Pre-Market Brief

Good morning. Its the last trading day of the week and the month. How we close today will be important in many respects, not least from a chartists perspective. Futures are showing slight gains, sp +2pts, we're set to open around 1418, a mere 2pts from yesterday mornings peak.


sp'60min

sp'daily5

Summary

Indeed, an important day is ahead.

As someone who is generally more focused on the bigger trends, as I noted in my overnight post, what is VERY important for the bears today, is to see the indexes close the day flat...or preferably a little lower. That would ensure at least the monthly cycles remain with provisional warnings of trouble for December.
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One good aspect that IS already the case for the bears is that the hourly cycles are all primed for a considerable down cycle now.

I suppose we could still hit the 50 day MA this morning @ 1422...and see a reversal from there.  However, I absolutely do not want to see a daily close >1425, or worse 1430. That would be a major problem.

*we have two pieces of econ-data today.

Personal income/outlays, important for the macro-economists out there.

However, much more important to the market..Chicago PMI @ 9.45am. Market is expecting 50.3
So, bears should be seeking anything under the recessionary threshold of 50.0  Any reading <48, and Mr Market will likely use it as an excuse to sell off, testing the sp'1400 level again.
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back at 10am

Another trading month to conclude

We have just one trading day left of the month, and how we close tomorrow will probably provide some key technical clues as to where we are headed next month, and into early 2013. Bears should be seeking at least a flat Friday, or preferably <sp'1410. A close under sp'1400 would be massively bearish for next week.


sp'monthly3, rainbow

sp'daily4 - original bearish outlook

VIX, weekly, 6yr, rainbow

Summary

Tomorrow is the end of what has been a pretty busy week, and also the end of the trading month.

The daily'4 chart - remains on track, and effectively, my outlook is that we are in back test mode - against the (now broken) Oct'2011 rising support. If I'm right, we shouldn't be putting in any daily closes >1430, and in fact, we should see a pretty strong reversal within the next day or two.


VIX - tight...and ready to explode.

Here is a new chart, rainbow VIX, spanning the past six years. The point I'd like to highlight is the super tight bollinger trading bands. We've not seen bands this tight since spring 2007. Usually - as is widely recognised, when the bands get tight, eventually there is a snap move.

With the VIX in the lowly 15s, I can only imagine that any 'snap'..will be to the upside. The only issue is 'when'.


Monthly closings

One particular aspect that I will be focusing on tomorrow is how the monthly charts will be closing, not least my infamous 'rainbow' (Elder Impulse) charts.

As things stand, despite yet another higher close, the Sp' monthly is still sporting a blue candle. Now, it was red earlier this month - when we were in the mid 1300s, but a blue candle is still an important provisional warning of trouble.

At the very least tomorrow, I will want to see the indexes close flat, or preferably, at least a little lower. A close <sp'1400 would be an absolutely superb way to end the month. I can't wait to find out!

Goodnight from London

Daily Index Cycle update

The main market closed higher by around 0.5%. However, once again, the Rus'2000, and the Transports were leading, closing around 1% and 0.6% respectively higher. The near term trend remains to the upside, although any break <sp'1400 would cause serious technical damage, and open the door to a major wave lower.


IWM (Rus'2000 small cap)

SP'daily5

Trans

Summary

So, the SP' has not hit the 50 day MA @ 1422, nor the 61% fib @ 1425. Its thus possible we'll do that tomorrow, if so, I can live with being short a day early.

As things are, I think we're close to being maxed out. Certainly, the hourly cycles (see earlier post) are all primed to rollover this Friday, and continue lower into Monday.
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Indeed, it was quite an interesting and exciting day, where after almost two weeks of waiting, I finally hit some trading buttons. I'm now heavy short, and seeking my first exit around sp'1400/1395 within the next 1-3 trading days.





Lets see how many of the deluded bull maniacs wish to hold across the weekend. I think we'll see some 'protective selling' tomorrow, not least since its the end of the trading month.

A little more later