VIX - still failing to break upward

Despite the main indexes closing lower by around 1%, the VIX actually closed moderately lower. The VIX, being what is it - a mere calculation based on option prices, is a very quirky indicator. So far -it could be said at least, VIX suggests virtually no fear in the market.

Bears will need to seek a VIX of 20 next week just to begin any kind of major move higher.


VIX'60min

VIX, daily, rainbow

VIX, weekly

Summary

A fair few traders will be bemused at the weakness in the VIX today, I myself was one of them. Yet, we've seen this kind of thing before, where the VIX lags declining indexes for a few days, only to snap 20/25% higher 'sooner or later'.

As noted, any bear out there should be seeking a move to VIX '20 no later than next Wednesday. That should in itself open the door to the first attempt for VIX 24/25 by the end of next week.

The longer term VIX weekly cycle is still suggestive - at least from a price/wave perspective, of a move into the 30s/40s within the next month or so. Yet, we'll need to see a good weekly close over the weekly 10MA - currently 20.72, to confirm any such bearish outlook.

A VIX '21 by the close of next week, if SP can close under the broad up trend channel of 1340, looks viable.

Closing Brief - a somewhat bearish Friday

Moderate declines to close the week, although one primary concern for the bears is that the VIX still closed red.

More importantly, the weekly cycles are closing red for the week, a little follow through early next week, and things might get 'interesting'.


IWM

Dow

Sp

Summary

So, sp'1354 to close the week, having declined from the Tuesday peak of 1374. Is the top in for wave'2 yet? We won't know until we break back below sp'1320. Only then will the broad up trend be fully broken. A break into the 1310s..should in theory open the door to a swift move to sp'1225/00 with 2-3 weeks.

*I added a further short position in the closing hour, from the equivalent of sp'1353. First target is 1335/30, no later than next Tuesday.
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Bit and pieces across the evening..and weekend.

3pm update - place your bets for the last hour

The closing hour, and it looks like we'll close within the bear flag I noted in the last hour. A close under the hourly 10MA of 1359 should be considered 'enough' for the bears.

The weekly index charts - if we close at these levels, will all look bearish for next week.

Yet..the VIX is still failing to confirm the declines, and that remains my primary concern.


sp'60min

sp, daily'5

Summary

So...bears want to see at least a close no higher than 1357/59, anything under that would be at least something useful to end the week. A moderately 'green' VIX will also be important.

What is clear today, the 80k jobs data is not good for the bulls to claim 'good growth', but neither is it dire enough to assure them of QE3 in August. Besides, the Bernanke can't possibly do QE with the markets a mere 4% from the recent highs.

More after the close
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update 3.20pm EST
added a new short position from sp'1353.
The VIX looks pretty low right now, and the 15min index cycle..

So I'm shorting within the mid-range of the baby bear flag...first target is the lower channel on the daily cycle of 1335/30 by Mon/Tue