Thursday 13 June 2013

Volatility smashed lower

With the main indexes reversing back upward in early morning, the VIX was ground lower across the day, closing -11.7% @ 16.41 Near term trend looks bullish for equities, and the VIX looks set to be trading in the 14s within the next few trading days.




VIX never did go positive at all today..despite sp -4pts in the opening 30minutes.

The VIX daily close is exceptionally bullish for equities for Friday..and at least the first half of next week.

For the equity bulls, they should be seeking a VIX weekly close <16 - which would break the daily rising trend/support.

more later...on the indexes

Closing Brief

The market opened a touch lower to sp'1608, and the critical 1598 was not broken. Just like last Thursday, the market held together, and then consistently climbed into the close. Near term trend looks strong into early next week. The VIX strongly confirmed the equity gains. -11%



Well, last night was rough for those on the long side..and filled with some excitement for those looking for a major break <1598.

Yet again though, the bulls have managed to avert a minor disaster, and instead, we're now looking at taking out the recent sp'1648 high by Friday/early next week. Incredible.

*I am very pleased to be out of my heavy index-long position, I'll sleep better for it! Holding MRO (long) into Friday..and probably early next week.

I will also look to pick up a new..smaller index-long position on the next minor down cycle.

bits and pieces across the evening

3pm update - a day for the bulls

The serious concerns of last night - a possible breach of the critical sp'1598 low, can now be put away. Daily charts appear to be confirming the 'moderately higher low of 1608. A break above sp'1648 looks likely within the next 1-3 trading days.




*rather clear double top on the VIX hourly.

Whether we close >1630, I don't think is too important for today.

What matters is that 1598 held, and today's rally has been pretty strong.

Bulls are back..if only for a few more weeks, before the real fun begins in August.

*I exited HEAVY longs @ sp'1628...will seek a 'light' index long position on the next minor down cycle..tomorrow.

updates into the close...

3.03pm.. there go the bears' sp'1630 short-stops.    A cascade to 1635/37 by the close, very viable.

3.09pm hourly upper bollinger has stabilised around sp' that is the next target.

Bears are on the run into the close!

3.19pm.... endless signs confirming the floor is in @ 1608. Some very strong moves out there right now, inc' MRO, +3%.

Will be interesting to see how Friday opens.

3.33pm.. could a good month or two before we're back down at these levels again. The big issue remains...sp'1700s..or lower high <1687 ?

*bears should be beware of a huge QE-pomo next Monday.

We're getting pretty over-stretched on the 15min cycle now...

A 'brief' fall Friday to 1630..even 1625 is possible. I'll be a buyer on ANY such minor drop.

3.43pm.. so much for even a touch of weakness...sp'1636... a truly dreadful end to the day for those on the bearish side. 

3.47pm..what a nasty market..sp'1637...thats almost a 30pt I feared this morning..urghh.

Worse still for the bears, daily charts now look pretty much straight up to 1670..if not >1687 by late June.

2pm update - a close above sp'1630?

With the sp' breaking to 1625 a little earlier, we were a mere 5pts away from what is the most important level of 1630. That would break a lot of resistance, and open the door to the 1645/50 zone by the Friday close. VIX remains significantly lower, and a close in the 16s looks likely.



We have what might be a baby bull flag on the 15min cycle.

Perhaps another 30-60mins trading a touch to the downside, but then a break higher into the close.

If Mr Market wants to keep everyone on edge overnight, it'll close somewhere in the 1627/29 area.

All things considered, I think the low is in @ 1608..and we're going to take out the 1648 high, if not tomorrow, then early next week.

2.13pm.. sp'1627s hit...hmm, I'm just getting a bit edgy.

tight stop set on my HEAVY long position, looking to get kicked.

2.17pm.. 5/15min cycle charts look VERY toppy...  stop raised..looking to get kicked any moment!

stopped out of index HEAVY longs @ sp'1628.

(holding MRO - long, into Friday)

VERY pleased with todays recovery. What a day!

2.33pm.. next upside target is of course sp'1630.. I expect that to be broken, and closed over.

A close of 1635 - at the upper hourly bollinger band..seems viable.

If Mr Market wants to nuke the'll gap right over 1648 at the Friday open.

*if market sees a minor down cycle early tomorrow, I will pick up a new (smaller) index long position.

Daily charts offering the sp'1700s by mid July.

1pm update - battling higher

The market is looking increasingly bullish, a daily close in the sp'1630s would really help to clarify things. VIX is consistently cooling down, and appears to have put in what is arguably a double top in the mid 18s. Bulls should seek a weekly VIX close <16.




Its starting to look rather good for the close, and across all of Friday.

Even the Transports and the R2K are starting to pick up momentum now.

*I remain heavy long the indexes, will look for an exit in the sp'1630s.

1.05pm.. sp'1624s,  hourly charts due to go + cycle, this hour..or next.

sp'1630s 2pm.

12pm update - marginally higher low

It would appear the bulls have managed to avert something of a crisis, and put in a marginally higher low of sp'1608. Perhaps more importantly, the daily index charts are now starting to look rather favourable for the bulls into the Friday close. VIX continues to cool down.




Daily MACD (blue bar histogram) cycle is indeed now starting to tick higher, although price momentum continues to be deep in negative territory.

The big question 1687 the key cycle high, or another 2-4 weeks of nonsense, into the 1700/50 area?

Best guess right now is...yes.

*as noted earlier, I'm tired. Is it the weekend yet?

time for lunch

12.36pm...sp'1621...still battling higher..bulls are a good 14pts (0.9%) from the morning low.

Best case for the close ..1635, a 2% reversal day...and that would setup Friday for the 1645/50 area.

11am update - first big target is sp'1630

The market did break a touch lower at the open to 1608, but we're seeing initial signs that the momentum is swinging back to the bulls - much like last Thursday. The rather obvious target is sp'1630. A daily close over that would be very impressive, and bode for a strong Friday close.




*VIX is starting to get slammed lower, and that bodes well for the bulls into the afternoon.

Bulls need to keep pushing from here. The whole situation looks very much like last Thursday, from which we bounced 52pts, in just 11 trading hours.

Right looks like we've put in an important 'marginally higher low'.

The obvious question then is...can we put in a higher high.. >1648 ?

UPDATE 11.38am.. Bulls need to break the hourly 10MA @ 1619/20.

An hourly close above 1620 will open the door to a very bullish close in the low 1630s.

VIX is still -5%, trying to hold the mid 17s.

Arguably, bulls need a VIX close in the 16s to be confident about Friday.

10am update - apocalypse averted

Despite Japan getting trashed 6%, the US indexes have so far managed to hold above the critical low of sp'1598. Even if the market starts to climb, its going to take at least 4-6 hours before the bulls can stand down from defcon'2.  VIX is a touch lower.




So...the 1598 low least for the open. For me, that was always the big concern, a straight forward gap lower of 15/20pts right under 1598.

Hourly index MACD cycles are arguably very low, and we're due some level of up cycle across today..and possibly all of tomorrow.

A replay of last Thursday/Friday?

*I remain heavy long the indexes, seeking an exit in the sp'1630s, before the weekend arrives.

10am....bulls closing the opening hourly candle..with a great floor-spike. Is that really it for this down cycle? building a rally, and underlying pressure will be significantly stronger as the day proceeds - much like last Thursday.

Pre-Market Brief

Good morning. Futures are moderately lower, sp -4pts, we're set to open around 1608. However, futures earlier tested the sp'1598 level, and apparently held. With Japan -843pts (6.4%), its not entirely surprising we look set to open weak.




Its pretty simple for today..and tomorrow.

Any break <1598..and this market unravels. There is simply NO significant support until the lower weekly bollinger - currently 1480 (but rising).

If 1687 was the top, then we are in the early phase of a wave'3, and it would be fierce. I see some claim we might get stuck around 1570/50..or the 1530s (April low), but in all recent multi-week down cycles, that is simply not how its played out.

A loss of 1598 is the last line for the bulls.

Saying all that, the hourly index charts are very low on the cycle. The price action is very similar to last Wed/early Thursday.

So..lets see how the day proceeds.

*there is mid-sized QE-pomo today - the first in 5 days, along with an array of econ-data.

8.39am.. Jobs and retail data come in slightly better than market expected, so..the main indexes are still holding together.

Looks like we'll open with a buffer of 7-10pts above the key 1598 low.

9.33am.. well, we're opening we'll see if the bulls can rally this nonsense back upward.

9.40am.  sp'1608..well, thats still 10pts away from the critical zone.

Considering the 15/60min cycles, bulls should be relieved at this rather quiet open...I know I am.

 First upside target is sp'1620/25

9.45am...sp' is the thing. Even if the bulls manage a rally, its going to take at least 4-6 hours to get any initial bullish signals.

Could be a VERY long day for those anxiously waiting to get away from the critical low.

*I remain long, seeking an exit on the next bounce.

Bears trying to seize control

With the market failing to hold opening gains, the bears quickly seized control, and ground the market lower across almost the entire day. The close of sp'1612 is a mere 14pts above the critical low of 1598. Bears are on the edge of a massive break through.


sp'weekly7 'the high is in'


So...what to say about today? Well, I will say I am surprised that the bears are managing as well as they are. There certainly isn't anything scary in terms of econ-news out there. Is the market simply exhausted after its 7-8 month up cycle? Probably, but baring a break <1598, there is still the chance of another up cycle before this nonsense is conclusively done.

Of course, the bigger weekly cycles have been rolling lower on the MACD (green bar histogram) cycle for the past four weeks, so its not like the current equity weakness is entirely surprising.

Best guess remains..we hold the line of 1598. I'm trading it that way, am long (again) from earlier today, but if we break <1598, then its arguably a case of 'sell at any price'.

Looking ahead

There is an array of econ-data tomorrow, including retail sales. Bears should be mindful that for the first time since last Thursday, there is a mid-sized QE of around $3bn.

Overnight futures trading will be important, but even more so, how we open tomorrow. Even a moderate gap lower in the 1605 area will put the market in imminent danger of a critical break down.

The bears have had another good run from 1648 down to 1610, good short-stops will be important. If the bulls do somehow magically ramp again, look for a daily close >1630.

Goodnight from London

Daily Index Cycle update

The main indexes all opened moderately higher, but were utterly unable to hold the gains, and the bears took control of the day. The sp' closed -13.6pts @ 1612. The critical line in the sand is just 14pts lower. Any hourly/daily close <1598, and this market is in massive trouble.



Today was indeed another pretty dynamic trading day. Those opening gains of sp'10pts to 1637 sure look a long way up now. It makes me wonder how many retail traders were chasing the open higher in the mid 1630s, and are still holding long at today's close.

The daily close of 1612 put in a very bearish candle, confirming the previous two days of weakness.

The 50 day MA @ 1610 did appear to hold today, but really, the only important level now is 1598.

Overnight futures trading will be very important. The market only needs to get whacked -1%, and the key low is taken out, and we might see a rather fierce cascade lower.

In favour of the bulls though, the current hourly charts are very low in terms of the MACD cycle, and we're due a bounce of some degree.

a little more later...