The 2009-2011 trend line - monthly cycle

A poster pointed out something to me which I've been remiss to note. The trend line from the index lows of March 2009, all the way up to last October'2011..such a trend line (purple) offers a possible market floor of sp'1225/00 by late June/July.  Will that be the low for this year though?


SP'monthly

Transports, monthly (bearish/doom chart)

Summary

There is no question - as I've noted for the world indexes for 3 months now, that we are rolling over. The issue remains..where is the floor? When will the printing man..aka..the Bernanke appear? The Fed never pre-empts a market fall, so at what level might he step in to announce he is spinning up the printers again?

I have to think that sp'1225/00 will simply not be enough of a down cycle for the Bernanke to appear. The natural level in my view remains sp'1100/25 - no later than October.

Re: the Transports chart....

You can ignore the 'crazy talk' count, I'm not much a fan of it myself, but the key issue is that the 5 month flat top did break below 5000, and we're likely going down to at least 4500. Were there serious social/financial 'issues' this summer in the EU, then trans'4000..if not the natural 3500 Fib zone area appears still very viable.

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**Special note...I do really welcome all comments, especially when it comes to targets for the indexes (stocks, VIX, currencies too!). so if you think I'm failing to note something important, please let me know!
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As for Wednesday, there is only some housing data to come, doubtless the market will be pulled in both directions by more endless rumours from the EU. The bulls do have the ball right now, but they are facing multiple brick walls of resistance at sp'1340, 50/60 and especially the 1370/80 zone ;)

Goodnight from London City.

Daily Cycle Update

With the main indexes rising over 1% today, everything is back to risk-on, yes? Err, no. The bigger monthly index cycle can easily dismiss such market action as mere 'noise'. Lets look at a few of the key daily cycle charts...


Sp'bullish outlook

Sp'bearish outlook'2

Transports

Summary

The transports - despite today's rally, remains in a very clear bear flag. There is going to be a real struggle to break above 5200/250 by the end of this week. In fact, I'd be looking for the tranny to break below 5000 in the coming days. If that's the case...then we should look for sp to break under 1291.

My best guess for the mid-term would be something like the second chart - where we level out in this wave'2. These small moves are always a tricky thing to guess, and in the bigger scheme of things, it doesn't matter anyway.

As for the bullish scenario chart, well, I suppose if the Bernanke appeared - overtly hinting at QE3, and if the Greeks formed a cohesive new government in June..maybe then I could envision this market breaking to a new high >sp1422. Yet even then, the econ-data (both within the USA, and worldwide) pretty much sucks, there is an increasing weakness across the world economy. The idea that Sp' can comfortably remain above 1300...no, I don't think so.

Also, considering that the VIX continues to show some underlying strength...I'm still guessing the indexes will be considerably lower in the coming weeks and months.

Volatility - holding up

Despite the indexes rising around 1% today, the VIX only closed marginally lower, and in fact was largely green for much of the day. The daily and weekly cycles continue to suggest much higher volatility levels in June.


VIX'60min

VIX, daily, bullish

VIX, daily, bearish

VIX, weekly

Summary

More than anything, I like the VIX weekly chart. It was warning since March of downside in the indexes, and we did indeed see a move from sp'1422 to the daily cycle low of 1291 just last week. Yet VIX is still relatively low, we have seen no panic spikes yet. There have been no high volume selling days in the equity market.

Mr VIX near term target remains 27/29...that may well be enough for a 'spike high', but...I am still looking for high 30s/40s by late June.