Good morning. A moderate rally across the morning seems likely, whether it can continue all the way into Friday..that is now the issue. Oil is significantly lower, along with the metals...not least helped by a significantly stronger USD. VIX is largely unchanged.
sp'60min
vix'60min
Summary
Best guess is we see a bounce into the mid 1560s.
After yesterdays action, I'm finding it hard to envision we make a play for 1576. It is possible, but I'm...guessing....no.
Thus..I will look to short the indexes later today, probably around 1-2pm
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*updates across the day, and I'll certainly note, when I start hitting buttons for a major re-short.
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UPDATE 10.05am
1561/62 already..and we're barely 35mins into the day!
On balance, i do NOT see 1576 being challenged.
Lets just see how the next 2-3 hrs play out. Bears need to give the bulls a few more hours at least.
Look for VIX to find support around the 13.60/50s.
With the Transports also breaking key rising support, the bears can start to be increasingly confident that a mid-term cyclical top is being put in. Whether we briefly test 1576 by the Friday close, seems largely inconsequential. This market is surely headed lower from current levels.
sp'weekly3, Keltner bands
sp'daily5b - best guess
Summary
Again, I think the weekly Keltner chart is useful to keep in mind. The lower band will be extremely hard to break on any initial down cycle. On any basis, bears can NOT expect any lower than the 1440/60s..as things currently are.
Indeed, by early May, that lower K' band will have risen, and be somewhere around 1460/80....which is very much where my primary target is @ 1470.
WTIC Oil - also broken
see USO, daily2
I was short USO from last night, and had been looking for a decline to the 34.40s..which I got..and that was indeed where I exited this morning. Yet, Oil fell across the day, and it was somewhat depressing to see just how low USO was by the close. I really didn't expect that level of drop on the first move.
Regardless, I will look to short Oil again on the next bounce, which could be as high (ironically) as my exit today around 34.40, although if the market is weak..maybe it'll struggle just to hit 34.0
Lesson of the day...'stops are good..but not too tight'.
Looking ahead
There really isn't much tomorrow in terms of data, just the usual weekly jobs numbers..not that many consider them too important anymore.
The hourly index chart (see earlier post) does offer significant upside potential tomorrow...so don't be surprised if we open back in the sp'1560s. Whether we can still make a play for 1576..I've no idea.
Regardless of whether 1576 will yet be hit, I am now very confident of the next 4-6 weeks.
*I will be looking to re-short the next equity/Oil bounce, and will be focusing on the 15/60min cycle charts tomorrow..more than ever.
Goodnight from London
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Video Bonus...'Risk', (39mins)
I finally got around to watching this from Grant Williams. Its relatively new, although its already been highlighted on Zerohedge. I know nothing about the narrator, but its worth seeing. In particular, it deals with the issue of fractional banking and gold leasing.
The bulls are unquestionably losing control, with most indexes closing around 1-1.5% lower. The Transports have followed the R2K, and also broken key rising support. Oil saw a sharp drop of 2.5%, and is now likely starting a major down cycle across April...and into May.
IWM
SP'daily5
Trans
Summary
So..we now have two indexes having broken key rising support..and indeed..the break of the Transports from the support that stretches all the way back to the post election - mid-November low...is very important.
Without question, this multi-month cycle is coming to an end. R2K was the first warning - it put in its high 3 weeks ago, and now we have two indexes broken.
I've no doubt now that the SP, Dow..and Nasdaq will follow across the next few days.
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In terms of the MACD (blue bar histogram) cycle, we're very low on the R2K/Transports, so..it wouldn't be too surprising if they get stuck soon. Yet the other indexes have a viable 3-5 days downside..which would take us all the way into the end of next week - when the tax year ends.
