10am update - bears starting to bite

After yet more lousy earnings, Mr Market is seeing some pretty exciting opening action Yesterdays closing hour ramp is entirely negated, and to be dismissed as what it was..nonsense. Next downside target is 1397, that will be 'difficult' to break though.


sp'60min

sp'daily5

vix'60min

Summary

An exciting open, but as ever..important to focus on the bigger targets. The weekly cycle targets secondary rising support in the 1380/70 level, that is viable, but it sure won't be easy to get down to that level.

The VIX  has already made a break into the 18s...the big 20' level would be a major victory for the bears.

*I am short, seeking an exit around 1400.

back at 11am (updates more frequent..when things...'exciting' ;) 

WTIC Oil - warning of trouble

Whilst the main equity indexes closed broadly flat, there were still signs of underlying weakness out there. WTIC Oil closed lower by 2.2% @ $88.65. The important weekly and monthly cycles are warning of significant downside risk into early 2013. As is often the case, weakness in commodities is often a precursor to major equity declines.



WTIC, daily

WTIC, weekly

WTIC, monthly, rainbow

Summary

With the indexes ramping in the closing hour, a lot of the bears will be understandably disheartened, yet there are still some very important signs of weakness out there. Today's WTIC close in the 88s was a key one, and I think it bodes well for index declines as the week progresses.

Next target for WTIC Oil is $88.00, a close in the mid 87s should open a fast move to $84. If 84s fail to hold, then a test of the June $77 low looks very viable.

Interestingly, the monthly rainbow chart is now sporting an outright bearish red candle.

I believe WTIC is indeed warning of underlying global economic weakness, and that - despite the money printing of the central bankers, Mr Deflation is still due another visit.


Looking ahead to Tuesday:

I am seeking opening moderate index gains, with VIX in the low 16s, but with an intra-day reversal, and at least moderately lower indexes at the Tuesday close. Opening moderate gains should be enough to fully reset the hourly index cycle, and set up a strong decline across Wednesday, and perhaps all the way into the Friday close.

One thing is for sure, with all the earnings and econ-data later this week, it will be very busy!

Goodnight from London

Daily Index Cycle update

It was a bit of a messy day, with the indexes closing largely flat. The Nasdaq was propped up literally by a 4% ramp in the AAPL. With the VIX closing moderately red, Tuesday looks very likely to open at least briefly higher.


Nasdaq Comp

Dow

Sp'daily5

Summary

So, what to make of today, not least the closing hour? Well, the closing ramp is certainly something we've all seen hundreds of times in the past few years. Partly it was cyclical, we were due a minor bounce on the hourly cycle, but as we crawled higher, it looked like a short-stop cascade upward occurred.

The daily charts look a little scary from the bearish perspective. We have some very possible spiky-floor candles, especially clear on the SP' daily chart. Such spikes are often a sign of at least a short term low, and are often a good turn indicator.


The levels are clear...

Bulls need to break new index highs, sp >1474, with the bears needing to take out the very important 1397 low. With the VIX closing lower, the bulls are attempting to seize back control after last Friday's rout.

Considering the manner in which we closed, it would be very likely we'll open Tuesday at least moderately higher, perhaps into the low 1440s. Yet, that is less than 3% from the index highs, urghhh !

So, best guess, we open higher, but close Tuesday lower. Taking out today's low will be very difficult, not least if are trading in the sp'1440s tomorrow morning. It will be an important battle tomorrow, the winner will very likely determine whether we end October >1490..or close in the mid 1300s. That is a stark price range to keep in mind this week.

Also keep in mind that today, we did take out the recent 1425 low, and took out the big Nasdaq '3000 level. Bears broke a few levels, but they really need to show some power later tomorrow or Wednesday.

Both the daily and weekly trends are pointing down, but the bears must keep pushing lower. Until we put in a few daily closes <1397, the bears should not have any confidence of 'major downside' into year end.

A little more later