Friday 31 May 2013

Volatility snaps higher into the close

With the indexes slipping significantly lower in the closing hour, the VIX closed the week on a high, settling +12.2% @ 16.30. Across the week, the VIX gained 16.5% Despite the gains, the big 20 threshold still looks very difficult to reach any time soon.





A pretty exciting end to the week..and the month. Yet, we're still only talking about VIX 16s, that is a still a bizarrely low level.

Equity bears should be careful not to lose themselves in the hysteria of what is just an index decline of 1.4%. Primary weekly and monthly trends remain to the upside.

The VIX weekly chart is kinda interesting, in that the week closed on a high - always a bullish sign for volatility. Yet, until we put in a VIX weekly close above the 200 weekly MA, the equity bears can't expect a major equity drop.

a little more later..on the indexes

Closing Brief

The main indexes saw a very significant secondary wave lower in the late afternoon, with the sp -23pts @ 1630. The VIX battled higher, closing +12% @ 16.30. Oil fell almost 2%, with similar weakness in the precious metals. A pretty exciting closing hour to end the month!




Certainly, not the end to the week that the bulls were seeking, but it was end month, and there was an awful lot of index re-balancing, along with month-end issues.

I certainly don't see any threat to the broader up trends. Nothing has changed. QE continues, and the daily charts are now due a cycle to the upside.

*I hold a small long position - via RIG, across the weekend.

Have a good weekend!

*next main post, late Saturday, on the World monthly indexes.

3pm update - its a tease for the bears

The main indexes have broken below the morning lows, but we are still holding just above key support @ sp'1644. VIX is +5.5%, a new daily high. USD is actually starting to cool down a little.



A little bit of drama to end the day, or just a cruel bear tease?

I'm guessing it WILL hold.

Those bears getting lost in hysteria, might be able to have their heads ripped off.

3.10pm...15min cycle looks BULLISH.

3.42pm... sp'1641....cycle STILL looks bullish for Monday.

3.50pm ...1639s... thats pretty interesting! Were it not the weekend, I'd be picking up another block to go LONG.

back at the close.

2pm update - afternoon micro moves

The indexes have again seen a little wave of weakness, but we're still very comfortably holding over the key support, now around sp'1644. There is simply an absence of power on the bearish side. We still have some major index rebalancing to come later today.



A little tiny wave lower, but still, its surely just 'mere noise' to be ignored.

Daily charts all look like they are primed for a major move higher into mid June.

Sp'1700s are a'coming.

UPDATE 2.15pm... sp'1648..hmm, just 4pts away from breaking key support.

Still...I don't think it'll break.

1pm update - new up cycle due

With the failure of the bears to break below sp'1640, a new 6-10 day up cycle looks due to begin next week. First target is the Bernanke 'reversal day' high of 1687. A 1.6x fib target offers 1719 by mid June. Meanwhile..Oil is recovering quite strongly from its earlier low.



*I've added a new channel (blue dash), it might get broken on Monday, but anyway, I just don't see the bears breaking <1640 now.

Bears had their chance...and failed.

Its been a pretty good week in the bunker, and I will hold Long RIG, across the weekend.

more later.

12pm update - afternoon QE melt

The main indexes are back to positive, with slight gains. VIX is set to go red this afternoon. USD is +0.5%, and this is keeping a lid on both Oil and the precious metals. Considering the QE out there, market is likely to churn quietly higher into the afternoon close.




Today...was as I feared. Moderate opening declines..that failed to breach the important sp'1640 threshold...and the market used the PMI number as the excuse to ramp back up.

No doubt many bears are now dismayed, and annoyed. Perhaps more than that though...a reminder that the primary trend remains UP..and despite the chatter...QE does in fact continue.

In fact, the next POMO schedule is issued this afternoon.

*I am minor LONG, via RIG, will hold into next week.

VIX update from Mr T.

stay tuned

11am update - end month churn

With the econ-data coming in better than expected, the market had the excuse it needed to ramp out of the sp'1640s. There is a lot of QE fuel out there today, so a moderate green close looks rather likely, with the VIX set to turn red later in the afternoon.




We have found support again in the area of my 'first target'.

Certainly, I just can't see the 1640 line being breached today, next Monday, or indeed, for perhaps the next few weeks.

Bears are probably going to need to wait until mid June.

*I am long RIG, I like the company/sector, and its my way of going long in what remains a...nasty market.

10am update - huge QE to end the month

The main indexes are holding above what is key support of sp'1642. There appears a lack of bear 'power', and there is the very real threat of a positive close, and gains across the next few weeks. PMI number comes in at a very bullish snap back higher.




*I exited my two major short index positions at the open @ sp'1649. I do not intend to launch another index short for at least 6-10 trading days.

So...I'm out..and now I am wondering what the bulls can do to close the week..and month. With QE of 5-6bn, you'd have to think we'll at least hold the sp'1640s..if not even a moderately higher close.

I have to say, the PMI of 58 is a real surprise, and if we see another number like that in June, it bodes pretty good for the US into the summer.

Update 10.30am. It does look like the market has floored..and will see some kind of 6-10 day up cycle into mid June.

I'm not in the mood to go long the indexes, but I am now LONG - Transocean (RIG).

The 200 day should offer good support, and I do think much higher levels are viable across the summer. As day at a time.

*I will hold Long, via RIG, across the weekend. First target for next week is 52/53.

Pre-Market Brief

Good morning.  Futures are somewhat lower, sp-8pts, we're set to open around 1646. Bears need a break <1640, and then quickly <1635. However, with huge QE of 5-6bn today, bears face massive resistance. USD is moderately higher.




All things considered, I don't think the bears can break back into the 1630s.

There is important econ-data this morning - the PMI number at 9.45am will be a market mover, look for the market to especially move at 9.40am - when a number of people receive the data prior to main market. best guess for today - market sells off to around 10.30/11am, but holds sp'1642/40, as best seen on the 15min cycle chart.

*look for an opening black/fail candle on the VIX.

However, I will note the MACD cycle on the VIX offers a broad VIX rise across the ENTIRE day. Arguably, that is the most bearish possibility right now.

*I am heavy short the indexes, and will seek an exit at the open.

I do not intend to go long today, but will consider trading long (probably via Oil) next Monday instead.

Update from Permabull...Mr Carboni...

tis the last day of the week..and month.   Updates across the day.

UPDATE 9.33am... exiting short positions...

Net declines for the week?

In this shortened trading week, the sp' is currently holding net weekly gains of just 4.8pts. Certainly, it won't take much to close the week red, but with a very large QE of 5-6bn to close the week...and month, the bears are still facing what remains an incessant Fed problem.


sp'weekly2, rainbow


So, can we close the week at least moderately red? Hourly index charts did rollover in the closing hour today, and the daily charts are still in a bearish state, yet, the damn Fed is going to be throwing 5-6bn of QE at the market tomorrow.

Primary weekly trend is unquestionably still bullish, but perhaps the 1687 'Bernanke reversal day' is at least a mid-term high. Obvious downside target is the lower bollinger band, which is currently 1459, but still broadly rising.

Many out there seem to be seeking the sp'1550s or so, and I can kinda understand that, but it will be exceptionally difficult whilst QE continues.

Final chart to end the trading day...

Nikkei, monthly, 20yr

As noted last night, I was looking for the candle to turn red, and indeed we now have an extremely bearish spiky candle, with just one trading day of the month left. First downside target is 12k, which is a good 10% lower!

Looking ahead

There is the QE tomorrow at 10am of course, but there is also some econ-data. Most notable is the Chicago PMI number at 9.45am. Market is looking for 50, equity bears should be seeking anything <49.

*I am heavy short the indexes, but seeking an early morning Friday exit

Goodnight from London

Daily Index Cycle update

The main indexes all closed moderately higher, with the sp +6pts @ 1654 - after being stuck around 1660 for almost the entire day. The market was weak in the closing hour, with the transports closing just 0.2% higher. VIX confirmed the moderate equity gains.





A pretty dull day of nothing. After the opening gains settled around 1660 by mid morning, the indexes effectively flat lined until 3pm. There was then a slightly interesting little closing hour weakness, but still, we are 20pts away from taking out the double floor of 1635.

Despite the moderate gains, the underlying MACD (blue bar histogram) cycle ticked lower again, and price momentum is STILL increasingly swinging in favour of the bears.

The primary near term target zone is sp'1630/25, although many chartists are still seeking 1600/1597. I personally find the latter price target very unlikely in this down cycle.

a little more later...