Pre-Market Brief

Good morning. Futures are fractionally lower, sp -1pt, we're set to open around sp'1408. After yesterdays late morning mini-ramp, bears are understandably edgy about being short in what remains a treacherous market. As usual.. eyes to the VIX..and the transports.

*weekly jobless claims: 370k vs 380k expected, as ever though, there really isn't much to make of that data point.


Trans'60min

VIX'60min

Sp'daily5

Summary

Considering everything, there should be renewed weakness today, and primary target remains 1385. That still seems viable, no later than tomorrow.
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I remain short, seeking my next exit around 1395, which I believe might come this morning before yet another bounce.

A long day ahead, and it won't take much of a rumour/news story to snap this market sharply higher..or lower. Everyone is getting twitchy about there I sense, and certainly includes..yours truly.

UPDATE 9.20am

Notice the Dollar, almost breaking USD 80.0.

Metals, Oil,..weak. Sp'-3pts...we now set to open around 1406.

I'd like an exit around 1395 by 11am.

Awaiting a major snap lower

It was a very mixed trading day. Once again opening gains failed to hold, then moderate declines developed, only to see a mini-ramp, with gains of 1% on most indexes.Yet, the underlying weakness is still there, and we saw much of the gains fade into the close.


sp'daily5b - scenarios

sp'daily4 - original bearish outlook

Summary

Today's intra-day action is the sort of nonsense that can understandably drive most traders insane, and I have to admit, I still find these brief..but fierce ramps, really annoying.

Yet, such ramps are to be expected, even if the general market is trading lower. In fact, as many recognise, the biggest ramps are during major market declines. Just look at the daily charts from 2008, endless hyper-ramps of 2, 3, even 5%...on a random, but pretty frequent basis.

I'm still holding to my original outlook, which is broadly seeking the low sp'1200s. This may occur in a very crashy (May 2010) manner, or more likely drag out into January. At the very minimum, a test of the June 1266 low seems a given, and I don't think that will hold for too long.


Bears need VIX to explode

VIX, weekly

If we're going to take out the recent sp'1343 low, bears will surely need to see the VIX break >20, and then spike higher into at least the low 30s. If my index target of low 1200s is correct, I would be surprised if the VIX doesn't briefly try to break 40.
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Bonus charts - the Dollar

USD, daily

USD, monthly2, rainbow

The dollar finally managed to put in a positive close today. The daily MACD (blue bar histogram) cycle is just starting to tick higher, but its still very negative momentum.

Index bears need to see USD back above 81, and make a break into the 82s. The monthly rainbow chart is actually sporting a red candle right now, but that could easily flip to green, if USD battles higher into the 81s.

USD 84/85 seems viable in early 2013, which would put serious downside pressure on both equities and commodities - especially the metals and Oil.

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The target levels are clear, lets see what Thursday brings.

Goodnight from London

Daily Index Cycle update

A very confusing and roller coaster trading day, although the trading range was barely 1%, so we're not into 'crazy wild swings' quite yet. Most of the main indexes closed moderately higher, despite a closing hour slump. With the VIX apparently flooring in the mid 16s, we could see much stronger downside moves, first target remains - sp'1385.


Nasdaq Comp

Dow

Sp'daily5

Trans

Summary

At 11am this morning I asked 'are we having fun yet?' Mere minutes later, the market turned, and ramped 150 dow points in just over an hour. Maybe I should be more careful with my words, do I tempt fate too much ?

So, the closing hour action was at least bearish into Thursday, and closing <1410 was quite a relief. 

Thursday, it will obviously be important to take out today's low of sp'1398, and break into the 1380s. If that is achieved, then everything remains 'broadly' on schedule.
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I remain short, and seeking first target of sp'1385. It will be VERY difficult for the indexes to break below the 200 day MA though, and today's late morning ramp again showed that the market can still easily smack the bears down.

A little more later