Wednesday 3 July 2013

Daily Index Cycle update

The US indexes generally closed fractionally higher, with the sp +1pt @ 1615. Despite a broad array of negative world news, with low holiday volume and a $5bn dose of QE-pomo, the market held together. Equity bears are still looking embarrassingly weak, in a fearless market.





When I saw the pre-market declines of barely 0.5% I was very concerned this market would see some of hyper-ramp, and even break the 50 day MA. Its not like we've not seen it before across the last four years.

The fact most indexes managed a net daily gain is pretty incredible in itself.

For those equity bears still looking for much lower levels, there is the small solice, that the market spent another day under the 50day MA, and that does count for something..but not much.

Its pretty clear now for Friday. Either we're going to break >1624..and close in the 1630s..or 1600 will fail, and that will begin a move down to the 1530s by mid July.

The US market is closed tomorrow - although the rest of the world will be open as usual. It will be interesting to see if Asia/Europe markets see further declines on Thursday/overnight Friday. Also of importance, will be how Oil trades.

a little more later...

Volatility fails to hold minor gains

With the main indexes holding together very well - considering the news, the VIX failed to hold minor opening gains of 3%, and actually closed a touch red, -0.5% @ 16.35. Daily VIX cycle may have floored, but if the bulls can break >sp'1624, then VIX will slip to the 14s.




It remains a classic situation, where despite the multiple negative news stories out there, equities are holding together, and the VIX is showing a virtually fearless market.

Capital inflows continue to be a real prop to this market, along with the regular doses of QE.

Just breaking back over the VIX 20 threshold will be a real challenge for the bears. Right now, it doesn't look possible, baring a break of sp'1600, and consistent trading in the 1570s..and lower.

more later..on those resilient indexes.

Closing Brief

The US markets again showed their underlying power. The opening declines were very minor, and sp'1600 wasn't even challenged. The QE of $5bn no doubt helped fuel a very low volume trading session. Where we close Friday will shape the rest of July.



Well, that was just another embarrassing bear failure. I suppose you could say it was another day under the 50 day MA, but still...on any basis we 'should' have dropped 15/20pts on the sp'500 today.

There is NO doubt, QE continues to prop' this market up, and until it stops...the down trends aren't very strong, and neither do they last very long.

*To those of you celebrating the illegal (and terroristic) declaration of July'4, 1776 - where British separatists declared 'independence' from their British overlords...

Have a good Thursday.

the usual bits and pieces to wrap up the day...later

12pm update - bears (and bulls) struggling

It continues to be a real messy day. Bears lack any power to break the sp'1600 level, but neither are the bulls able to make a third attempt at breaking the 50 day MA @ 1624.  It would seem that Friday will unquestionably be a pivotal day.


VIX' daily3


*VIX is weak, barely higher, but holding above yesterdays low. Further, daily VIX MACD cycle is appearing to level out.
-- hour left, and 'we're off the lows of the day'.

No doubt the clown maniacs will be hyper-bullish for Friday, despite a great many ongoing world issues right now.

I can only hope the market snaps through 1600 on Friday, and make a fast run to the low 1570s. That would at least conclude - on a bearish note, what has been a very frustrating five trading days.

12.03pm well, here comes the ramp.  sigh.

sp'1616..a mere 8pts away from causing absolute carnage to the bears.

12.12pm. 1617..and the hourly charts look very bullish for Friday.

Just how stupid..or outright in denial, are the bears?

I still see ENDLESS nonsense talk how QE doesn't actually do anything, or how it is 'going to end soon anyway'.

Unless I'm mistaken, QE does continue, and we're sure seeing another $5bn being leveraged up, and ploughed into the market.

Its that simple.

No sig' QE on Friday, but right now, a gap right over the 50 day MA on Friday looks viable, and if thats the case, the bears can write off the rest of the month.

12.31pm.  I sure see a lot of whining and outright bitching on Zerohedge about the ramp..yet, how are they also so stupid as to ignore the giant QE this morning?

Which part of $5bn into stocks is hard to comprehend?, who wants to hold long or short across Thursday, and into the Friday jobs report?

Extremely high risk..for both sides. For the more conservative out there, sitting it out is the only decent option.

11am update - extremely marginal situation

Market is holding slight declines, which is impressive considering the many negative issues out there. The snap/break levels are clear. Bulls need >sp'1628/30, bears need <1600/1598. Which ever of those is this Friday, will be the clear signal.




*VIX is weak, showing no underlying market concern, which is pretty incredible really.

So, two hours left of the trading day, and market is in a twilight zone between key support and resistance.

For the big money, the 'chase it lower/higher' levels are very straight forward. The big weekly charts are still broadly long as we don't go >1628

11.09am... sp'1609.. it remains kinda scary how we are just 1% from breaking the weekly down trend.

Even if we close around current levels, if Mr Market likes the jobs data on Friday (regardless of the number), it really won't take much to break the upside resistance, and then off we go.

Messy morning...indeed.

11.30am.. well, 90mins to go, and so far, no hyper-ramp on QE. Seems not many want to buy ahead of the holiday and jobs report.

As a bear, I'd settle for any close <1610.

10am update - messy morning

The market opens moderately lower, but the declines aren't enough to puncture the big sp'1600 level. Bears face severe problems with a very large QE of $5bn this morning. Underlying momentum is starting to swing back to the bears, but what matters is where we close on Friday.




*daily VIX black-fail candle sure isn't such a great one for the bears. I remain very concerned VIX will go red by the 1pm close.

I've seen this picture many times before and it rarely ends well for the bears.

Despite a truck load of bad news/mood out there, the market is barely -0.5%.

*for the record, I will hold short into Friday, but I sure ain't confident about the current unclear mess.

10.03am.. ISM Data, weak, 52s, but not recessionary, and not enough to kick this market lower.

Bulls still comfortably holding sp'1600.

1021am...sp'1606,, hmm... As ever though, 11am is often a low point of the day. I am concerned we'll test 1600/1598, and then soar on the QE. 

Pre-Market Brief

Good morning. Futures are somewhat lower, sp -10pts, we're set to open around 1604. Oil is trading $101, with the precious metals higher. An early morning break back under sp'1600 does seem likely. The only issue is if the bears can close it under, despite a large QE.




An interesting 'short' day ahead.

We have a large QE of around $5bn to deal with, but world markets are shaken up by the Egyptian issue, which has driven oil back above the big $100 level.

If we can close <1600, then I will be looking for the low 1570s on Friday, with VIX 19s.

8.33am.. futures jumping back higher, sp -3pts, 1611....hell, they are almost close to positive.

With the large QE, bears are massive risk today. Worse case.. a close >1625/30, which will nail the bears for another few weeks. 

9.17am.. sp-6pts, so thats 1608. That is still a fair way from breaking the 1600 threshold, and will be really tough to break after 10am, once the QE money starts kicking in.

We've seen this picture before, 'bad news everywhere', only to close green.

A real mess of a morning ahead.

Low sp'1500s still viable

The mid-term weekly 'bearish' outlook/count is still holding together. The critical line remains the 10MA @ sp'1628, and we've repeatedly come very close to breaking it. Yet these borderline situations are typically the case in market land. Where we close the week will be pivotal.

sp'weekly7 - near term bearish count


So...we still have a blue candle on the weekly 'rainbow' chart, (we need 1605/1595 to get back to red), and the bearish case is still on.

Primary downside target remains the lower weekly bollinger, currently @ 1506, but that will rise to around 1512/16 next week, and the 1530s by mid July.

As has been the case since the 1687 high of May'22, 'the faster we fall, the lower we can go'.

Right now, it looks like the 1530s will be hit, but no lower.

WTIC Oil breaks the big $100 level

As I type (10.30pm EST), WTIC has now hit the $102s, and could easily be a few dollars higher in the morning.

WTIC, monthly 20yr historic

WTIC, monthly'2, rainbow

The Egyptian situation is a major one, and if the Suez canal is closed (or merely at threat of closing) - if only for a few days, we'll probably be looking at WTIC $110/120s. That will most certainly upset the equity markets, and we'd be unquestionably trading back under sp'1600.

From a simple price perspective, the first 'easy' target is the monthly upper bollinger of $106. A daily close >110, and then we could be looking at a couple of $10+ daily gains. I'm certainly not expecting the $147 all time high to be hit any time soon, but the daily, weekly, and monthly trends are ALL trending higher.

Higher Oil prices for the US..and other western economies, that will help the 'summer of recovery, ver'5.0', yes?

Looking ahead

Wednesday has three pieces of econ-data, ADP jobs, EIA oil report, and ISM non-manu (10am).

*there is a very significant QE of around $5bn to prop' up the market tomorrow, and bears are going to be under severe pressure until the early close of 1pm.

Things will become a lot clearer by the Friday close. At that time, we'll either be breaking well into the 1630s, or closing <1600. I'm guessing it will be the latter, and I remain on the short side.

Goodnight from London

intra-day video from Mr Permabull, 'Carboni

I certainly agree with him on Gold and bonds. Yet, higher bond yields will be a downward pressure on the market, at least until the market 'gets used to it'.

Daily Index Cycle update

The market bulls made another play to break/hold above the 50 day MA of sp'1624, but again failed. Certainly, the closing hour mini-ramp helped negate the moderate declines to 1606, but the daily candle makes for the second bearish spiky top this week.



Certainly, today wasn't a 'great victory' for the bears. In many ways, bears are merely - so far at least, able to contain the recent ramp from 1560, keeping the market restrained under the old channel support (better seen on the weekly charts).

 *see MACD (blue bar histogram) cycle, I think we might have an important 'fail 2'. We'll know by the Friday close, if we're consistently trading back <1600.

What is clear, if the bulls can't break >1624 this week, it does seem very likely we'll still see another significant wave lower, down to the 1530s by mid-July. That in itself will make for a far better 'go-long' buying level.

a little more later...