Volatility gains for a second week

Despite equity indexes closing the week with moderate declines, the VIX still slipped into the Friday close, settling -2.4% @ 14.37. Across the week though, the VIX gained for a second consecutive week, with net gains of 7.2%.


VIX'60min

VIX'daily3

VIX'weekly

Summary

Despite the market declining a little more:  sp -5pts, the VIX still cooled down..

First support looks to be the daily 10MA, that is @ 13.09, but is rising.

Arguably, VIX 11s look completely out of range for some 'weeks', and 12s will only be viable if the market can make a play into the sp'1690s again - which certainly won't be easy next week.


Two weeks does not make a trend..but its a start

For the equity 'doomer bears' out there, one of the most bearish aspects is that the VIX has actually managed to close with net gains for the second consecutive week. Sure, we're only in the low teens, but its a start..and 16/19s look viable within the next week or two.

Breaking into the VIX 20s though, that remains VERY difficult, and looks to only be briefly viable in the first half of September.
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more later..on those weak indexes

Closing Brief

The main indexes mostly closed a touch lower, after a slight late afternoon micro rally. The broad trend remains weak, but a bounce next week into the sp'1680s looks very viable. Precious metals and Oil both closed with moderate gains. VIX closed around 2% lower in the low 14s.


sp'60min

Summary

*bulls fail to clear the hourly 10MA. That keeps the door open to further downside, even as far as the 1630s, although I'm inclined against that. Bears still seem weak.
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Certainly, today was a failure for the bulls, with further declines, and the sp' even broke below the daily 50MA of 1657.

This week was useful, if only in that the five week tight trading range is over. Downside into September is pretty secure now, somewhere down to the sp'1575/50 zone.

Have a good weekend.
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*next main post, late Saturday on the US weekly indexes

3pm update - another floor attempt

The indexes are again trying to secure a floor, with the sp' having hit 1652. Bulls need an hourly closing candle above the 10MA..currently 1660. Precious metals holding gains, Gold +$12, with Oil similarly higher. VIX -1%, and looks likely to melt lower into the opex close.


sp'60min

Summary

*interesting hourly candle..is that a spike floor?

Look at MACD (blue bar histogram) cycle...inexorable battling back upward. Bulls have a real chance on Monday to kick this market back upward.
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The bulls sure have struggled since Thursday morning, with the market set to close the week with net weekly declines of around 2%.
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*upside target for a bounce early next week remains 1680/85....which now looks not viable until Tues/Wed.
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*I remain on the sidelines across the weekend.
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3.01pm..just another 2/3pts..and the 10MA will be cleared..and bulls will be all set for Monday.

3.28pm.. bulls still struggling to clear the hourly 10MA of 1660, but then its choppy opex.

Looks like market makers  content to pin AAPL at the big $500 level. 

2pm update - weak market

The main market remains moderately weak, but despite the declines, the bears look tired, that has seen the market slip from sp'1709 to 1653 across ten trading days. A bounce into the 1680s still looks likely. Gold is building gains, now +$8


sp'60min

GLD, daily

Summary

*GLD 142 looks an easy target for mid/late September.
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The 5/15min cycles look arguably floored, and we could easily battle higher into the close.

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Certainly though, with just two hours left of the week, I don't think it merits 'getting involved'.

Considering the lack of strength today, the 1680s now don't look viable until late Tue/early Wed.

So..yours truly, is probably going to remain a watcher for another 2-3 days. Urghh


2.19pm..  sp'1652...and indexes continue melting lower... not seen this kind of action a few months.

If follow through on Monday morning, then 1640/35... would make for a buying level, even for me.

Gold +$14...only another $85/90 to go.

1pm update - market struggling a little

The sp'500 is -3.5pts @ 1657, a mere 1pt from the morning low. Yet other indexes are not as closing to breaking new lows. Bears still look exhausted, and a recovery/bounce into the sp'1680s remains the target. Oil has lost its earlier gains, back to flat.  VIX is similarly off the lows, now -3%


sp'60min

Trans, daily

Summary

Note the market 'old leader' - Trans, actually still positive.

That is probably the key sign indicating the main market will hold up...and rally into Monday.
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Certainly, there seems absolutely zero reason to be short across the weekend, not least for the options traders out there.


1.09pm..  sp/dow break new lows..but everything is still holding up.

Tech and Transports are STILL positive on the day.
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1.45pm...R2K and Dow now breaking new daily lows.. hmm.

Oh well, at least I'm not long.  Always overly risky, whilst the bigger cycles are pushing lower.
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12pm update - still building a floor

The market is pretty subdued, and clearly still in the process of building a floor for the recovery/bounce, back into the sp'1680s. Hourly index charts still suggestive of a leap higher this afternoon. Precious metals and Oil both building moderate gains. VIX -6%


sp'60min

vix'60min

Summary

A hit of the 50day MA @ 1657, and we're now set for a bounce.

Many are now calling for new highs >1709. Yet, weekly charts say..NO.
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I holding to original outlook...seeking a significant wave lower into September.

The only issue is finding an acceptable entry point. Right now, no point shorting into the weekend..not least since we're not even in the 1680s yet.


VIX update from Mr T.



time for lunch!

11am update - setting up an afternoon jump

The market appears to be coiling up for a rebound to the upside. With a hit of the 50 day MA, the sp' looks set for higher levels into Monday, target is a somewhat obvious gap zone of 1680/85. VIX continues to cool down.. -6% in the 13.70s.


sp'60min

Summary

Well, the bears  had an extra opportunity to close out this morning. 

There can be no excuses for whining and bitching if the sp' is in 1680/90s on Monday.
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Regardless, at least yesterdays move gave clarity to the mid-term.


At a minimum, the current downside target is 1560

sp'weekly3

You can see why I'm looking for that kind of move. 

10am update - recovery into the weekend

The main indexes open a touch weaker, but the 50 day MA has held on the sp'500, and all things considered, the market looks set to battle back higher into the Friday opex close. Precious metals and Oil both building gains again. VIX is cooling down.


sp'60min

vix'60min

Summary

Market is very likely exhausted on the downside in the current multi-day cycle.

The only issue is how high do we bounce..and how many days.

Best guess..sp'1680s look very likely. The only issue is whether the bulls get yet another attempt to clear 1700.

Not that it should matter for the bears in the mid-term. I can't consider a new high viable until late October..at the earliest.


10.38am.. market still battling it out to hold a floor, but frankly, bears look done for a few days.

Overly risky to take a long position, but a lousy place to launch a new short.

For the moment, patience would seem the only conservative option.

Pre-Market Brief

Good morning. Futures are flat..for just about everything. Sp'500 is set to open unchanged at 1661. Today is opex, and with $3bn of QE, the bears face something of a challenge to close the market lower. The obvious target is the 50 day MA, just a little lower @ 1656.


sp'60min

Summary

So... a flat open...and that will give everyone a chance to re-position.

Considering the last few trading hours, along with 5/15/60min MACD cycles that look floored, bears should probably have already exited, ahead of the weekend.

At best, a hit of the 50day in early morning, before a general recovery into the 1670s.
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*I remain on the sidelines, and I don't expect to trade today either. Doesn't seem any point, with sig' risk of upside into the Friday close..and possible follow through early next week (to the upside).

Frankly, I'd only feel comfortable with a re-short in the sp'1680s or higher..and that sure doesn't seem likely for a few days.
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9.34am... market testing the 50 day MA . sp'1657.. hmm

9.40am.. looks like a floor at the 50 day.

If I could stomach it, I'd be going long now, but I can't.  Absolutely tired of this market.

Target upside remains the 1680s.

Downside into the September FOMC

The main indexes finally picked a direction after trading within a 3% range for the past five weeks. With the market decisively breaking 1675, sp'1709 is now a confirmed top. The only issue is what happens after the current down wave concludes in September.


sp'weekly4b - long term hyper-bullish outlook

sp'weekly8

Summary

If there is one thing worse than losing money, its being on the sidelines, and not being involved.

I suppose I could have chased the open lower at sp'1670, but really, that goes against a core personal trading rule, never mind that the hourly MACD cycle was already low yesterday afternoon.

So..for yours truly, it was one of the most annoying days of the year so far. Tomorrow can only be worse, if we gap down another 1% or more. At which point, I'll probably turn off my screen until next week.


Downside into the next FOMC ?

The weekly charts are highly suggestive of downside into September, where we have the next FOMC announcement due on Sept'18.

If you consider that markets might unravel into that time, do you think there is a chance in hell that the Bernanke is going to start cutting QE? Hell no, in which case, the bounce from the FOMC is going to be fierce, probably 75-100pts.

That will get us right back into the mid 1600s, and then the ultimate issue will become apparent. Does the market put in a critical lower high...or does it just keep on rallying into spring 2014? Right now, that is utterly impossible to fathom, with late Sept/early October likely being a treacherous time for traders.


Looking ahead

There is a trio of minor econ-data tomorrow - housing starts, productivity/costs, and consumer sentiment. If those come in at least 'reasonable', then the market will have an excuse to rally.

*there is sig' QE of around $3bn tomorrow. Although yes, I can hear the bears bitching that since Thursday closed lower - despite the earlier QE, that negates the previous four year link between QE and the rising US/World equity markets. Idiots.
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sp'60min'4 - H/S formation confirmed

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So...what the hell do I do next? Going long is out of the question, not least now that the old support of 1675 has been busted. The only issue is trying to find a decent short entry level, but what if we just keep on falling?

Those daily charts sure aren't offering any sign of a turn yet, and as some out there are suggesting, a move down to the 1630/20s is viable within a few days.

Goodnight.. from a frustrated London

Daily Index Cycle update

The main indexes all closed significantly lower, with the sp -1.4% @ 1661, a very decisive close under the old support floor of 1675. Near term trend looks weak - although a bounce briefly back into the 1680s is viable. Mid-term outlook is for downside to the sp'1575/50 zone by mid September.


sp'daily5

R2K

Trans

Summary

For the bears, it doesn't get any better. A straight forward gap right under the old support floor, and then just continued weakness across the day. Despite renewed attempts to rally after late morning, the bulls failed, with the market settling very close to the lows.

The only issue remains whether the bulls can stage a recovery bounce into opex/early next week, before a continuation downward.

Mid-term downside now seems relatively assured into September. The bigger wave count - even on the hyper-bullish outlook, is suggestive of sp' back in the 1500s.
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a little more later...