Thursday, 3 May 2012

Daily Cycle Update

A moderately lower day across most indexes, with the VIX putting in a moderately higher close. In the scheme of things, its nothing 'significant' yet, but the potential is there for some exciting down moves both tomorrow and into next week. Perhaps the ultimate question is what the algo-bots will do tomorrow morning if the jobs data comes in under 100k. Whilst many of the European indexes (not least Spain) have already been in what continues to be a major collapse wave, the US market has not had a decent down day in over 7 months. Maybe tomorrow.

IWM, daily

SP, daily

Transport, daily, rainbow (Elder impulse)

VIX, daily, rainbow


The daily charts are clear, there is great potential for a significant down wave in the coming days. From a cycle perspective, everything is just starting to rollover. The big money will now have short stops around 1395/1400 tight..or 1415/22 lose.

More later in the evening...(probably).

Closing Brief

A pretty good day for the bears, and it sets up what will likely be a brisk Friday trading session. VIX still noticeably lagging though.



More later, dealing with those daily charts.

3pm update - looking for a weak close

The weakness continues, a close under the 1394 level would be preferable. A lot of individual signs to look for..not least the AAPL, which looks like it'll break the big $580 level - opening up $500 (best bear case) in the near term.


Bears must see a close under the 10MA - currently sp'1396

The jobs data -and the level of intensity with which the market reacts to it, will very important tomorrow.

More after the close.

2pm update - sp' mini H/S formation confirmed

Finally, we've a clean break below 1394. Things are starting to get real interesting, even the VIX is starting to pick up almost 6% (with a buy signal on the VIX rainbow chart).


Nothing else to add right now, aside from the fact that it is certainly pleasing to see a formation/theory develop, and be confirmed :)

The daily cycles are now looking VERY promising for major downside in the coming days.

1pm update - looking forward to Friday

The recent 'everything is gonna be great for the rest of 2012' hysteria on the various clown channels is noticeably fading these past few days. Similarly, Mr Market sure is looking weak from the daily cycle perspective. I'm not expecting much this afternoon, other than continued moderate weakness. However, Friday could be a really exciting and dynamic trading day.

Lets assume we close somewhere between 1390/1400 - which is appears highly probable. A good 1.5% lower tomorrow will get us to the lower channel of what is still a giant bear flag on the 60min cycle. A bounce there would be normal...and then a further wave lower either late Friday or sometime Monday.

One important factor to keep in mind - the bears MUST see the VIX start to show some +10% daily moves soon, if some of the bearish index targets - sp'1340/1300 are to have any reasonable chance of being hit.


More later!

12pm update - lunchtime meanderings

Its looking pretty good for the bears. The bulls failed to break a new high on most of the indexes (the dow was the exception) this past week  The question remains, how will the market react to the jobs data tomorrow? We've seen some very mixed data these past few weeks, but the data for April has so far been a little concerning. A sub 100k net job gain would probably send this market down at least 1.5% tomorrow - aka sp'1375 - a level at which I'd expect an intra-day bounce.




*no sign yet of the VIX showing any significant upside..perhaps near the close we'll see something?

More across the afternoon..have a good lunch.

11am update - daily cycles...looking bearish

Whilst the main market is again back to churn mode for a few hours, lets take a quick look at the bigger picture, focusing on the Rus'2000 small cap index (via IWM etf).

IWM, daily, bearish H/S scenario

IWM, weekly

The daily cycle looks pretty good for a rollover. The weekly cycle looks like we've seen yet another failure to break/close over 83.00. Certainly, the 83.00 level is a great place for short-stops, for those with 'serious money'.

Sp'60min update

Is the RS complete? I don't know, it won't be clear until after the fact of course, much like almost all technical analysis. In terms of the SP', a break <1394 would be a real sign that theory was maybe correct, but even then, we need to put in a number of consecutive intra-day lower highs - especially tomorrow.

10am update - do you like milk in your GMCR ?

Whether bullish or bearish right now, just be glad you're (hopefully!) not one of  those Green Mountain stock holders today., currently around 40% lower. GMCR is yet another one of those infamous momo (momentum) stocks that always eventually get destroyed - just like NFLX, and almost all of those overpriced 'social media' pieces of junk.

*ISM non-manu: 53.5 vs  56.0 expected.   A weak number, and it won't please the market!


Not much to add right now, if it is a mini H/S, then the RS 'should' complete today, and then we fall away into the close - with a snap lower Friday morning. Its just an idea, and as ever..the 'smart/big/serious' money will be using good stops regardless.

Special bonus chart on....GMCR, daily

You can see the lunatics chased this nonsense up across the last 3 years, but such things rarely end well, and today is another important reminded that eventually...'price discovery' does happen, even in what remains an overpriced and largely deluded stock market.

More later...

Pre-Market Brief

Good morning. Futures are catching a bid as weekly jobs data came in better than expected at 365k vs 378k expected. Productivy numbers came in largely in line at -0.4% (Q1/Q4 change). Note that we have ISM non-manufacturing number at 10am, that will likely give the market an excuse to solidify gains..or sell off any opening rally.


From a cycle MACD (blue bar histogram) perspective, we are certainly inclined to cycle up for a few hours in the first half of today. Bears could cope (just) with sp'1310, but certainly the mini-H/S formation idea gets thrown out if we break a new high sp>1416.

*It remains important to note that other indexes - including the Rus'2000, already broke below the equivalent of sp'1395 yesterday.

Asking for too much?

Tomorrow we have the big monthly jobs data for April. The last time the number came out the main market was closed and only the Futures were open..and we saw a swift dow -150pt decline. What about tomorrow? I don't think its expecting too much to see at least 1385/80 tested on Friday. That would of course be a natural bounce zone, at least for 2-6 trading hours.

As usual..more throughout the day. Good wishes for Thursday trading!

Dr Copper - leading the next wave lower?

Copper showed some distinct weakness today, whilst equities largely remained flat.

Copper, daily

Copper, weekly


The daily cycle is clearly ready to rollover. The big question is whether the weekly cycle is about to also rollover, and put in a much smaller tower/up cycle. If Copper can break below 3.70..and soon after..3.60, then it might be a prime sell signal for the broader equity and commodity markets.

Its certainly something to watch for the remainder of this week.

Goodnight from London

Transports - which way?

The Transportation Index remains the one to watch this summer. The 'Tranny' almost had a second consecutive +1% day. Lets take a quick look, especially at the bigger picture.

Transports, daily, rainbow (Elder Impulse -style)

Transports, monthly, bullish

Transports, monthly, bearish/doomster outlook


Key thresholds...
March high: 5390     
Recent trading range low: March: 5029

As I've been noting for some weeks now, the direction in which the transports breaks from its current 5 month range, will likely be a key indicator of where the broader market is headed. Keep on watching that Tranny!