Tuesday, January 31, 2012

Market Timing Update (1/31/12)

[EOD] Stocks -
It's important to note that the rebound from yesterday's low to today's high in SPX is not a regular five wave advance since the proposed 3rd wave would be the shortest. As such, Chart 1 shows the near term options.
blue - bearish - A zizzag rebound from today's low likely has ended. Yesterday's low is likely to be breached.
green - bullish - Another upward wave is in progress, following an expanded flat pullback to today's low. We could be dealing with an x wave (instead of a i/ii/[1]/[2] setup), but expect yesterday's low to hold in this case. 
Chart 2 shows the larger count.

[12pm] DAX update at the close-
We have a five up from the recent low in DAX. The blue or green counts in first chart look more probable.

[11am] SPX/ES update -
A visual 5-down from the AM high in SPX cash, could also be interpreted as wave C-down of an expanded flat correction in ES. We'll find out.

[1010am] SPX/ES update -
Not a regular five-up from the low in SPX cash as wave 3 is the shortest. See charts.

[9am] ES update -
Month end, with near term options.

[840am] DAX update -
Near term options remain. See charts.

Monday, January 30, 2012

Market Timing Update (1/30/12)

[EOD] Stocks -
SPX is making all the right turns for a bearish LD or 1/2/[i]/[ii] decline. Recovering above last Friday's high will confirm a corrective pullback which would most likely be a wave [iv] off the December low. See charts.

[1230pm] DAX update -
A visual overlapping five down from the recent high. But squiggle count reveals near term options. See charts.

[12pm] SPX squiggles -
Wave structure off today's low. See the 2nd chart below.
[1030am] SPX update -
See the latest weekly commentary for details.

[845am] ES update -
As discussed in Squeezed(1/27/12), "something has to give." It appears to be the support line (Chart 1).

The overnight drop in ES helps us to eliminate the triangle possibility and leaves open the rest as highlighted by this chart in Squeezed (1/27/12). Chart 2 below updates.

Sunday, January 29, 2012

MTU Weekend Ed. - Squeezed (1/27/12 Close)

Bottom line -
[1] SPX and DAX are squeezed by increasingly narrow up-channels. Something has to give.
[2] SP500 index volatility has entered a range where past major tops were made.

Details - 

Both SPX and DAX are squeezing their way along supply-resistance lines defined by increasingly narrow up-channels (Chart 1 and Chart 2). In fact, last week saw the first two consecutive daily declines in SPX since its December low.  SPX finished week up by less than one index point on a close-to-close basis.

Our assessment remains unchanged. The advance off the December low remains incredibly mature, if not already over (Chart 3 and Chart 4). Please see Shifting Odds (1/20/12) for longer term scenarios, especially as the Dow closed just 1.7% away from a new recovery high with its recent high only 34.05 index points short.  Chart 5 to the right shows top near term scenarios based on the squiggle count on ES.

At the same time, risk premium as measured by the VIX index remains low (Chart 6). While the low levels of implied volatility has been justified by declining realized volatility, current VIX levels leave little margin of safety. Perhaps more telling, the 20-day realized volatility dropped below 10% per annum this past week. It has now entered a range where past major tops were made (Chart 7).

Thursday, January 26, 2012

Market Timing Update (1/26/12)

[EOD] Stocks -

[230pm] SPX update -
If the proposed [v]-up needs to extend, this is a logical place to do so.

[1105am] SPX squiggles -
Five waves down from the high.

[935am] SPX update -
The wave structure off the Dec low looks increasingly mature.

[7am] DAX update -
Logical spot for at least a pullback. DAX still within the base channel, up against the mid-channel line and 0.618 retrace, but cushioned by MA200 at the moment.

Wednesday, January 25, 2012

Market Timing Update (1/25/12)

[EOD] Stocks -
A seven wave sideways correction places today's low as wave [iv] off the December low (Chart 1). Wave [v] = [i] at 1350.37 and [v]= 0.618 [i] at 1334.05.

However, the squiggle structure off today's low is quite complete (Chart 2). If the proposed small degree 5th wave (wave [v]) does not extend further, the top tick off the Dec low is in sight. Naturally, one shall prepare for truncation (or even absence) or extension as 5th waves (as well as 1st waves) are fickle.

[320pm] SPX Squiggles -
See 130pm entry for the larger count.

[130pm] SPX update -
The lower in INDU this AM could mark the end of [iv]-down, which totals 7 sideways waves (blue). The red count counts a yet-to-be-completed expanded flat / triangle. See 2nd chart below.

[1235pm] SPX squiggles post FOMC -

[945am] SPX update -
Possibilities, but keep in mind that failed technical patterns can potentially and forcefully point to the opposite direction. Keep an eye on the HS structure.

[7am] ES update -
Testing trend-line support once again.