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Tuesday, August 14, 2012

$SPX - Failed Again


SPX tried to advance above the turquoise fork resistance but failed once again.  The cycles are mostly negative during the rest of August.  Additionally, there are very negative spots in mid-September as well.  Initially it may establish a gradual trend lower with a fair amount of chop along the way.      

15min Chart

























The negative cycles have been discussed, and the market is providing evidence that suggests weakness ahead.  There is no credible possibility of significant upside ahead in the near term. 

These correlations will not provide precise timing of large declines used on their own, but clearly caution is a requirement going forward from this point.  A minor higher high is still quite possible, but nothing significant.

RLX, Rifin, TRAN, RUT are all leading down from the May high.

Daily Chart















The Financial index Rifin double topped in 2010 and 2011, and has a lower high this year. 

This chart below was shown in 2011 as evidence prior to the summer 2011 collapse.  The warning signs were obvious at that time, in advance, of the plunge.

The warnings are similar this year with financials continuing to underperform dramatically.  The next crisis is more likely to come from the Banking sector than Europe.  One word can justify a huge spike in the VIX - "Lehman".


2day Chart















Initially, the large pattern suggests UVXY establishes a gradually rising trend.  Watch for a trend to develop as shown with the orange fork support and resistance.  It will likely be choppy, but overall gradually rising. 

15min Chart

79 comments:

  1. SC, do you think the low for UVXY has been put in yesterday? or do you think there could be more downside to the $4 level?

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    Replies
    1. Since during this phase the analysis is only indicating a gradual trend to develop, there will likely be retests of support, and a lower low for UVXY still is possible.

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    2. Though overall the pressure should now be to the upside for UVXY.

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    3. You were very patient with acquiring the 100% position, don't you think its a bit risky to trade in and out based on your hort term cycles? do you think at this point buying and holding may be better or will you look to buy and hold at a later date?

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    4. It can be just held, but I think there will be some nice moves up and down along the way. So I will look to capture some, but yes, there are certain spots in my cycles when I will just hold tight.

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  2. Can you please update as you exit and enter your position as well as the %? Thx

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  3. SC,
    Thank you for the updated charts.
    For UVXY it seems the expectation is for a gradual rise until end of Aug to the 6's.
    Since it seems no longer viable that we will see 28 any time soon, where do the cycles see UVXY reaching by the end of the negative September cycle?
    thanks in advance.

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    Replies
    1. My big picture targets are the same, and these charts will be coming. Yes, initially the move is anticipated to start gradually, then acceleration phases.

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    2. SC, when do you see UVXY hitting the first target ($28)? Thx

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    3. First need to establish this gradual rising trend.

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  4. SC, all im seeing is negative divergence on weekly. There are no sell signals on SnP 500, market will continue to bleed these leveraged instruments.

    My box is still in buy the dips mode from july 26th.

    Timing is everything.

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    Replies
    1. Well no offense but your box was short at 1340. I think you may have mentioned that your system is based on moving averages, and I told you then that moving averages would be prone to whipsaws. This is not a critisism but a heads up, and of course with moving averages it is difficult to design a net that catches every size fish.

      Anyway, my cycles are negative into mid-Sept. This doesn't mean large declines have to occur during this time period, but it certainly makes sense to focus on the bearish side. Thus your point is valid, and I have also said not to expect anything major just yet. The market is quiet.

      AMJuly 24, 2012 7:33 AM
      "My box already went short on daily spiders with potential sell signal on weekly (!) coming up."

      DYODD

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    2. On july 26th it covered at 1360 level and went long. i did not update since i did not think anybody was interested or followed what i say at all. We did not get a weekly sell, it bounced and turned up higher, so short flipped to long.

      The box uses averaged set of 3 versions of one indicator, it can be fine tuned for better timing. Additionally i do use MA's to follow bigger trends but this is for manual trading mostly.

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    3. My point is that its very primitive and it still managed to catch big moves. Whenever we humans get involved with our fancy analyses thats when things tend to deteriorate.

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  5. SC, when does the short term cycle turn positive?

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    1. Also, when do you plan on exiting UVXY..today/tomorrow?

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    2. Tomorrow and Fri are mixed and then early next week is neg again.

      I probably will hold for tomorrow at least, and maybe early next week.

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  6. SC,
    what happened to 17 dollar silver... lemme guess its just around the corner right

    ReplyDelete
    Replies
    1. His timing is off, but general idea is that metals can rally while markets sell off and then everything comes down in the major deflationary wave.

      How it plays out remains to be seen. At this point i favor more risk appetite into the solar peak in 2013 and then we sell off.. unless picture changes in the near future.

      Guys. There is no silver bullet out there. We all come here for free info and we get what we pay for. At the end it is your own decision how you allocate YOUR money.

      It all comes down to good money management practice. Even with bad SC calls, those with large positions should have taken smaller losses when trade went against them, or should have had hedges in place.

      Its your accounts guys. Mr. Market will punish stupidity, overconfidence or plane negligence faster than rabbits can make another offspring.

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  7. SC timing is really not precise for precious metals.
    His analysis is not clear and he changed his mind so often.
    Maybe in the long run he is right but I do not like his overconfidence when he forecasts moves.
    It's my opinion and I absolutely do not want to be rude, just honest.

    ReplyDelete
    Replies
    1. Bobo MikFebruary 29, 2012 8:38 AM
      "SC, silver went down to $34. Are you now long on silver ?
      Thanks

      CONGRATS for your forecast on precious metals, it's kinda magical !!!!"

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    2. SC, everyone do mistakes and has weakenesses. I am not saying that my forecasts are better than yours. I am not 100% correct and I make mistakes often and it's normal.
      Your analysis on the long term is interesting but what I have observed so far is that your comments on precious metals on the short term are not clear.
      I do not share all of my views on precious metals because I think people are more interested in yours, but sometimes I do.

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  8. Took profit on UVXY @5.61, tommorow is another day. There is no real trend so I don't want to take any risk overnight.

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  9. SILVER

    http://traderjoed.blogspot.com/

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  10. SC,
    I believe you stated you saw the SPX cycles being positive for the end of this week before getting weaker again starting next week. How do you plan to trade UVXY during this time and how low do you think UVXY will fall before resuming it's gradual uptrend next week. Thanks in advance.

    ReplyDelete
    Replies
    1. UVXY hit the orange midfork yesterday exactly at $5.62. It is trading in the lower half of the fork currently with plenty of support in the low $5. Once it breaks above the midfork then $6.30-40 or so at the upper fork is where it is heading imo.

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  11. Thank you SC for your charts and information that you share with us, Thanks a lot :)

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  12. Now gaps above and below. Lower gap will likely fill today on one big final surge in markets...then we can look at 17.57.

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  13. SC, do you think this could possibly be the gradual rising stage? or do you think we get one more surge lower for UVXY.

    Will you be exiting UVXY today? Thanks

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    Replies
    1. UVXY holding well today. $5.85 or so might be a point of resistance short term. I may look to take profit around that level, and reload again low $5 for a move to $6.30-40 area.

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    2. Hi SC

      thanks for the update.


      Thanks!

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    3. Thnx SC. Great charts. Thorough explanations.

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  14. UVXY seems to be holding up very well on this move up

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  15. I think S&P will retest the 1420-2 zone

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  16. SC, are you still at 100% UVXY?

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  17. 200MA support on the 10min UVXY...

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  18. I'm holding all my UVXY, and I am really liking the way it looks. It is holding well. The yellow fork tomorrow is in the low $6.

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  19. SPX is at yellow fork resistance now.

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  20. SC, is your cycle work tomorrow positive/negative?

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    Replies
    1. Tomorrow is mixed, but I am suspecting market gaps down.

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  21. Kiss off the 30 min lower BB at 5.30 would be a nice entry point

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  22. BKX breaking out higher. Financials are rallying, nothing bearish there.

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  23. SC, are you adding anymore UVXY?

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    Replies
    1. My thinking is simply that there is good support low $5, and $6 level coming soon.

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    2. Hi SC,
      I'm a bit confused.
      I thought until end of August is supposed to be a negative cycle, yet SPX is grinding higher this week and UVXY is grinding lower albeit slowly so far. In fact SPX seem likely to push even higher now that it broke out of its narrow range the past 8 or sessions.
      Not sure what to expect next with these conflicts.
      Thoughts?

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    3. The typical pattern is that VIX bottoms before SPX tops. So VIX bottomed last Fri, and SPX is likely approaching a top. The cycles still are negative into late Aug and also mid Sept.

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  24. Hi SC,

    This is my first post. I've gone back and read a dozen or so of your most recent posts. It would seem like you have a decent following. I'm still going to go back and read more of your posts to understand the way you think. It would appear the markets have not been so kind lately.

    Personally i develop automated trading systems using simple mathematical ideas (I’m a mathematician(: ) and trade them with futures. So far it looks great, pulling about 21% per month for the past couple of years on average. I just recently am interested into cycles and Gann's works and am trying to incorporate them into my next system. I'm hoping to learn a lot from your work!

    It’s always nice to see people provide their insight for free. Most of my knowledge has come from free blogs like this.
    How long have you been trading cycles? Do you have any stats regarding the success/failure of your calls?


    Thanks, M

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    Replies
    1. Interesting M, welcome. I've been working with cycles for 15 years, and am a firm believer in market cycles. Most of my analysis and stats have not been shown on the site, but I probably will expand on that to explain better.

      Thanks and feel free to share your thoughts on markets and the mathematics that explain them.

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    2. Hi SC

      ZZ is calling an estimate of a fall to 1350 ish. +/- a few points. Wondering if you have an estimate on this drop as well that you can share with us?


      Thanks!

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    3. I would like 21%/month as well where do i sign up?

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    4. I'm working on estimates. Will update soon.

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    5. It is doable. Spending stupid hours studying to be an actuary has tought me probability in my sleep. Now, taking that and using the goal of trying to have more winners than losers and having very positive expectancy has lead me to my profits.
      Dont get me wrong, there will always be losses. but being a student of probability, you can calculate the probability of getting a loss given your last trade (or two or three) were losses.

      Coming out of college i was amazed that traders werent using basic conditional probability. There are a few excellent blogs out there right now. Look into wiseguytrading.blogspot.com
      It is exactly the type of trading i am talking about.

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  25. Seems like UVXY will break thru the 200MA is this bear flag on 10 min plays out...

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  26. looks like a blow off top is coming in the next couple days, wondering if UVXY could get down to $4...

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  27. SC,

    How are your cycle lengths determined? especially for VIX?

    Thanks

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    Replies
    1. I chart the VIX but am not currently using VIX cycles. SPX cycles are used. There are many different methods to develop cycles that I use. Here is one example of an equal time cycle method from last year:

      http://cyclicalmarketanalysis.blogspot.ca/2011/07/spy-july-timing.html

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    2. http://cyclicalmarketanalysis.blogspot.ca/2011/08/spx-massive-bear-trap.html

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  28. SC, Would you please let me know if UVXY will be affected negatively (rebalancing at expiration) with contango at the coming VIX expiration? And would it be on Tuesday or Wednesday? Thanks!

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    1. Yes, Wednesday. I don't see it being an issue because these etfs are constantly switching ahead. The curve is steep in coming months, but the VIX is low and in my analysis the VIX has big moves ahead.

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  29. "In recent years, a VIX front month futures contract below 16 has not been a good sign for stocks. Beck points out that each of the five times the front month contract closed at or below 16 since 2008, it coincided with a sell-off in the S&P over the next one to two months. Of the five times it happened, the selloff average 8 percent over 40 trading days."

    http://www.cnbc.com/id/48692307

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    1. Well if the sell off is going to happen it needs to happen before the end of the month if you believe zigzags forecast that the market will rise in September.

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    2. i use cnbc as a contraian factor...this is not good news for bears...

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  30. Tomorrow is the Jupiter-Mars opposition, and a New Moon.

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    1. How does this translate into tradeable advice? thanks.

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    2. Possible major trend reversal

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    3. Interesting thanks. I'm not so sure I believe that Celestial movements can affect markets like that unless it causes a physical disaster of some kind on Earth.

      Let's see what tomorrow brings.

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    4. An open mind is good. In the meantime, check this out:

      http://planetforecaster.blogspot.com/2012/06/golds-natal-chart.html

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  31. VIX futures are already trading on sept month...huge $ 3 gap up....

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  32. VIX futures are up more then $3 to $ 18.50 but bad news and really bad news for UVXY and HVU as they have potential to go much lower here....

    This is getting scary day by day....

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