The market has managed to hit some short-stops in pre-market, and we've opened above sp'1600. Next level is 1607/08, where a 50% fib retrace and an old low reside. The VIX has possible completed a gap-fill in the mid 17s, and is offering a reversal candle!
sp'60min
vix'60min
Summary
*I am HEAVY short the market from VIX 17.50s, and sp'1601.
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This was actually the open I was hoping for, its knocked another 10/15% off the 'bearish' side in options land, and I'm considering it as a bonus discount.
Lets be clear, there IS risk of continued rally to the 1620s - as many recognise, but that is only another 1% higher, and downside is arguably all the way to sp'1510/00, about 6% lower.
So...1% risk of upside... 6% downside, thats pretty good in my view.
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Now...its back to the waiting game.
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Here is the thing..if you believe this is merely the bounce, then on any basis, this is the place to be taking a new short, at the top of the hourly bol/Keltner bands.
We're seen a good 40pt bounce since the Monday low, I think the bounce is at least 'largely' complete, if not fully.
10.10am.. first soft downside target is the rising hourly 10MA @ 1587. A daily close under that..and the bounce will indeed be confirmed as complete.
10.17am...sp'1598...hmm...interesting...but a long day ahead. I will be holding short overnight anyway, I ain't in this for a 5/10pt down move, I want 50pts down.
Good morning. Futures have turned strongly around overnight, and we're now looking at sp +9pts @ 1597. Precious metals are seeing severe falls, Gold -$40, Silver -80 cents (4%). USD is moderately higher. Oil is actually a touch lower again.
sp'60min
vix'60min
Summary
With the turn in the futures (from Dow -60), everything remains on track.
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The one issue we have this morning are comments from two Fed' people at 10am.
Considering futures are higher, I'm wondering if that will be the excuse the market wants for a full reversal to RED indexes. Or...if the gains will intensify, and that we'll be making a play for 1600/10 later in the day.
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What will I be looking for ?
VIX, a reversal candle in the lower gap zone, 17.25/16.75....best seen on the hourly chart.
Sp' getting stuck just under the old key low of 1598
I'm seeking to pick up a HEAVY index-short, and also long VIX. I've not been long volatility since January, so this is an 'old school' trade for me. Its sure been a while!
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Arguably, the 'don't trade in the first 30mins rule', is good, but if I see black candles on the R2K/Trans hourly (where they usually appear first), and a reversal candle on the VIX early on...I'll be sorely tempted.
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Good wishes for what will be an important day !
Just noticed an update from Oscar
Naturally..he is bullish, ;)
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UPDATE 8.42am.. GDP revised down from 2.4 to 1.8%....which is somewhat of a surprise to Mr Market.
sp +6pts, we're now looking at 1594.
8.59am... Oil sure is weak, -0.5% now, sp +8pts, which is impressive considering the lousy GDP data.
9.21am..there go some stops..and we're sp +12... @ 1600.
Next level is the old 1608 'moderately higher low'.
There is also the 50% fib retrace around 1607.
I am in NO hurry to hit buttons right now. Good bears..need patience ;)
9.37am.. sp'1603.. hmm..... VIX is near the lower gap level
Eyes..sharp
9.42am LONG VIX... from 17.54
9.45am.. SHORT the main market, from sp'1601
Thats it...I've made my move.. am HEAVY short this market, now ....I wait.
I can sustain a move to sp'1620s...if I'm wrong, but the smaller cycles look pretty maxed out already.
Long day ahead....
As it is, I will look to hold short..overnight..and across all of Thursday, possibly all the way into the Friday close.
First downside target is the 1560 low, then 1550..and the mid-april low of 1536.
Despite the rally from sp'1560 to 1588, this is probably just a bounce, and primary outlook remains unchanged. The sp'1550/30 zone looks very viable within the next few days, although the bigger weekly cycle target remains the lower bollinger, currently @ 1495.
sp'weekly7 - near term count'1
sp'60min'3 - near term hourly outlook
Summary
An interesting day to watch, although more so, for individual stocks - like BKS, CNX, and MRO.
The bulls have now had almost two full days of bounce, and I'm still guessing we'll cycle to much lower levels within the next few days.
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Keep those bond yields in mind.
Just a brief reminder on the 10yr US treasury note..
Despite the market rallying, the 10yr yield is still 2.60..a mere 15bps from breaking the next critical level of 2.75. If we see 2.80s at ANY point, then a further 40/60bps look viable within days..if not 'hours'.
Looking ahead
There are a few econ-data points tomorrow, the main one being the final reading 'attempt' for Q1 GDP, market is expecting an unchanged number of +2.4%. There is a mid-sized QE this Wednesday..and Thursday, so equity bears will be fighting the Fed to some extent.
*perhaps most notable, there are three Fed' reserve people talking tomorrow, and no doubt those comments will be listened to by Mr Market.
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Seeking a major re-short
I am looking to launch a major short of this market early tomorrow, somewhere in the sp'1595/1605 area. I no longer think the gap in the mid sp'1620s is going to be hit/filled in the current bounce.
Goodnight from London
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Bonus video...
In my somewhat random youtube viewing just earlier, I noticed the following, and I think its worth highlighting.
There are times when I wonder if my econ/market/stock postings are actually 'entertaining' enough. Since I started doing this, some 15 months ago, I have tried my best, I really have.
