Thursday, 3 January 2013

Volatility fractionally lower

Despite the indexes closing a little lower, the VIX was red most of the day, and closed -0.8% @ 14.56. The lower bollinger on the daily charts is 13.40..and that seems very viable in the near term.





A fearless market..and the VIX looks set to break back into the 13s, right back where we were in September.

We're now down almost 36% this week...and thats with Tuesday closed!

This is an incredible drop to start the year, and right now, there is no sign of the decline ending.

It has to be asked.. VIX single digits with sp in the low 1500s..within the next month or two?

More later..on the daily indexes.

Closing Brief

After a move from 1398 to 1465 within 3 trading days, the market saw weakness in the afternoon after the FOMC minutes reminded Mr Market that higher prices are probably dependent upon continued printing from the Fed.





The declines were indeed very slight, and even if we drop to 1440/35 in the next day or two, it really won't do too much damage to the current up trend.

The underlying MACD cycle is now probably two thirds reset, so..once we see that level out, we'll get our first opportunity for a challenge to take out the 1474 high.

More later 

3pm update - Mr Market needs more printing

Any hint of less QE, and the market gets rattled. The latest FOMC minutes have upset a few this afternoon, and its being used as an excuse for what remains largely sideways chop. Dollar has added to earlier gains, and the metals have especially reacted.




Updated daily chart. New channel. By end of next week, bears need break <1415..and that looks a long way down from here.

Many are still focused on the 1474 level, but again it should be noted, that with the trans breaking 5500, and the R2K pushing to yet higher highs.. its less important than it could be.

VIX is a touch higher, but its probably still going to drop into the 13s within 2-4 days.

UPDATE 3.30pm ... looks like market wants to retrace.

best guess...1440/35 tomorrow/early Monday.

back after the close

2pm update - crawling higher

Mr Market just keeps on battling higher, lead by the R2K and the Transports, the latter of which is now soaring.+1.3% on the day, into the 5500s. The monthly charts are very much open to sp'1490/1510 within a few weeks.


Trans, daily

IWM, weekly


Just look at the R2K and the transports, there is no doubt about this break higher.

Suffice to say, this is a freight train, and the destination is somewhat unknown..over an unknown time frame.

Best guess though, is now sp'1490/1510, within the next 2-6 weeks.

Having managed a short exit @ 1398, I remain content to sit this out..and see how high the maniacs/algo-bots want to take it.

UPDATE 2.15pm  The FOMC minutes have upset the market a little.

Seems 'more than 1' Fed member doesn't want QE going on much longer.

Yet, its clear, the Fed have to print, otherwise, how will the US fund its deficit spending of 1trn a year?

The printing WILL continue.

12pm update - pushing higher

The market is already pushing to new highs again, sp'1464 is impressive, considering we were @ 1398 just 17 trading hours ago.



Not much to add, trend is clearly upward...on every cycle, not least the weekly and monthly.

back around 2pm

11am update - smaller cycles resetting

Mr Market is merely resetting itself for another up cycle. The hourly cycle is already 30/35% reset, if Friday is a flat close, we'll be set for a higher Monday close, perhaps >1474. With the R2K and Transports already over the equivalent of 1474, the outlook is to the upside.




You can see the MACD (blue bar histogram) which is ticking lower, and it'll probably be close to zero by the Friday close.

Perhaps an initial lower open on Monday, but closing higher?

The VIX hourly chart just looks...bizarre. That was indeed a record breaking 2 day fall in percentage terms.

10am update - morning chop

As expected, the market opens a little weaker, but its nothing for the bears to start getting excited over. Underlying momentum on the daily index charts is now positive, and still rising. Even if indexes are flat for the next few days, the bias will remain to the upside.




I'm focusing on the MACD (blue bar histogram) cycle. This is merely day'3 up. and there is NO sign of a turn, or levelling phase.

Its going to take at least 2-3 days to have any chance of seeing the upside momentum stall. point considering a re-short until next week.

Since we're so close to the 1474 high, its easily feasible we'll gap over that early next week, in which case the monthly charts would easily allow 1490/1510.

It has to be said, it would be a hell of a lot safer shorting in the low 1500s than where we currently are.

Mr Dollar remains higher, a move into the 81s next week would spice things up.

XOM/CVX, I'm still liking these as very significant signs of weakness in the main market.

Huge companies, and both look weak, especially CVX, which is due a death X within 2 weeks.

Pre-Market Brief

Good morning. Futures are slightly lower, sp -5pts, we're set to open around 1457. Most notable aspect so far today, the USD, which is +0.4% @ 80.19. The metals and Oil are thus naturally somewhat weaker.

USD, weekly




Lets be clear, there is no point re-shorting right now. We've just seen two massively strong up days, and even if we close moderately lower today, we'll probably still be churning in the 1450/60s early next week.

The dollar, if it starts to pick up some momentum could be a real problem though, USD 81s would be a key level to watch for next week.

So...I won't be hitting any buttons today..nor likely tomorrow.

I'm still wondering if the 'fourth MACD tower' - see daily chart, will indeed occur. If we do see a rollover, then I'll re-short, but I'll be VERY cautious.

There remains a significant chance we'll hit the upper bollinger/Keltner band on the monthly charts, which is somewhere around sp'1490/1510...within 2-6 weeks.

Good wishes for Thursday trading!

Important the upside

Today was especially bullish for two indexes. The Rus'2000 small cap broke to new all time historic highs, which is a truly bizarre thing to reflect upon. Similarly, the Transports broke into the 5400s, a level not seen since July 2011.

IWM, monthly

Trans, monthly2, rainbow


Well, despite being a self-defined 'Permabear', it has to be said...seeing the Rus'2000 break to historic highs, and the Transports breaking into the important 5400s..this was an extremely bullish start to a new year.

It could all be a brief fake-out of course, but hey, that's mere 'doomer talk', and we have to deal with the facts.

The charts are clear...

The transports has broken a year long tight trading range..and the break is to the upside.
The Rus'2000 small cap is now in new trading territory...that's unquestionably super bullish.

In terms of the sp'500....

A move to sp'1510/20 seems very viable, based on a simple tag of the upper channel/band. That is a mere 3-4% away, so its easily within range by late Jan/early February. In any future multi-month downside cycle, the low sp'1200s remains the general target zone.

2013 begins with a hyper-ramp.

We have a very long year ahead of us, I'm sure we'll see many more hyper-ramp days like today...and no doubt...many similar sized ones to the downside.

There is plenty of econ-data this Thursday and Friday - including the big monthly jobs data. So, as the market begins to move past the fiscal cliff deal, it'll have to once again consider whether its priced correctly to reflect the upcoming Q4 earnings reports.

I think we'll see some very weak earnings from some of the bigger industrials (such as DD, GE), but as is often the case, the Market may simply dismiss such reports..and keep on going higher.

*I remain on the sidelines, and currently have no intention of re-shorting until next Tue/Wednesday, and that's at the earliest. If we break sp>1474, then the remaining bearish outlooks on the monthly charts will have to get thrown out.

Goodnight from London

Daily Index Cycle update

With a fiscal cliff deal passed in the US house, the indexes opened sharply higher, and saw a particularly strong closing hour. Most indexes closed with gains of around 2.5%. Most notable aspect of the day..the Rus'2000 small cap' ALL time highs. Incredible.






Today certainly counts as confirmation of the turn to the upside we saw occur during Monday morning.

The most bullish aspect of all is unquestionably the new all time high seen in the Rus'2000, with the Transports putting in a similarly important close in the 5400s.

The Sp' and Dow are still lagging a little behind, and bulls should be seeking >sp'1474, and Dow 13700s sometime 'soon'.

Doomer bears have a very simple objective level now..<sp'1398. Until we see that level broken, the bigger picture is now very much on the bullish side.

Quite frankly...a break <1398 looks....really difficult..but hey..we have a long year ahead of us.

A little more later.