Wednesday 31 October 2012

Volatility trying to confirm a bull flag

With the market reopened, it was a pretty muted day, despite somewhat reasonable trading volume, the VIX closed 4.4% higher, to close @ 18.60. The VIX is trying to confirm what appears to be a bull flag on the daily chart. First upside target would be 20/21.


VIX'60min



VIX'daily


Summary

A relatively quiet day in market land, somewhat interesting that the VIX managed to at least close a little higher, but it was a small gain, and we're still not even above 20.

It would be VERY useful if we can close the week with VIX >20. That remains my third red flag.
-

More later.

Closing Brief

October comes to a somewhat muted end, we've been stuck in a very narrow trading range for almost five full trading days. The VIX closed 2/4% higher, but that move is inconclusive.

The closing hourly charts...

IWM'60min



Dow'60min



sp'60min


Summary

It is good that the market is back up and running, today was certainly another mixed mess, and Mr Market is still looking to pick its next direction.

What is clear - as I'll highlight later, the daily index charts have bear flags.

More later.

3pm update - last trading hour of October

Just one hour left of the trading day..and month. There will probably be a little more dynamic action this hour. The bears would do well to see a close at the low of the day, with VIX 19s. That seems a little on the doomy side though, I will admit.


sp'daily5



VIX'daily


Summary

So, lets see if we see a little sell side volume in this closing hour. There is plenty of econ-data tomorrow, and with the ADP jobs (September numbers) being revised 50% lower, its not exactly the recovery that even the moderate bulls were hoping for.
--

*Later this evening, I will cover about how we closed the month.

More after the close.

2pm update - this market is WEAK

The fourth day in a row where the market opens higher..only to again slip back into the red. Of course today is a real mixture of things, not least, since it is the end of the month. The VIX is continuing to show upside, a close in the 19s would be super bearish for the Thursday open.


sp'daily5



VIX'daily


Summary

The bull flag on the VIX that I highlighted last week looks as though it is being provisionally confirmed. Only with a daily close >20/21 though, would I really be clear that the formation was correct.

The indexes look as though they will all close at least slightly red. With two hours to go of the trading day...and indeed month..lets see if some of the rats want to sell before its too late.

back at 3pm.

12pm update - morning weakness

For the fourth day in a row, the opening moderate gains have failed to hold, and the indexes have all switched to moderately lower. The tech' is weakest, not least due to AAPL which earlier briefly hit the 200 day MA @ 587. VIX is starting to show its underlying strength again.


sp'daily5



vix'daily5


Summary

The market is looking weak. The daily chart is now sporting a pretty clear bear flag, and if we get a daily close <1397 tomorrow - or Friday, I will be targeting a fast move to the low 1300s early next week.

The VIX is starting to confirm the bull flag I was suggesting, first target remains 20/21 - which could be hit as early as tomorrow, and certainly by Friday.

Bears should seek at least a marginally lower index close, with VIX at least in the low 18s.

back at 2pm

10am update - up and running

Good morning! The market is finally running again, and as I thought yesterday, it will likely be a very choppy and confusing day. A definitive trend won't likely be clear until tomorrow at least.

*Chicago PMI: 49.9  vs 51.0 expected, still warning of recessionary pressures.


sp'daily5



sp'weekly, rainbow


VIX'weekly


Summary

So...we're opening higher (especially on the transports) but its very likely to remain choppy.today.

There will be a lot of end-month book squaring to do, despite the open, its still very viable we can close red.

The VIX is just a touch lower, and certainly does not confirm/support the current index gains of 0.5%
-
It is somewhat disturbing to realise that tomorrow it will be November, and 2013 really won't be too far away!

back at 12pm

Turn the machines back on!

With Sandy now fading away, its time to fire up the machines again, with the US markets all set to open this Wednesday morning. It is very likely to be a very mixed and confusing day, we probably won't have a clear direction of where we are broadly headed until late Thursday.




Lets take a quick overview of where we are...


sp'60min



sp'daily5


VIX'daily


Summary

The smaller 15/60min' cycles on all the indexes are fully reset, and are arguably exhausted on the bullish side. The previous FOUR trading days saw many attempts by the bulls to rally, but all such moves have failed to hold.

The daily cycle is absolutely clear, the bears need a break under the Sept'3rd low of 1397.Bulls need a close in the mid 1430s, which would open a challenge of the QE3 spike high of 1474.

The VIX daily sure looks like a bull flag, with a very natural target of 20/21. Only if the indexes break secondary rising support @ 1375, can I see any hope of the more exciting secondary target zone of VIX 24/26.


Turn the machines back on!

It will be good to have everything up and running tomorrow, but for those bears looking for a significant red close, it will probably be a disappointing day.

We are due econ-data in the morning - Chicago PMI. Market is expecting 51.0 against a previous 49.7. So, anything still sub'50 would count as a real disappointment. All those who believe the US will slip into recession in either Q4, or early 2013 are going to need to see a PMI <50.





A few other issues to consider.

Yes, volume will be lighter in some respects due to some institutions being offline still, but it is the end of the month, and so there will surely be some counter aspect to seeing at least some trading activity as some square off their trading books.

Doubtless the cheer leading maniacs on the clown networks of CNBC and Bloomberg will be jumping up and down with their pom poms at 9.30am. On this occasion, I think I will almost be able to tolerate their exuberance.

Lets turn those machines back on!

Goodnight from London

Tuesday 30 October 2012

US Markets to open Wednesday

It appears from a few news organisations that the NYSE and NASDAQ are planning to re-open Wednesday morning.




Another overnight ramp?

After last nights 18pt swing from the ES 1393 low, and with the Zerohedge story on the Canadian market's last hour ramp, it appears we might gap higher 1% at the open of tonight's futures wheel (7pm EST)

So..it is entirely possible we'll be trading around sp'1425/30 sometime tomorrow, which is of course just utterly insane.


sp'daily5


Summary

First soft resistance is the declining daily 10MA @ 1432. A daily close over that, whether tomorrow or later this week would be pretty devastating to the bears.

Having fallen just 4% -  an embarrassingly small decline, are we now set for a ramp into, and post election? Are new index highs due within the next 2 trading weeks?

However, the bigger weekly charts still say 'hell NO!', but last nights action sure doesn't bode well for the bears.


sp'weekly, rainbow



I am most definitely not looking forward to the re-open, as I was last night.

More later, if the futures do anything other than ramp 'to da moon'.

Overnight ramp - indexes back to flat

Overnight futures turned after midnight, with a swing higher of 18 sp' points, we're back to effectively flat on most indexes. There is noticeable dollar weakness.




sp'daily5


Summary

It is currently unknown if we will open Wednesday. There are end-month institutional reasons why some want the market open, and some options expire (I believe).

We might get a 3-4 hour electronic session tomorrow.

Yet, considering the subway flooding, and so many other issues, I'd not be surprised if they wait a few extra days, even into next week.

RE: futures, we were trading down to effectively sp'1399/98 last night, so the important Sept'3rd low has not yet been breached, even in overnight futures.

Bears need to see a clear drop of sp'16 points to break the key level.
--

More later...once we get the next NYSE update* - MARKET STATUS

*the NYSE seem to be missing their website editor though, they've not even updated their page since the Sunday night update.
--

Monday 29 October 2012

US Markets Closed Tuesday

The US markets will remain CLOSED Tuesday, and 'might' open for limited hours on Wednesday.



NYSE updates - MARKET STATUS

Futures:

The ES currently frozen @ 1400,  -7pts.

So, we're currently set to open @ 1405, although I expect a further drop in overnight futures.

Oil, and the broader commodities are all considerably lower, and this indicates further falls in the indexes are very likely.

--
Something to consider..'if' we can open for Wednesday

Sp'monthly, rainbow


Summary

If we do open Wednesday, if only for a few hours, it will be a very important morning.

Bears should be seeking at least a test of the monthly 10MA, currently @ sp'1379. However, that is a pretty steep 33pts lower.

It IS viable for a gap down of that size, although we could instead open down 20/25, and melt lower into the closing hour around 1pm (if we're even open!)
--

*we have key econ-data, the Chicago PMI - due Wednesday morning, I still expect that to be released.

However, the Friday jobs data now looks likely to be delayed into next week...probably AFTER the US election.
-

More later today, especially if the Futures can more decisively take a cliff dive overnight.
 --

UPDATE 3.50pm - Futures will open up at 7pm EST...as normal

UPDATE 6.14pm (EST) - Futures, ES -5 @ 1397.

Certainly nothing dramatic so far. I'll only get a little excited if we can trade into the low 1380s by the morning.

UPDATE 9.47pm: (unsubstanciated rumour) via CNN, US NYSE trading room floor.. water level: 3ft.

This is pretty bad, and I can't imagine the bigger implications. The chances of opening this week just dropped significantly. Urgh.

UPDATE 10.19pm - seems the CNN report was entirely wrong. NYSE is still dry..the bull has not drowned. Futures are still weak though, ES is 1397*

*bears need to see ES 1391/90 to see a clear break of the low from September'1st.

US Markets closed Monday (and probably further)

Late Sunday update - US Markets will be closed Monday due to the east coast storm Sandy. It seems highly probable the market will also be closed on Tuesday, and only slightly less so on Wednesday.




Official 'Market Status' NYSE

Zerohedge - UPDATE

--
sp'daily3 - news/events



So....we are shut Monday, and I'm guessing its a near guarentee...Tuesday also.

If Sandy is a major 'water problem' - not least for the NYC subway network, then we could be looking at everything shut ALL WEEK. Its notable that the NYSE was shut for just four days after the 9/11 event.

We have some big econ-data later this week, not least the big jobs data, but could see some of this delayed into the following week?
--

A serious question to end the weekend...is Sandy a black swan, or just over-hyped media hysteria?

What IS clear, is that there won't be any flashing green/red boxes on my screen this Monday.

Goodnight from London

Saturday 27 October 2012

Weekend Update - Weekly Index Cycles

This past week was further confirmation for the bears that a down trend is indeed underway. We saw a further major down move on Tuesday, with three subsequent days where the bulls tried to rally each morning...but failed. With Oil looking weak, and the VIX trying to break back above 20, the coming week should offer some much more dynamic trading action.


Lets take a look at the six main indexes...


IWM (representing Rus'2000 small cap)


The R2K is down for the sixth week running, and yet the bull maniacs are still surprisingly confident of new index highs into 2013. All indicators are negative, with the MACD (blue bar histogram) turning negative for the first time since early August.

There is nothing bullish here, next target is 80, with a swift move to 76 - which I believe would be a near term floor.


Nasdaq Comp


Again, its important to note that what was once the strongest index is now looking one of the worst. The tech' is also now down for the sixth week. With a few daily closes under the big 3000 level, we now have good likelihood of lower levels.

Next target is 2900/2850, where we are likely to floor.


Dow


The big Dow'30 came close to breaching the big 13k level, it held, but I'd certainly look for a major move lower in the coming week. All indicators are negative, and have great potential for much lower price levels.

First target is 12600, a fast move to 12300/250 seems viable if the market gets spooked this coming week.


NYSE Comp


The master index closed the week 1.8% lower, but is still above the important 8k level. A weekly close under 8k would suggest a possible further multi-week drop to around 7600/7500. The underlying MACD cycle is still positive, but is set to go negative cycle within the next 1-2 trading weeks.


Sp'500


The Sp' just managed to hold over the 1400 level, but the trend is certainly downward. All indicators are negative, first down side target is the secondary rising support (from the Oct'2011 lows) @1375.

If we see a daily close <1370, the door is open to a swift fall to the lower bollinger of 1325. This move could even be done on an intra-day basis if we gap lower by 2% or more.

If the Sp' somehow manages to slide into the lower 1300s, we will very likely see a strong bounce back to the 1400 level. It is at that point (possibly mid/late November), that things will become critical.


Transports


The transports remain the Willy Wonka of indexes, almost entirely trading within its own little world.

With just 3 trading days left of October, the bears would do well to keep in mind that a further monthly close <5000 is an important result to achieve. If that is the case, then a Nov/early Dec' target of 4500/4400 is fully back in play, and would make for a perfect late 2012 low, before Santa appears.


Summary

So, lets get this clear..we are generally week'6 down on most of the major indexes. That is a pretty impressive run, although if I dare say, it sure doesn't feel like we've been falling for six weeks. The sad irony is that we're still only 4% (at least on the Sp) from the QE spike highs of mid September.

Four percent in no way can be considered as anything other than 'very minor'. Hell, we've seen a fair few days in the past few years of intra-day swings of 4%.

All those bull maniacs who are calling this 'correction' done, I just have to roll my eyes at those types of comments. We haven't corrected, we're still hovering near the very top of a 4.5 year paper bubble ramp.


Next week

Its always hard to guess how we'll open Monday. The last 3 opens have been moderately higher, only to see such gains quickly fade and turn to red. One of these days we're going to see a massive collapse during the Sunday night futures session, but that seems unlikely right now.

However, the weekly charts do all suggest further weakness, and there is ample potential for a major move lower this week.

I would think the dream of any permabear this Autumn is indeed a swift move to the lower 1300s, then a 2-4 week bounce, before the more 'significant' down move in late Nov/early December.

--
I am holding short across the weekend, and seeking my next exit around 1390/75. If the market is real moody next week (with VIX >20), I will merely re-short on any intra-day bounces.

Good wishes for the trading week ahead!

Daily Index Cycle update

A moderately choppy end to the week for the main indexes. The main indexes closed largely flat, although the Rus'2000 showed further moderate weakness, whilst the transports again does its own thing, closing a little higher.


IWM



Nasdaq Comp



Dow



NYSE Comp



SP'daily5



Transports


Summary

Its been a long day and week, so I'll keep this one short.

Suffice to say, the bears can at least claim a moderate victory this week, although the net weekly decline was only 1.5% (21pts) on the sp'500. It is a small step, but at least the direction is downward.

As for next week, well, I'll post something on the weekly charts over the weekend.

Goodnight from London

Friday 26 October 2012

Volatility higher on the week

The indexes closed largely flat this Friday. The VIX closed a touch lower, but across the week, the VIX did make net gains of just over 4%, to close @ 17.81. This remains a bizarrely low VIX, and a mini-surge into the low 20s seems very viable next week.


VIX'60min



VIX'daily



VIX'weekly


Summary

A somewhat muted end to the week for both the indexes and in terms of volatility itself.

The hourly cycle is fully reset, and we could easily open much higher on Monday - although that was also true for today.

The daily cycle is I believe a very important chart, and I think we have a very clear bullish flag, with a likely target of 20/21 early next week.

The bigger weekly cycle continues to battle higher, but so far, we're still not even over 20, which considering 'everything out there', is remarkably low.

-
A weekly VIX closing >20, remains my third 'red flag for the Autumn' (the other two was transports monthly close <5000, and WTIC Oil <$90 - both achieved some weeks ago).


More later.

Closing Brief

A choppy end to the week, with the main indexes closing largely flat, although the Rus'2000 was marginally red, with the transports moderately higher.


IWM'60min



Dow



Sp



Summary

It was a long day..and a long week for many traders. The bulls ARE losing their grip, as best seen on the bigger weekly/monthly charts. The VIX remains very low, and I'm still waiting for a break above the big 20 level.

-
I am holding short across this weekend in late October. I remain trying to focus on the bigger picture, with those weekly cycles targeting sp'1325/00 within the near term. The VIX - especially on the hourly and weekly cycle charts is primed for a major leap upward, into the 24/26 area.
-

The usual bits and pieces across the evening.

Have a good weekend

3pm update - closing into the weekend

The week has been one where the bears have fought hard to hold onto their moderate declines. It would appear the bulls are losing their grip, as especially seen on the bigger weekly index cycles.


sp'60min


sp'weekly


Summary

I've added a vague guess at what might be a valid count. Is this a particularly weak wave'2 /bear flag, that is so weak, its still trending lower?

I don't expect much this closing hour, least of all for the bulls who have spent the past 4 trading sessions (since the big gap lower on Tuesday) trying to rally back..failing EVERY time.

back after the close

2pm update - churning

Mr Market is still lost, trying to find an excuse to ramp hard...but it can't find it, at least not yet. The VIX is flat, and with two hours to go, its difficult to see anything other than a lacklustre close.


sp'daily5



vix'daily


Summary

So again the question is 'who wants to go long into a late October weekend?'
--

I remain short, and will hold across the weekend. The weekly charts suggest must lower levels in this current cycle.

back at 3pm

12pm update - urghh

What to say? Hmm, its a mess, market still trying to find direction. VIX is largely flat, indexes are a touch lower.


 sp'60min



sp'daily5
 




VIX'60min



Summary

I am trying.vainly to ignore the intra-day noise, and focus on the bigger weekly cycle charts that still suggest 1325/00 within the near term.
--

How we close today will be critical, but then...isn't that always the case?

back at 2pm