Wednesday 14 August 2013

Best case downside

The markets continue to trade sideways into August opex, but the bigger picture is offering a small possibility of what would be a very exciting downside scenario for the autumn. For the bears, an initial hit of the lower weekly bollinger - currently @ 1543, will be stage'1.


sp'weekly9b - Autumnal weakness, H/S formation



sp'weekly9c - touch of the lower trend line


Summary

Well, another rather dull day in market land, but then, its sleepy August. Indeed, I have to wonder if it will remain quiet all the way into the Labor day holiday of Mon' Sept'2. I'm guessing we'll at least fall to the sp'1660/50s before then though.


So..H/S doom?

The above two charts remain a 'mere hope'. I am reasonably confident of an initial wave lower into September, but the subsequent bounce had better be contained quickly, or I fear we'll just rally all the way into spring 2014.

For the moment, they are mere scenarios, and until we see stage 1 and 2...I certainly won't be seriously considering the likelihood of a return into the sp'1400s.

Even Zerohedge covered the above chart scenarios today, and there are certainly many others out there also keeping it in mind.


Looking ahead

Wednesday has producer prices, and the usual EIA oil report at 10.30am.

*there is no sig' QE until Thursday.
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I remain on the sidelines, and looking to side step the next two big QEs of this Thurs/Friday, along with the likely minor price-chop of opex. I will be looking to pick up an index short, perhaps late Friday, especially if the market remains stuck in the sp'1695/1700 zone.

Downside target for next week will be the sp'1660/50s.
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Goodnight from London