Volatility battling higher

With the indexes swinging back lower, the VIX managed to close the week, month, and quarter, higher by 6% to 15.73. This remains a bizarrely low level of course, and still infers near complete market complacency.


VIX'60min

VIX' daily

VIX,weekly

Summary

Looking ahead to next week, there is potential for VIX upside all the way to 19 by the Monday close. So, the bear can dream of that possibility across the weekend ;)

The underlying - and hugely important, weekly cycle, is still a touch negative on the MACD (blue bar histogram) cycle. There is certainly big potential for a move into the 24/26 traditional resistance zone.

At some point, the VIX will explode higher, the only issue is when. Are we going to have to wait until next year, or.. are the doomer bears going to get at least a little fun before Santa arrives?

With the tranny closing <5000 for the first time since Dec'2011, I'm somewhat inclined to still have hope for an 'entertaining' Autumn.

More later...

Closing Brief

A bit of a choppy closing hour, and with the VIX closing near the high of the day, its moderately suggestive of a bearish Monday and start to Q4.

The closing hourly index charts...


IWM

Sp

Trans

Summary

I really quite like the idea of a small H/S within what 'might' be a larger H/S formation. If correct, it actually suggest 1410/00 is possible before the current down cycle completes.

I've seen others out there seeking 1375/60 next week. I find that pretty optimistic, although the VIX weekly chart offers good upside into the mid 20s.

With the tranny closing <5000 for the first time since Dec'2011, my primary red flag for October has been achieved. Much more on that issue later.

3pm update - closing hour weakness

The early afternoon rally appears to be loosing steam, and we are now slipping lower again. The sp'1440 level is certainly an important level, and whichever side we close on it, will be a good indicator for how we trade early next week.


sp'60min - H/S formation

VIX'60min

Summary

Targets for the bears...MUST close <1450.

A good close would break the lower rising channel of 1437. Anything <1435 would really confirm it.

VIX is starting to pick up, and is battling back higher on the hourly cycle. Target remains 18/19.

I remain short, and added to SPY puts in the previous hour @ sp'1442 (gods help me!)

More after the close