Volatility fails to hold earlier gains

The month started with some moderate swings in the market, but with the indexes climbing into the close, the VIX was naturally unable to hold gains, closing -0.1% @ 16.28  Daily trend looks very toppy now, and a multi-day drop into the 14s now looks very likely.


VIX'60min

VIX'daily3

Summary

I was a little surprised to see the VIX open higher, and even more surprised to see it break into the mid 17s.

Yet, as is almost always the case, we saw a latter day equity rally, and the VIX dropped across the afternoon.

Lets be clear, there is NO turn/levelling phase on the VIX daily chart at the moment. However, on any basis, we're very high on the cycle, and I am guessing we'll see the VIX melt lower into the 14s..perhaps even the 13s by the end of this week.

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*equity bulls should be seeking a VIX Tuesday close <15.

more later...on the indexes

Closing Brief

The market saw a choppy day to begin the week, with the main indexes all closing with moderate gains. The sp' close of 1640 opens up an attempt to break descending triangle resistance in the upper 1640s tomorrow. With fear of equity downside lessening, the VIX closed a touch lower.


sp'60min

Summary

So..the market ramps into the close, and the bulls will now be seeking a daily close >1650.

The big issue is whether 1687 will be taken out in the new up cycle. I'm guessing...yes, but as ever.. good trading stops will be vital.
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*a good trading day in the permabear bunker. A fast 9min morning trade in IWM, and RIG closes the day pretty well.
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bits and pieces across the evening.

3pm update - battling higher

Mr Market is back to moderate gains on just about all indexes, and further upside seems 'more likely than not' into the close. VIX continues to cool down, and could easily close a touch red. USD remains -1%, whilst the metals and Oil naturally benefit.


sp'60min

Summary

Its increasingly looking good for the bulls.

Yes, there is Japan, which might get whacked again later tonight, but still, if we close around current levels, the daily MACD cycle will be levelling out tomorrow.

Equity bears have had almost the whole day to exit, there can be no excuse for them to be complaining tomorrow if we're challenging 1650s.

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The ultimate question is whether we can break >!687 in the next multi-day up cycle.

If we FAIL to break 1687, then a VERY obvious downside target is the lower weekly bollinger..currently sp'1472.. and that'd make for one hell of a profitable short.


UPDATE 3.16pm...best guess, 15min cycle...

A slightly higher low..early tomorrow,, then a challenge of 1650s

2pm update - daily charts not turned yet

The market is holding together pretty well today, but there is most definitely no turn yet on the daily charts. Bears are still in control, next downside target remains a touch lower, around sp'1615/10. VIX may yet get one little spike early Tuesday, 20s still look out of range though.


sp'daily5

Summary

Certainly, I wouldn't be surprised if we are trading sp'1615/10 early tomorrow.

Nikkei futures for Tuesday are -3% (according to clown finance TV), so...the equity bears have that going for them.
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I will look to again go heavy long indexes...tomorrow..as ever though....one day at a time.

*I should note the transports, weekly...

A daily close <6200 would be a problem. More on that later though.


2.16pm...sp'1633s....a close 1635/37...very viable...although that still doesn't preclude a brief Tuesday drop.

Pretty good day for day-traders though.
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1pm update - afternoon rally?

The smaller 15/60min cycles still look floored, and there seems little reason why the market make a run into the mid/upper 1630s by the close. VIX is similarly looking very toppy, Metals and Oil both very strong, whilst the USD is now dropping hard, -0.9%


sp'60min

vix'60min

Summary

I don't know why, but the dollar is getting whacked, and that is especially helping the metals/Oil to go higher.

VIX looks maxed, and we might be closing this hour with our first red candle.

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*I am long RIG, but will look to again pick up an index long..early Tuesday.
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VIX update...



stay tuned!

12pm update - battling it out

Its turning out be quite a fierce little battle today. The secondary target has been hit on my hourly chart, and I'm guessing thats 'probably' it for this cycle. Transports though is on the edge, a daily close <6200 would be a major problem. VIX is +6%, and looks increasingly tired.


sp'60min

vix'60min

Summary

The smaller 5/15min cycles again look floored, lets see what the bulls can do into the early afternoon.

What would actually shock me right now is if the VIX broke 20 this week.

Those 'doomer bears' out there seeking major downside, need Trans <6100 (to be decisive), and VIX 20s. That would be a clear warning of a multi-week trend change.
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VIX update coming...

11am update - still choppy

Mr Market remains in a bit of a mess. The bears are desperate for follow through from last Friday afternoon, but the bulls are seeing this as merely another buying opportunity. Considering its Tuesday tomorrow - with mid-size QE, I'm guessing we'll battle higher by end-week.


sp'60min

vix'60min

Summary

A messy Monday, but that's okay.

ISM data was certainly weak, arguably recessionary, so...those hoping for 'QE tapering'...forget it.

I will say, I am surprised to see VIX break into the 17s, although I still think its merely another chance for bears to exit.
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*I went long earlier, and exited after a mere 9mins, for a very good gain. Will re-long tomorrow, probably a combination of IWM and USO. Although I do like MRO lately too.

10am update - Monday morning chop

The main indexes are battling to hold onto moderate gains. Surprisingly, VIX opened fractionally higher, but looks set to decline across the next few days. USD is a touch weak, with the metals and oil holding gains, but those look increasingly weak.

Without question, its a  bit of mess out there.


sp'60min

VIX'60min

Summary

Indexes look floored on the 15, 60, and daily charts.

Yes, the weekly...and MONTHLY charts are now showing initial signs of a rollover, but...its very much 'initial', nothing clear...yet.

*I remain long RIG, and looking to go long indexes..perhaps this hour.

UPDATE 10.02am.. .econ-data comes in poor...market takes another swing to the downside.

10.05am.. I am now heavy long indexes from sp'1631.

First upside target is sp'1645/50

10.14am.. stopped out of my heavy IWM long position...for a very significant gain.

Options..sure are crazy.
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10.30am... it remains a choppy mess out there...people seem to be selling into each little ramp...yours truly included.

To be clear though, I will look to go long again early tomorrow. Daily/60min cycle ..oversold.

10.35am...red indexes again...VIX +2%....kinda interesting, but I sure don't see anything happening today/tomorrow, other than chop.
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10.42am.. market about to hit my secondary target of sp'1624/23..that I set over a week ago.

Best case for the bears...sp'1615/10...I''d be surprised if 1600/1597 gap fill.

Regardless, it'll just make for a better place to go long.

Pre-Market Brief

Good morning. Futures are moderately higher, sp +6pts, we're set to open around 1636. USD is -0.3%, and that is no doubt especially helping the precious metals and Oil, both with significant gains. VIX looks set to open down 5-7%.


sp'60min

vix'60min

Summary

Those bears seeking a major gap down to begin the week, will no doubt be annoyed with the opening gains.

Things could be a bit choppy for the next few days.

Secondary downside target remains 1615/10 - as suggested by a number of factors. Yet frankly, there is every reason to believe that 1630 might have been a 'fractionally lower low'.

If that's the case, bulls merely need a daily close >1650, and that will open up the first challenge of the Bernanke 'reversal day' high of 1687.

Considering its Tuesday tomorrow, why not?
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What am I planning? Well, I'm in no hurry to do anything, and I certainly don't think its particularly safe on the short side, never mind that QE continues. I'll consider an index or Oil long, later today/early Tuesday.
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updates across the day.