;) ?

Despite the bounce, underlying MACD (blue bar histogram) momentum is increasingly swinging to the bears, and we are due to go negative cycle at the Friday open, and get some bearish crosses on many of the indicators.

Everything is primed for those on the bearish side. With no QE tomorrow, it is going to be fascinating to see how we close the week.

a little more later..