Tuesday 11 June 2013

Volatility climbs into the close

With equities opening lower, the VIX jumped, but immediately put in a black-fail candle. As expected, the market rallied. Yet equities were weak into the close, and the VIX closed +10.6% @ 17.07. Hourly charts look close to maxing out, but daily charts are now ticking back higher.




The open was certainly a classic warning that the opening equity falls would not last.

A black VIX candle...and then weakness into the early afternoon. Interestingly, the VIX closed right where the opening high was.

For equity bears out there, the VIX MACD (blue bar histogram) cycle is now actually ticking back higher

How we trade Wednesday morning will very likely shape the next few weeks. If the bulls can't hold the sp'1620s, then the door opens to a major decline..as low as sp'1530/1500 by early July.

As it is, best guess remains..the bulls will hold the line tomorrow, and then push back upward.

more later...on the indexes

Closing Brief

The market opened significantly lower, ramped, but closed particularly weak. The bulls need to hold the line in the low 1620s, or there is a huge problem in the immediate term. VIX closed significantly higher, +11%  @ 17.13, and reflected a market that is battling it out.



So..a weak close, and a break under the triangle formation.

Yet, my best guess remains, this was merely a small wave'2 gap-fill. It will be important for the bulls to break the recent 1648 high within the next 3 days.

*I remain largely on the sidelines after a rather good morning index-long trade.

Baring a sharply lower Wednesday open, I will again consider another trade on the dark...I mean.. long side.

3pm update - ramp into the close?

The market has put in a secondary floor at sp'1627, and we're now seemingly set to rally into the close. First target is the morning high of sp'1640, a close above that is very much possible, and that would crush the VIX back into the 15s.



Interesting day, Mr Market is somewhat 'behaving' very well lately.  The up and down cycles seem natural, which sure makes things a lot easier to trade.

Hourly index charts will likely show a confirmed new up cycle early Wednesday - even if we open marginally lower.

*note that there is no significant QE-pomo until this Thursday.

*I remain largely on the sidelines. Will consider an Oil (USO), and possibly index long tomorrow morning.

3.17pm... price formation getting squeezed. I'm guessing we break UP imminently. A close in the 1640s still on the table.

stay tuned

3.25pm... ANY break >1635..and this market will close in the 1640s.

As Maria might say ..'we're off the lows of the day'.   urghh.#

3.33pm.. price formation remains a VERY tight triangle.

Its gonna break one way or ...other. Not necessarily today though. It could flatline into the close.

*I'm actually hoping it trades sideways, and will re-long at the Wednesday open.

3.45pm.. prices BREAK under the triangle. It sure looks weak now.

Market had better rally upward tomorrow..or the HIGH is in @ 1687..in which case the target is...1480.

3.48pm...Its getting ugly out there ! sp'1625..and this is looking like the Wednesday open will be way more critical than today was.

Market in serious trouble now.

2pm update - minor down cycle complete?

The market has seen half of the morning recovery gains evaporate, but its still probably just a minor down cycle..enough to shake out the weaker bulls, and suck in the most careless of bears. Oil remains weak, -1%.



Certainly, an interesting little wave lower, but the 'real fear' of the day has been and gone.

I will be very surprised if we take out the morning low. Neither the daily or hourly index cycles support such a move.

*I am largely on the sidelines, seeking another long-entry...early Wednesday, preferably in the 1635/30 area.

2.18pm.. we have a very nice marginally high low in the sp'1628/30 area, and a little rally into the close is now very viable.

Bulls should be making a charge for the 1640s again.

1pm update - a bit of chop

The market is seeing a very small down cycle, but a rally into the close still seems likely..with moderately higher indexes. There is a tiny chance of a close in the 1650s, although that seems far more likely late Wed/early Thursday. VIX is +5%, but that's really not much.




You can see on the daily charts, that makes for a rather clear wave'2 floor-spike.

Underlying MACD cycle is STILL ticking higher, despite the last two days of weakness.

Bears have even bigger problem, this Thursday. There is 3bn of QE-pomo, and I'm guessing other markets will similarly be clawing higher. Ohh.and its opex next week, that is generally not bearish.

VIX update from Mr T.

stay tuned

UPDATE 1.32pm...sp'1631..hmm.  Bulls really need to hold 1630s at the close.

Considering the morning action, this is almost certainly just a minor down cycle.

1.40pm.. looks like the 1629/30 area is support. That could be it.

Easy long trade here, with a loose stop @ 1620....not that I'm taking it!

12pm update - headed for much higher levels

The gap fill is done, and it would seem the market is headed higher for the rest of this week. The bears have failed again, and lack any consistent downside power. Bulls should be seeking a Friday close in the sp'1660/70s, with VIX 14s.




So..another day for those on the bearish side to be annoyed about.

We could of course still be tracing out some kind of ABC bounce - with 1687 being the mid-term top.

Yet, I'm still guessing we'll soon see the sp'1700s, perhaps even 1740/60s by mid July.

*I exited a rather brief 'heavy long index' position earlier. Rather good gains, and I've done more than enough for today.

Still holding the somewhat annoying MRO (long) position, but even that has a reversal candle on the daily chart. $36s seem viable within 3-4 days.

UPDATE 12.24pm..minor down cycle underway..but it probably won't be much.

A close in the 1650s is still viable..which would really annoy those still holding short.

11am update - bears in trouble

The market appears to have completed a classic gap-fill scenario, and now we're headed back upward. We could easily close green today, and that will set up the sp'1660/70s by the Friday close. For the bears, today looks to have been another dreadful failure.




Well, we're battling higher, at a pace that exceeds even my outlook.

*I am HEAVY long from sp'1626, I will look to exit sometime in the next few hours. I like to keep things 'simple'.

next soft target is sp'1636/37..looks viable this hour.

11.23am.. EXITED index longs @ sp'1634. I'm just a little edgy today.

I still think we broadly climb in the days ahead, but I'm out for today. Will consider another long-entry tomorrow morning.

11.30am...well, market seeing the MACD cycle go +..and we're seeing the reaction. sp'1640s imminent.

Bears....effectively nuked again, especially those chasing the lower open.

*I am holding one minor long position still, MRO. It has been a bit of a laggard lately. I will still look to drop that later this week in the sp'1660/70s.

10am update - flooring

The main indexes open significantly lower, but we've possibly already floored. The 15/60min cycles are NOT showing a clear turn yet though. Were we to close at these levels, bulls would have a major problem, but I'm expecting a significant latter day recovery.




*black candle on the hourly VIX, bears should be spooked by that.

Okay, so we've hit the target gap-fill zone on most indexes.

Now, this is something of a dicey place for the market. It will surely floor and bounce, but if the bounce isn't very much, then bulls have a serious problem later this week.

All things considered, I think we go up across the rest of the week.
*I am standing by to launch a major re-long (having bailed at sp'1647 yesterday open).

'Traditional' time for a floor will be THIS 10-11am hour.

Lots of reversal candles out there...Oil, metals

10 07am ...still waiting. It'd be nice to see a test of the floor in the 1626/24 area.

10.12am.. am HEAVY long from sp'1626

Now..its the waiting game.

1015am... market almost showing a floor on the 15min cycle..

I think the bears are done for today. Bulls merely need to claw back half of the declines by the close, and then up across Wed-Friday.

10.28am...sp'1629/30s.... a floor does now look...in.

The only issue of course is just how big a bounce do we get. Can the indexes go green by early afternoon? The opening drop was barely 1%, so, a move back into the 1640s is very viable within 2-3 hrs.

Pre-Market Brief

Good morning. Futures are sharply lower, sp -16pts, we're set to open around 1626. Precious metals and Oil are similarly lower by around 1%. Even the USD is lower by 0.25%. Bulls really need to hold the gap zone area of 1625/22. VIX looks set to open up at least 5-7%




Well, yesterday was rather dull and quiet...today will not be!

It looks like the market has gradually slipped lower across the night, and we're already very close to the key retracement target zone of 1625/22.

Best guess, we level out by the 'traditional' lower time of 10.30/11am..and then see some level of latter day recovery. Bulls could tolerate a close of -7 to -10pts. However, anything more than 23pts..and its VERY major problem.

Strap in!

*I will consider going long at the gap-fill zone of 1625/22 this morning, but it is certainly not without risk.

9.35am ...well, we're near the target zone.

I'm in no hurry to hit buttons yet, but I'm guessing we floor within the next 90mins

VIX up almost 10%...thats interesting!

Best guess remains..we floor no later than 11am.

*gap on the transports is at @6200, thats another 0.5% lower.

EYes on the VIX

Quiet day to start the week

The main indexes started the week in a very muted manner. There is no major econ/corporate news, and there isn't even any significant QE-pomo until this Thursday. Bears have a small chance of downside on Tuesday, but as ever, the dip buyers are no doubt standing by.


sp'15min - with fib levels


A pretty dull day, although it did give many (myself included) the opportunity to exit at the open on a brief opening spike high @ sp'1648.

There isn't much to say about today, other than there is the very reasonable chance both tomorrow and Wednesday will be much the same.

Mid-term - best guess

I'm assuming sp'1598 was the floor of sub'3..and that we're still to conclude what has been a relentless 'big 3' - from the November low of sp'1343.

sp'weekly8 - a pull back in Aug/Sept...then up again

Many out there are seeking a turn late July/early August, and I'm most definately one of them. Best guess right now is for a final higher high around sp'1725/50..then a move back down to the low sp'1600s. Right now, I find it very difficult to envision the market putting in some consecutive closes <1600.

Looking ahead

There isn't much of anything tomorrow. Nor is there any significant QE-pomo either.

We have the hourly charts pointing downward, whilst the daily charts are increasingly swinging back towards the bulls. I certainly think there is a 'moderate' risk of a retracement to the sp'1625/22 gap zone area, I suppose it could even drag out into early Wednesday.

On any basis though, considering the bigger picture - which remains to the upside, I will look to go long again in the sp'1625/20 area..if available.

Goodnight from London

Daily Index Cycle update

The US equity started the week in a very subdued mood. Volume was light, and with no real news - or significant QE-pomo, the main indexes closed a touch lower. The R2K managed gains of 0.5%, although it was an anomaly last Friday, and was probably just catching up.




So, a very quiet day to start the week. A mere 9pt trading range on the sp' today, although we did break above what many considered to be an important level @ 1646.

Certainly the bulls haven't yet broken back into the more important 1650s, but that does still look very likely by the end of this week.

Underlying MACD (blue bar histogram) cycle ticked higher for a third day, and we are set to go positive cycle on the indexes this coming Thursday/Friday.

Baring a break <1598, the bears are in serious trouble, and there is VERY high risk of breaking the Bernanke 'reversal day' high of 1687 later this month.

*I exited (index Longs) right at the open, on the opening spike @ sp'1647, and frankly, I'm glad to be out. I will look for a better entry level across all of Tuesday

a little more later...