Tuesday, December 13, 2011

Market Timing Update (12/13/11)

[EOD] Stocks and VIX -
The preferred/anticipated near-term weakness materialized in both stocks and gold. 

Chart 1 updates the top tracking counts on SPX  from yesterday's EOD update chart.
Price profile fits a news-driven E-wave of an EDT (Chart 1 blue, bullish), especially when viewed in conjunction with the DAX structure (see 1210pm entry below).  SPX has retraced around 40% of the recent rise and has reached the middle of the green box.  This is a good place for a small-degree b wave or 2nd wave retrace.

On the bearish side, wave structures support an LD wave 1-down (Chart 1 red, bearish) in SPX as well as DAX. More bearish 1/2/[i]/[ii] setup exists.

The next rebound will be telling and is likely to be deep.  The Dec high is now a hurdle.

VIX  has been dropping counter intuitively with the decline in stocks.  However, the current decline could be bearish for stocks as a visual EDT is concluding (Chart 2, green).  In addition, lower VIX could be deceiving as the term structure of vol based on VIX futures are rising going out into 2012.

[1210pm] DAX update at the close -
Near 0.618 retrace, double zigzag decline can be counted as complete. Otherwise, a lengthy LD down, probably still incomplete.

[8am] DAX, ES update -
color coded tracking counts. DAX relatively more bullish than ES.  In ES, add a green [x] to next to the red [ii] as a double three possibility.