12pm update - intra day bounce

We're probably just seeing what is an overdue bounce, the daily trend remains downward, and the target by the Friday close is still sp'1420.

*there is a lot of econ-data both tomorrow and Friday, so there is great potential for some more dynamic market moves. There is a 'small' chance 1420 - the trend from the June low could be broken.


sp'60min

sp'daily5

VIX, daily

Summary

The daily trend remains bearish, and a hit of 1420 tomorrow looks very viable.

I suppose the bears could pray for an overnight gap UNDER 1420, in which case we move into semi-twilight zone territory. A challenge of the important 1397 low would then on offer.

VIX was +10% earlier, its cooled off, but the daily trend still looks good. 18s look viable. I would be very surprised if 20 is hit by the Friday close.

I remain short, seeking an exit of 1420.

Time for lunch

10am update - cycle target is 1420

Good morning. Futures were surprisingly muted overnight, and the bulls failed to even get a little ramp at the open. The opening declines are important, we've a good break under sp'1440.

Next target is soft support at 1435 - unlikely to hold for more than a few hours, and then the trend/channel of 1420 by the Friday close.


sp'60min

vix'60min

sp'daily5

Summary

A good start for the bears. It'd seem likely we'll get an intra-day bounce, but a red close still seems very likely. The daily cycle offers at least 1 or 2 days further lower.

Thursday will be an important day. Perhaps we can see the VIX briefly spike higher to 17/18.

*I remain short, seeking an exit around 1420 by late Friday.

**As the market becomes more volatilie again, updates will become more frequent.

Volatility primed to explode

The current VIX of 15.43 remains very low in historic terms. Typically, we'd normally be somewhere around 20. Considering the endless socio-political and macro-economic problems out there, it is truly incredible to see both US and other world markets so utterly complacent.

Today's 9% gain in the VIX barely registers as noise when you consider the bigger picture.


VIX, weekly, 2yr

Summary

The underlying MACD (blue bar histogram) cycle is due to go positive cycle towards the end of this week, or early next week. There are some good signs that the cycle is well overdue a move to at least the mid 20s.

First near term target is the big 20, a few consecutive daily closes over 20, and we should at least test the 24/26 zone - which historically has often been where a intermediate sized VIX up cycle maxes out.


Seeking a lower high

As noted in the index update - regardless of where the current down cycle floors, the doomer bears should be seeking a lower high<1474. If that is achieved, then a major index cycle top may have been put in. Although its something that will take a few months to be absolutely sure of, which of course is of little use for short-term trading!

Those VIX calls sure are 'cheap', but then, that's been the case since late June, and the decay on options really is a problem if the entry is not timed well. I haven't picked any up yet.

If my 'two red flags for October'* are confirmed at this Friday close, then that does bode for the VIX to explode higher next month. The only issue then is, 'how high?' .

Goodnight from London

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*I am seeking transportation index to close <5000, and WTIC Oil <$90, both at the close of trading Sept'28.