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Friday, June 29, 2012

$SPX - July Outlook Severely Bearish

SPX tested the orange midfork this week, and bounced sharply once it held firm as support.  There were negative cycles during the week, but that only resulted in a few significant down days rather than a sustained downtrend.  The negative cycles continue in July.

Minimal upside seems possible first into the 1370's, but overall the outlook is severely bearish in July.  The cycle analysis is very negative during the middle part of July with mixed positive and negative spots late in the month.  Therefore, late July is likely to be characterized by whipsaws.  August looks much more positive.         

30min Chart

65 comments:

  1. I suspect may see a small dip early in the week since there are some negative cycles, then grind a little higher around the holidays.

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  2. This is what you said 1 week ago... the exact opposite happened


    "Next week, the cycle analysis is extremely negative centered around June 29th. A continuation of the drop next week is anticipated"

    now you are saying we grind higher into holiday.. UVXY from 12.50 to 9.80.. not good

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    1. Yes, the negative cycles this week only amounted to a few down days. This is fine because the negative cycles continue in July. So rather than the continuation down this week we saw whipsaws instead. The conclusion is that we'll see the continuation down in July.

      This does push out my timing, but the price targets are the same.

      I've made it clear that this is not a daytrade on UVXY. I like it at every price since my target is $28 in July.

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    2. SCJune 22, 2012 1:03 PM
      "VIX and the VIX futures lead though so they slow down when SPX finishes. $9 looks about right to me if SPX hits 1370. This is a sucker rally according to my work."

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  3. SC quite frankly if you are correct on this then kudos to you but that is about the most bullish day I have seen in months.
    Daily/weekly charts look really bullish

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    Replies
    1. The sharpest rallies occur in bear markets and downtrends, not bull markets. Friday was just another bounce in downtrend. SPX has declined for 3 months already.

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  4. SC, I hold only myself accountable for the investment decisions I make. Just wanted to say thanks for the analysis and talking points!

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  5. SC: RE: 'I've made it clear that this is not a daytrade on UVXY. I like it at every price since my target is $28 in July.'
    --

    Both TVIX and UVXY are inherently for day-trading ONLY.

    Its on page'1 of the prospectus, not that more 0.01% of traders read such things.

    The notion that even holding UVXY whilst the main indexes go from 1360 to 1390/1400 is outright INSANE.

    I respect, and follow your market forecasts -I'm a follower no less!, but your comments are very much in the style of the FAZ trades post 2009 lows.

    They battled relentlessly against decay..and EVERY time they lost.
    --

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    Replies
    1. I do agree generally, but this is 100% above the 2009 bottom...so not an exact parallel, unless you think spx is going to 2700. Gotta have an exit strategy nonetheless. Personally, I'm waiting for 8's as my entry sometime before July 11. After that markets will get very ugly until 1st week of August.

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    2. Well, we its only Monday, and we got $8.55 already.

      7s can't be far off, even if indexes remain flat!
      ---

      I am still looking for a significant down move to at least 1225/00 this July. That outlook would be invalidated if we break new highs 1422>, but I find that impossible to imagine rignt now.

      good wishes

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  6. what we witnessed fri. was a massive short covering rally based on euro...once the news leaked late thurs.,the covering started...although I noticed AAPL was not participating(then).
    I didn't put 2 and 2 together...there is not much short interest in AAPL why it didn't pop thurs.However fri I came home to find a $15 dollar move on 2/3 normal volume??? and $11.50 of that on less than half avg.,...not a bull type move to me..normally you see 1.5 to 2 times daily avg...sooo the quarter closed and so did the shorts to start all over again mon. rumor ISM # to be downright horrible...live and learn I did ...live to trade again.

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  7. SC,

    Are you sure your cycles haven't inverted? Zig Zag has nailed this market and he is bullish until August 9.

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    Replies
    1. No, in my work this is a clean setup for the bears in July. Many different methods I use all show the markets heading down deep in July.

      However, August looks positive. My analysis for August is in agreement with ZZ's timing cycle. While I see SPX heading lower in July first, I also see a strongly positive August.

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    2. Thanks SC. For someone who does not like to day trade this market is brutal. Cash is king for now.

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    3. We've been in a whipsaw period for the last 3 months, but this chop will "clean up" and develop into nice trends later this year. I have patterns that show this, and will explain later.

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  8. SC, will you be waiting for the $28 target to sell all your UVXY or will you be selling it in batches as it approaches the target? do you think this target will be reached mid July or at the end of July? also, how confident are you in %'age that target will be reached?

    Thanks for all your work.

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    Replies
    1. I plan to sell everything at $28 because that is my minimum target for July. Mid-July at the earliest. I've done the analysis many different ways, and they all come up with the same answer so I'm completely confident.

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    2. An analyst I subscribe to who has been very accurate, even this bounce, sees July 11 at latest for turn, and rest of July bearish...so I believe SC is on track, just early.

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    3. SC, you're providing an excellent service here. No one can be 100% accurate and may be off in terms of timing cycles due to present central bank interventions. I hope things turn down this week and we hit that target.

      Thanks for your reply.

      Delete
  9. Hi SC.

    What about gold & silver?
    What do you expect for metals in july, if markets go down in july then pog & pos should go down or contraversely they will be up?
    When can we get your gold & silver analysis that we wait for weeks?

    Thanks, RB

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    Replies
    1. I'll try to do an update on them soon. Metals went up on Fri with SPX. In contrast on Monday, June 25th the metals went up with SPX down sharply. So the correlation is all over the map.

      However, they can rise the markets dropping. This is the "safe haven" trade. I think the metals rise in July with the markets declining.

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  10. Bought a boatload of UVXY at $9.37 per market.

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  11. Hi SC, will be considering buying some XIV for the bounce in August? Will you be buying any leveraged ETF's for any of the major indexes? If so, which ones? Thanks

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    Replies
    1. Yes, I have a plan for August, and Sept. I also have completed my analysis for many years to come.

      Let's discuss August later in July though. I like to let things unfold, and outline the next steps close to turning points.

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  12. Hi SC
    Is your target for Hvu about 7.85 for mid July
    TIA

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  13. Sc
    Thank you and continue your Great work

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  14. They're eating this thing alive with chop. Next spike will bring it to 8's for the next grind and chop.

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  15. SC, do u think we will see much selling this week or do u think it may be delayed becaue of the holiday?

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    Replies
    1. Tomorrow may see a dip for SPX, but around the holiday often is fairly quiet.

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  16. SC,

    Just checking....you still holding UVXY? I'm guessing that we'll see a small bounce and a final wave down before the turn up? It is getting harder to see a retracement all the way up to $28......still confident? or has the pattern changed?

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    Replies
    1. Yes, still the same. No doubt about it.

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    2. Thanks for the quick reply.......got itchy fingers watching the blood bath :-)

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    3. This isn't an easy trade otherwise everybody would be making money hand over fist...

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    4. Yep - very challenging! Thanks for the words!

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  17. I've learned that the closer i get to stopping out of a trade emotionally the closer the trade is to breaking out...the computer programs are professionals in human psycology...

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  18. SC, what would the target be for the VXX if the UVXY reaches $28?

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  19. What is your cost basis in UVXY SC?

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    Replies
    1. $12 and I may add to this position.

      Delete
  20. hi SC

    to get to 26$ for VIX, wondering what type of issue you seeing that can bring us up to there from the our current level 17.3$?
    UVXY at 8.74$, to get to 28$ wont that mean we will crash hard in July? not saying it wont happen, but looking at the odd currently even with the really bad ISM number, we still bounce back up hard because ppl think of QE or LTRO or other money pumping method over at Europe.

    wondering if your have stop for UVXY? what would be a good stop place?


    ThankS!

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    Replies
    1. There are plenty of problems out there. I do see the market plunging in July.

      Stops are a personal choice depending on the strategy used by an individual trader. I don't see any significant downside.

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    2. Here we go again? Define significant? 35% down in the last 2 sessions alone is huge

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  21. The wild ride with the UVXY is down another 11% today...holding this vehicle waiting for a possible down cycle is insane!!

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  22. In order to get to $28, it needs to explode 250% from here. Based on 15% increase, it needs full consecutive 7 sessions. It is just pure maths. So $28 seems theoretical number, but mathematically impossible for short July window. May be $15~$17 would be good/realistic target. Hey, I am in the same boat with SC costwise. SC, comment?

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    1. Mathematically, there are no issues with the $28 target because it compounds as it increases. UVXY has the same structure as TVIX. TVIX went from $15 to $109 last year.

      $28 is a reasonable target, and likely in my work.

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    2. I am 60% loaded (roughly same cost as yours. BTW, hats off, you are brave enough to list your cost), and figure it will be senseless to set stop this stage of the game while VIX is just 4 points away from historical low. Let's see how this boat get rowed by MM. However be very honest, even from $12 to $6 would be very painful to watch. UVXY is jsut not for normal trader or normal heart......

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    3. Bottom line for me is I see large upside from my cost. I've been suggesting a bottom in the $9 to $11 range since it was $20. Now, just slightly under that level.

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    4. $15 to $109..okay, yes, thats a VERY good point, but still...a 250% increase is a very long way up.

      I've not seen your VIX target anyway, but I'd guess you are looking for something in the 40s.

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  23. Come on SC if you truly believed $28 was a reasonable short term target for the UVXY you would be backing up the truck at its present value of $8.62!!

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    Replies
    1. I already have lots that I will hold and will not risk missing this move higher with any short term trades. I plan to add more though soon.

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  24. Hi Sc,
    Why is sp still going up today when poor manufacturing data just came out this morning?

    Thank you

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    Replies
    1. The rally that started Fri was just a short squeeze due to the large gap overnight Thurs. We're seeing bad data everywhere. The market has backed itself into a corner here, and once it loses momentum, it'll collapse.

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  25. ah, i see,

    Thank you for the fast response

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  26. SC, how did you calculate that UVXY would bottom in the range 9 to 11? At (2x) the performance of the S&P 500 VIX short-term futures index, UVXY could easily see 5.9 yet this month and much lower as we roll over into the next months futures contract.

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    Replies
    1. I use the forks as well as other patterns. Many different methods I use indicate that the downside is practically nothing from this level for UVXY.


      SCJune 22, 2012 1:03 PM
      "VIX and the VIX futures lead though so they slow down when SPX finishes. $9 looks about right to me if SPX hits 1370. This is a sucker rally according to my work."

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    2. The decay in the futures even if the VIX slows down will drive the UVXY (2x) the decay lower.

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    3. Hey Recount, I see you're a new guy here. Are you a mole for this etf that goes on boards and spreads fear to drive people out of positions before large moves? There been documented evidence of this in the past, on both sides of the trade, and wondered because of your sudden appearance and stark negativity.

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    4. SC: Not a mole but believe UVXY is a vehicle only to be used for day trading. Your case is an example: You have a position at 12 and since Thursday UVXY has decline 29% to 8.55 with no bottom in site. You have to have a 40% move from here just to break even. If UVXY breaks 6 as I think it will just due to decay, you will need it to double to break even. For the UVXY to reach your target of 28 from today's close, the short term VIX futures must increase by over 110% at (2x) for a 220 % move. Just trying to grasp the amount of risk that has to be assumed to achieve rewards that seem unrealistic.

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    5. IMO, the best strategy is to wait for these things to spike and then short the hell out of them, they are built to go to 0 over time.

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  27. SC, what % do you have invested at 12? With market manipulation, and the potential of a hyperinflation leg starting, this is a big roll of the dice. My favored for-fee analyst says ugly last 2/3 of July...so I'm going with it. Started 50% position today.

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  28. FOR ANY GRAIN TRADERS.......BEANS!

    http://img13.imageshack.us/img13/5982/beansdaily.jpg

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  29. evening all...still trying to ge over the "peeling" i been taking since last thurs...cycle low??? evidently low went to high in about day and a half...anyway still holding aapl puts and waitin for turn to get back what's been takin so far...
    new to cycle analysis and apparently cycle dates can reverse polarity...i didn't catch on in time...this time but learning is a blessing of sorts...save me next time...SC still da man and don't let no one shake you out of your charts...new guys need to watch and learn instead of asking obvious questions about things they don't get...still exciting times !!

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