10am update - Election chop

Since it is election day, it would be somewhat surprising if we do anything other than minor chop today. I'd guess we'll close within the war zone...somewhere in the range of 1420/00. VIX will probably close a little higher.


sp'60min

sp'daily5

vix'daily

Summary

We still have pretty clear bear flags on the daily index charts. Essentially, the bears have leeway up to around sp'1440. Any daily closes over around 1445/50, and the near/mid-term bearish scenarios will have to be thrown into the trash.

I'd be surprised if we can claw into the 1430s today, never mind the '40s.
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*I am still guessing Obama wins a second term, although it may take some days, even a week or two to clarify the result. If it does drag out, then Mr Market won't be entirely pleased, just like in 2000.

back at 12pm

Bigger index cycles warning of trouble

Whilst the main indexes are trading a mere 4% from the QE3 spike highs, the bigger index cycles continue to warn of trouble into year end. The weekly charts suggest a brief move as low as sp'1345/20, whilst the monthly charts suggest sp'1200/1175, the latter of which would probably equate to VIX back into the 30s, if not 40s.


sp'weekly2, rainbow

sp'monthly, rainbow

Summary

With Monday being a somewhat choppy day, Mr Market is clearly waiting to find a direction. Once we get past the election, the market will surely have chosen whether to break >1440..and proceed to new index highs, or..to have broken 1400...and take a swift trip to the low 1300s.

Rather than getting lost in such daily noise though, I remain trying to view things from a bigger perspective. The weekly charts do suggest if we can get a daily close under the key cycle low of sp'1397, then we should see a further 4-6% decline across a few days.

My best guess is that if we see the lower 1300s, we'll then see a bounce back to 1400/25, before a much more severe drop. A close parallel is the pattern from summer 2011.

I will continue to keep noting, the bears are yet to put in a lower high on the bigger weekly/monthly charts. Until we see a break lower, a bounce, and THEN a lower high, any potential collapse wave (like May'2010 or July/August 2011) seems very unlikely.

Goodnight from London

Daily Index Cycle update

A choppy pre-election Monday for the US markets. Opening minor declines of sp 5pts only held for an hour, and then crawled higher across the day. A closing hour mini-ramp saw the sp' try to close >1420, but it failed. The bulls sure are seeing a lot of failed rallies lately.


Dow

Sp'daily5

Trans

Summary

The main indexes continue to have very clear bear flags on their daily cycles. The Sp' is trapped back within last weeks war-zone of 1420/00.

Clearly, any intra-day break under dow 13k, sp'1400, will very likely be an important moment for the market this autumn, and will likely see the VIX break back into the 20s.

*I'm guessing Obama wins a second term. That would surely annoy the republicans, to the extent they'll largely refuse to compromise to delaying the fiscal cliff. If that is the case, then Mr Market will need to significantly factor in a GDP drop of -2 to -5%. - and that's even when assuming 'everything else is okay'.

We may have some very interesting and exciting trading days and weeks ahead.

A little more later..