10am update - morning chop

Good morning.A choppy open, we could easily turn a little red in the next hour, but really, its all noise again. There appears near zero downside momentum, and the VIX confirms the near complete confidence in the market that 'everything is just fine'.


sp'60min

sp'daily5

Summary

Action in the indexes is very much like the latter half of August. Sideways chop for over a week, and then... BAM, further moves higher ! So, the question would be, whats the next excuse for a major gap higher into the 1480/90s ? With the QE3 decision out of the way, maybe earnings will come in 'better than expected'?

Frankly, its looking pretty bad for the bears. The only negative remains the transports and Oil, both of which could close the month in a pretty bearish way.

Even sp'1440 right now looks a stretch.

Back at 12pm

Tranny - still red and under the big 5000

Despite the transports rallying 1% today, the monthly trend is still warning of trouble for October.


Trans, monthly, 6yr, rainbow

Summary

With 4 trading days left of the week, month, and the third quarter, the tranny is still red

Primary downside target is 4500/4400 by the end of November. That would probably equate to around *sp'1350/25.

*The problem is if the market is in the mid 1300s by late November, that would have broken the post October 2011 low of 1074 trend/ lower channel. Without going into the 'what happens then', if the transports does continue to weaken, it IS a warning that can't be dismissed, even with the Bernanke now buying up MBS and soon - monthly $40bn blocks of unsterilised T-bonds.
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The tranny will remain my primary red flag warning, lets see if we can close the week under 5k with a red candle. The secondary red flag is WTIC Oil, and I remain seeking a weekly close <$90. Stay tuned!

Goodnight from London

Daily Index Cycle update

Minor declines for the indexes, although the transports showed some significant closing gains - after its 6% decline across last week.


IWM,daily

Sp'daily5

Trans

Summary

Frankly, its not looking so great for the bears. Both the Rus'2000 and the SP' look as though they are just creating yet another bull flag. We could easily trundle slowly downward for the rest of this week, - with the daily cycle fully reset, and then another ramp higher into mid October (SP'1500?).

As was again seen today, any down moves in the morning are very minor, never hold for more than an hour or two, and then up we go again.

What remains clear, until the VIX is back over 20, and until the SP' takes out the recent important low of 1397, the bears are fighting against a freight train driven by the Bernanke.

A little more later.