Wednesday, 20 June 2012

VIX - spiking lower into the close and AH

The VIX was a real anomaly at the close. A fall of 6%, even breaking the recent low of 17.40. I'm very unsure as to if this spike lower is just a quirk (certainly, it happens occasionally), or something else.


VIX'daily, rainbow

Vix, weekly


The style in which the VIX closed is the one main concern the bears will likely have overnight. Yes, the FOMC is now out of the way - which does take away some of the uncertainty, but still...the closing hour action is a little surprising.

Despite the closing weakness in the VIX, the weekly trend continues to warn of major upside in the weeks ahead. Arguably, all VIX weakness can be seen as merely a bonus buying opportunity for both index puts..and vix/volatility calls.

Closing Brief

A very choppy day, not least the closing hour! With both the Greek elections and FOMC now out of the way though, trading just became a great deal simpler in my view. The one notable bullish action -especially in AH action so far, the VIX -6.64%....a rogue spike, or something else?

Lets check those closing hourly cycles...





*first, don't get too obsessed over the giant red arrows. They are not suggesting price levels/time frames..just the projected general direction into July.

It would appear sp'1363 was the wave'2 peak. A few days chop in the 1350/40s would be natural, but first target remains somewhere around 1300 within the next 3-5 days.

Much more later...

3pm update - closing hour weakness

Well, the markets are showing some afternoon weakness. The FOMC has FAILED to inspire the bulls to keep buying. Neither do the words of the Bernanke seem to be helping.


sp, daily 4mth


I would be very surprised if we see any kind of late day ramp. It looks like sp'1363 was the top of sub'wave C of wave'2.

Bears first target on the daily chart will be a close under the 50day MA at 1346. That seems a little unlikely today, much more within range tomorrow. A close in the low 1340s tomorrow, opens up 1330/25 by the Friday close.

From a MACD (blue bar histogram) perspective, we are actually just starting to tick lower..the first initial sign that the top is in. A close in the 1340s would be a bonus for the bears. A green VIX would be stronger sign I believe.

So..wave'3...begins (probably ;:) )

More after the close, where I will especially focus on the bigger picture targets.

2pm update - now its time for the Bernanke

The Bernanke is next due to speak at 2.15pm - as covered on all the major clown networks. Lets see if he gives the market a good scare ;)  VIX is marginally lower, could easily close moderate green, and would confirm a possible top in the indexes.



*could be a near perfect double top on the 15/60min cycle charts for IWM/ rus'2000.

Sp, daily, 4mth

*I would find it very surprising now if we can break above 1363, to the secondary zone of 1380/90.


I am now short (via IWM puts) from equivalent of sp'1358. Looking for 1335, then 1305/00, within 2-4 trading days.

Good wishes to all those patient bears!

1pm update - The FOMC fails to deliver.. BEARS WIN.

The bulls summer is now wrecked by today's FOMC decision. The mere QE-twist extension to end'2012 will not be enough to prop this market up. Bulls can tout the $267bn number around all they like..its not new money. Its merely shifting from short/mid term bonds to long term.

The reality of today's decision will soon hit the market. First though, the 15min cycle IS still due to cycle UP in the next hour or so.




I plan to short at the top of the next 15min cycle..whether that's late this afternoon, or early tomorrow. I am now very pleased with the trading action today, the FOMC decision...bears should feel good.

In my view...its time for the bears to start deploying the infantry, tanks...battleships..and start launching some preliminary salvos.
PRIMARY monthly cycle target remains..sp'1150/00 by end July.

UPDATE 1.14pm

Indexes close to going +cycle on the 15min...we could rally for as little as 15-30mins.before a major snap lower due to...

The Bernanke.
As ever...good short-stops will solve a lot of problems.

UPDATE 1.25pm... SHORTED, via IWM, index puts.
-- I wait. I am very content with my entry..equivilent to sp'1358.

First target. sp'1335.. , secondary 1305/00

12pm update - FOMC hour

Tis the most important hour of the day, week, month..and possibly this summer.




The 15min cycle is low, there IS significant room for a spike/re-test to yesterdays peak of 1363. If 1363 is broken..a quick move to 1370/75 is possible.

So long as I don't hear the phrase 'Fed balance sheet expansion', I will be confident to short the peak of the nezt 15min cycle..that could come as early as 1pm.
...standing by.



QE-twist extended to end 2012.
so...... NO QE3
NO 'expanded balance sheet'

I will short this market at top of the next 15min cycle...late this afternoon, or early tomorrow.

11am update - The Bernanke..soon to twist again... he did last summer?

As expected, the trading chop is likely to continue until the announcement at 12.30pm. Remember, we have the Bernanke himself doing a press conference at 2.15pm - that will of course be covered on all the usual clown networks.




Are you getting excited yet? I remain suspicious that the market will make at least some sort of attempt to break yesterdays high of 1363.

If this occurs just after the FOMC decision, we could see a brief spike (as bears get stopped out) to as high as 1370/75. Unless we see Fed 'balance sheet expansion', with QE3...I will short the main indexes.

        awaiting the Bernanke

10am update - opening chop

Marginal gains..marginal losses..its all noise. By the end of today, we'll have a much clearer picture on where we are headed in July and the rest of summer 2012.




First soft support is the hourly 10MA of 1355.

Seeking to short on any brief spike after the FOMC decision at 12.30pm.

In terms of sp, I think there is a fair chance of a micro double top of 1363. That would make taking a short after 12.30..very easy.

Good wishes to all those brave traders willing to trade this nasty market...on a Fed day,

More across the day...!

Pre-Market Brief - Day of the Fed

Good morning! Its a big day today, a day that will shape the direction of the market for weeks, if not many months ahead.

Futures are showing moderate gains of around dow +20/30pts. That could easily flip marginally negative by the open, but I'm certainly not expecting a significant drop early today. It will surely remain quiet until the market is clear on what the FOMC have decided.

sp' daily, 4mth


So, we did indeed hit my original target zone of sp'1350/60s. The question now remains, will the FOMC decision give the market the excuse (with rampant bear covering?), for a fast spike into the secondary zone?

Lets be clear...unless the FOMC initiate QE3 today (and that does NOT merely mean QE-twist extension), I will short this market on EVERY spike/bounce we get..all the way to sp'1100.

My primary based on the monthly index cycle...

Good wishes for FOMC day

Battle Plan for Fed day

Wednesday is the all important 'Fed' day, where the FOMC will issue a press release at 12.30pm, detailing their latest outlook on life, the universe..and any plans to interfere in our supposedly free market.

It will be a critical day for the bears. Those who have been touting wave'1...and then'2, they are clearly now seeking the start of wave'3. Are we about to see the FOMC disappoint the market, with a lack of action?

sp' weekly, scenarios


I'm highlighting the scenario chart again, since we really are at a very important junction. Scenario C' of course did not that leaves us with continued gains 'A'...or we'll put in a lower high 'B', rollover, break sp'1266..and down we go - forming wave'3 (or C?).

The Battle Plan for Fed day

I plan to continue to wait to re-short..until I'm clear on what the FOMC have decided. I will have trade/s ready to hit though after 12.30pm.

1. If NO action of any kind...I'll short the market.
2. If QE-twist extended - but no net added funds...I short
3. If QE3 - of ANY kind is annouced...I will hold back for a further day or re-assess.

My best guess?

High confidence - NO QE3
Mid-confidence - QE-twist might be extended, but it will only be minor
Low-confidence - QE-twist, but major 350/500bn balance sheet expansion/new funds in some form

*FOMC decision on interest rates, QE, 12.30pm
Bernanke, press conference, live on clown networks. 2.15pm

Wednesday will be critically important, and will shape the direction of the market for the next few months. Good wishes for those who plan to trade tomorrow, whether bullish..or bearish!

Goodnight from the rehypothicated capital of the world (aka... London)

Daily Index Cycle update - wave'2 might be complete.

A good day for the bulls. After 12 days, we're now finally in the target zone of sp'1350/60. Is that it for wave'2? Wednesday might well be unlucky 13 for the bull maniacs who are looking for new index highs of sp>1422 this summer.

Lets look at those daily cycles....

IWM, bearish outlook

Nas' comp


Sp' daily, 4mth



A strong day across just about the whole market. A few key aspects of today...

Transports...getting a little close to the concrete wall of 5400. A break over this level and the general bearish outlook is arguably in critical danger of being thrown out.

Sp' fib 61.8% level of 1363...hit..(just about) today. That may have been the high for this cycle. We might have another attempt to break it tomorrow. A double top on the hourly cycle would be a very nice place to re-short tomorrow afternoon.

All indexes are over-stretched on the MACD (blue bar histogram) cycle, and have been outside their daily bollinger bands today. We are at pretty good levels for a re-short..but...first...lets get the FOMC decision out of the way.
Still to close the night...the battle plan for Fed day.