Pre-Market Brief

Good morning. Futures have swung back moderately higher, sp +5pts, we're set to open around 1568. USD is higher, and might be why the precious  metals and Oil are both lower - although too dramatic. Primary target remains the low sp'1570s, with VIX in the 13s...briefly.


sp'60min

sp'daily5

Summary

So, it looks like we're going to open a little higher. Its certainly not over key resistance in the 1572/74 though.

We do have some econ-data at 10am to be mindful of, and Mr Market could use it as an excuse to move into those 1570s.
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*I will be on standby to launch a major re-short across the day. 

I think 10.30/11am would be a very reasonable time to see the market max out.
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UPDATE 8.52am . metals are on the slide. Silver -60 cents @ $22. a mere 5 cents from taking out the recent crash low.

If SLV closes <21.96, it bodes badly for the days ahead. SLV 17 is viable 'at any time' on an overnight snap. I am not meddling in it..yet.

 UPDATE 9.19am...sp +7pts..we're now set to open on the 1570 border.

If the 10am econ-data comes in at least 'reasonable', then we'll see just how much power the bulls have. Anything >1575 would be a problem to the bears.

9.35am...well, we're in the low 1570s...the target zone.

Those bears holding to the H/S theory should be seeking a re-short across the next few hours...with very obvious stops @ 1575 tight..or 1597 loose.

Its actually a rather straight forward trading situation.
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9.41am  sp'1573s...we're NOW on the threshold. I suppose we could spike over, and its not an issue. VIX is -5%...as expected.

9.50am sp'1574s...still no levelling on the 5/15min charts...VIX still falling.

Seeking a fail in the low sp'1570s

The main indexes closed higher for a second day, with the VIX back in the low 14s. Many are starting to get bullish again, yet is this just a small wave'2 bounce, before a much sharper wave'3 decline? Primary downside target zone is the sp'1490/80s, with VIX 20+.


sp'daily5b - best guess

sp'daily3 - fib levels

sp'weekly3 - bollinger and keltner bands

Summary

So.....the market opens higher - although for anyone watching, pre-market price action was weakening into the open. The opening gains then quickly failed, and the market broke into the 1540s again.

No doubt, a fair few bears were chasing that open lower...and got burnt, especially those running without trading stops. The latter day recovery was certainly expected, and the algo-bots (in melt mode), were given free reign during what became a very quiet afternoon session.


The bands of constraint

As ever, I think its important to note the current weekly Bollinger - and sometimes, Keltner.bands The lower weekly bol' band is now up to 1408, and that is going to keep rising in the weeks ahead - even if the indexes decline.

Quite frankly, it seems near impossible for the market to be trading anywhere under the 1450/40 zone in the current down cycle. Its possible we could break much lower levels, but only on a secondary down cycle - see May-August 2011 for a good example.


Holding to the 'best guess'.

Nothing has changed in my view, and so I'm holding to what I stated last week. Bears should be seeking a market fail/rollover in the sp'1570s...and then a swift move lower. Perhaps the 1500 level will hold on first attempt, before the FOMC give the market a wave'4 bounce higher..only to eventually hit the primary target of 1485 - the old February low.


Looking ahead

Its hard to call how the market will open tomorrow. Regardless of the open, I'd be looking to wait until I see the sp'1570s, before I start hitting buttons. Another 8-12pts on the sp'500 certainly look viable by tomorrow afternoon.

We have a very long week ahead!

Goodnight from London

Daily Index Cycle update

The main indexes saw some moderate swings in the early morning, but closed moderately higher. The sp' close of 1562 is barely 10pts away from a target right shoulder, of what might be a mini H/S formation, within a (possible) much larger H/S. Bears need to keep market <1575.


sp'daily5

Summary

Today was broadly as expected, with continued upside from the Thursday afternoon low of sp'1536. A move into the low 1570s looks relatively easy, the only issue is whether we are setting up a mini H/S formation.

Bears really need to keep prices <1575. Any daily close in the upper 1570s..or higher, would mean the above scenario needs to be thrown out.

Considering the bigger picture, I would say there is at least a 60/70% probability of the sp' failing in the 1570s, with a rather 'swift and fierce' move to the 1490/80s - within 5-7 trading days.

Worse case for the bears, would be a choppy 1-2 weeks, but putting in a lower high, <1597. What I can't envision - after the recent strong downside action, are new index highs. That now seems extremely unlikely.

a little more later...