Open Weekend Post 10/20-21/12

You know the drill, share the love and the knowledge.

Markets look bleak right now, but have no fear QE and Potter are here! Well, they were. Maybe they took Friday off?

VIX - Looks like we're bout to get a possible near term scare, but the real fear lies when the falling blue diagonal comes into play next year or sooner.

If you do not know about Bayou Corne, please watch this video. This is some really freaky stuff.



And how about a little throwback STB. From the ole weekend video days - light up a fattie and enjoy. Nothing like happy little foothills in your paintings.



Thanks for another great week on the blog.

Have a good weekend.

GL and GB!

60m SPX And VIX Ending Triangles

Sorry I missed this morning. I'm not feeling all that well and slept in.

Here is a quick post that I will elaborate more on in the Morning Post tomorrow. Simple triangle formations ending on the SPX and VIX. Is this the end of 2 of 1 of 3 and we have a pretty strong 3rd wave down staring us in the face? All measurements at this time call for an initial drop to end near the last bottom at 1044.

SPX 60m - I am throwing out an expanded chart with the last triangle call that worked so well (that so few believed). That one took forever to happen as the throw over lasted almost three weeks. With this smaller triangle, I do not expect anything as drawn out, but am cautioning about the possibility of a throw over. I have not given up on my 5.3.5 fantasy call at this time (ending 1 of 5 here), but the indicators are saying this could be the top of this move (never discount the power of manipulation!). The daily's are toppy setting possible divergences, but they still have some room to run if they want.

VIX 60m -

GL!

What A Bunch Of Crap

Let's start with Trim Tabs CEO Charles Biderman courtesy of the ZH post More Observations On The Federal Reserve Buying Stocks. You all know I love to harp on manipulation, well, the numbers are starting to add up and they will continue to shine a brighter light on the fraud as time goes on. Unfortunately at the end, when it is to late and your future has been promised/sold to the banksters, we will all be indentured servants to the system. I'm not joking. Please watch.




So let's back that up with VIX-VXV Spread At 3 Year Lows from ZH. Can you put 2 and 2 together? This is really simple math and the thesis does not take more than a second grade mentality to deduct. Why should there be any fear if the government is backstopping everything taking your funds (borrowed/leveraged) and using then to support the market at all costs? 


And to pick a third post from ZH (just putting the pieces together) Insider Selling/Buying Ratio At 62.3x To Start Off 2010; Insiders Can't Thank The Fed Enough For Inflated Stock Prices - 



Mish has Investor Complacency Running High, Stock Valuations Extreme - Which is Rosie's report from Friday if you have not seen it (thrying to drive my point home here). 


And from Denninger - If Consumer Spending Is Improving, Where Is It? - again it takes demand to drive everything and if the consumer is dead then.....then......

Its a big no brainer. As I have said all along, it is manipulated and it will remain that way till something happens out of their control. It is a fucking Ponzi scheme that is being run at your expense. So why are we all not in the streets raising hell? Who knows, but we will be one day soon looking for blood. Sadly the corporate and governmental elite will weather the storm and some patsy that you have never heard of will get grilled. Geitner may get in trouble, but remember those pardons that the O gets? Timmuh will be at the top of the list (now as for the rest, I can't wait to see the radical trash that he sets free back to the streets). 


I keep putting posts like this together nightly. News is news, good or bad, the market reacts positively. The news is forming a tsunami IMO that is building off shore and will crest later this year. You may wonder, how it can get worse? Trust me it can and will during the election year as the finger pointing gets going good and accusations are rampant of who caused this mess. The team will no longer function as a unit and the lack of chemistry will destroy the hopium driven karma that has ruled DC and Wall St. The house of cards is going to crumble and then we will have our say. I'm not sure what it is going to take to get the public mad enough to get off their la-z-boys, but it will happen. 

Want to see the coolest chart you have ever seen that is a real eye opener? Gone in 24 Seconds: An ETCH Visualization - the flow of treasuries - it is wicked and tells a (not so) great story.




It is coming, be prepared. 


GL

Morning Post

E-minis set new high last night to catch up with everyone else. The RUT finally caught up with everyone else in new high land. After lagging horribly coming into December, down the stretch they came after turn four and RUT hit the turbo boost and appears to want to pass everyone in the final quarter mile. The consensus appears to want everyone to end the year in high style.

Looking at SPX compared to the dollar, oil, TNX and gold here. SPX holds it range and its high as everything else appears to be making the necessary adjustments to their unrealistic conditions.

The VIX daily decided to (not surprisingly) set a new low yesterday. I'm not really sure what to say other than the fear index is not accurately describing the fear that should be evident. IMO this chart best describes the fantasy land scenario we are experiencing now. Combine this with the overall bullish sentiment and you get the recipe for the much anticipated impending correction.







I have no idea what to expect or to call at this time with the SPX range bound, slightly setting a new high yesterday (my upper range all along was 1050 to 1121), meeting resistance at the upper BB and the daily RSI not making any decisive moves. I'm on the sidelines and enjoying the holidays. I'm not ruling out the possibility of anything up or down right now. I'm seeing counts that have tops set or being set and some with a good bit of upside to them. I don't trust any of the counts right now (I don't trust anything right now actually). My suggestion is to wait for the market to come to you. If there is a decisive break north, then 1214 is my target area. If there is a decisive break down, let's watch the form and see what it has to offer. I'm sticking to my call all along that it will take an "external event" to rip this market from Ben, Timmuhh and the gang. Will a big hedge fund or some mutual funds blink before year end in this game of high stakes chicken they are playing or will they take this thru the first quarter earnings period?

Happy holidays and good luck.

Morning Post

I hope you had a good weekend. 11 days to Christmas. More importantly 17 till 2010 where I believe the action begins. Dubai gets bailed out and thus saves CITI's (and the global financial system) butt. So, you can say we dodged a huge bullet there. I'm not sure what will happen with volume this week. Maybe the holiday volume started three weeks early?

Some have asked why I have stopped giving targets? Well, first they are all in the charts via fibs, S/R lines, BB's, gaps and  trendlines. Second, when the market is range bound line this and is lacking clear direction there is no point. Since I do not trade 1 and 2% moves, I do not see a need to slap a fib on every squiggle. Now I do have 1, 5, and 15m charts that I try to keep updated in the chartbook for a greater drill down if you like. I have also been asked about my EWT count. LOL - I'm not even sure if EWI has a count nor if the good Lord could count this mess. I think we're in the last wave up with a possible 1214 top target or we are in a topping process. I'm just gonna wait for it to blow out the end of the barrel and get some clear direction. Then I'll start counting again.

SPX daily - Someone wanted a daily chart, so here it is. I can not make this one say go down like the 15m I posted yesterday, but it does say the bulls are very weak and the bears can't get their act together. First note all the support under price. I count 9 support points from 1064 up. Next note the narrow BB's. Anything below 60 has created volatility and with them sitting at 29 something should be about to pop. RSI now has 3 separate divergence lines and has been trading between them and the 50 line for a month. The red line is cracking and a push to the blue line may be in order, but the upper BB may have something to say about that. S Sto got a bull cross Friday, but it never made it to being oversold and is right under TL.

SPX 60m - MACD hist does not look good. S Sto overbought. This chart looks toppy, but you know I do not thrust or trade on the 60m and find it highly unreliable. It does say toppy though. Notice the group of gaps on the upswings between 1090 and 1100. Something (?) is protection that 1088 price level. If that cracks, there is not much below it to keep the market from going straight to 1030.

DXY 60m - For all the bearish angles I tried to take above, if the dollar and the markets decide to resume their dance, this rising wedge should be viewed as potentially bullish near term for the markets. One thing that I am speculating about is that they are going to keep the $ in a range and use it to prop up the markets. Let it breathe and then deflate it. Although the dollar has decidedly bottomed for now (according to the TA I see) and broken out of its LT falling wedge, they may drag it out down here for a while.

Oil daily - goes under $70 and cracks a level I was not ready for it to violate. I thought the yellow channel would hold. Let's see what happens at support at $65.

EUR/USD daily - The breakdown continues. I'm not sure if the dashed gray TL holds here or not. Let's see what happens at the $1.44 level.







VIX - Needs to hold the lower TL near 21.
EUR/JPY - wedging down with support at $126.71.
Gold - Still in the channel down. but may be nearing a pop point as I mentioned last week.
Natgas - Looking to see any reaction to the XOM deal.

Morning Post

Running a little late so it has to be a quickie.

SPX 60m - See the red TL? Break that with some conviction and set a lower low and we'll get a full frontal bear move. Till then that range in the red diagonal is still in play. I do not believe the top TL will be tested again (that is not saying I have called a top - which 1119 was most likely it at this point). 60m indicators still have a little room to fall and there are no divergences to speak of to price at this time signaling a turn up. 

SPX daily - Whether the TL's and labels are right or wrong (this is a chart I play with), you can not argue with the divergences to price in the indicators and the interaction with the upper bear market TL and the 50% fib retracement.  See the red box? Taht is a lot of nasty stuff in there that does not look good for the bulls. I do like that target in the circle. Those should look familiar from the SPX channels I showed yesterday.

VIX daily - I think the VIX has bottomed based on the action of price and it's relation the the 50 and 100ma. The blue boxes tell a good story. It can't hold a break above the ma's. When the 50 crosses the 100 the bears party will be on. No telling how long that will take, but with them less than 6 points apart it may not take long. The indicators are mixed, but favor a bullish move here for the VIX.





It is a  tough call here. We are near the TL of what has been a really choppy market for three weeks and they may force it back up here some. I think the bulls have lost their mojo and the top is most likely in, but that is not a call (you can't go against the PPT). Odds are good that we stay range bound till the EOY. Bottom line is the divergences on the daily and weekly charts with the price action say loud and clear the bulls have had their run. Now we have to wait patiently for the selling to commence.

GL and happy holidays.

I'll be doing some more daily posts on other stuff so look for them.

VIX, VXX and VXZ

I'm gonna need a bigger chart.

The VIX And It's Not So Identical Twins (VXX And VXZ)

Time for a little schooling on something a few of you may have some interest in over the next year or two the two $VIX long ETN's VXX and VXZ. What are they? How do they work? What is the difference? They are not your standard SPY type of index designed to track the VIX tick for tick. They are very different futures oriented ETNs that don't track the VIX as closely as you would imagine.

The reason for this post is to educate you in hoping you do a little research into the price relationships before you purchase one of these. I was about to pull the trigger last week and thought I would slap together a chart and see what was up. Boy was I amazed with what I found.

First let me introduce you to the two ETN's and share some of the vitals.

iPath S&P 500 VIX Short-Term Futures™ Index VXX

The S&P 500 VIX Short-Term Futures™ Index TR is designed to provide access to equity market volatility through CBOE Volatility Index® (the "VIX Index") futures. Specifically, the S&P 500 VIX Short-Term Futures™ Index TR offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500® Index at various points along the volatility forward curve. The index futures roll continuously throughout each month from the first month VIX futures contract into the second month VIX futures contract.

Correlations (As of 08/31/2009)
S&P 500 Index -0.74
CBOE SPX Volatility Index 0.71
S&P 500 VIX Short-Term Futures™ Index TR 1.00
S&P 500 VIX Mid-Term Futures™ Index TR 0.90

Sources: S&P, BGI (12/05-12/08) based on monthly returns.
Index returns prior to 1/22/09 are hypothetical and are an illustration of how the index would have performed based on current methodology. This data does not reflect actual performance of the index.

iNAV (Indicative Value) - $51.93 - Close price $52.35

iPath S&P 500 VIX Mid-Term Futures™ Index VXZ

The S&P 500 VIX Mid-Term Futures™ Index TR is designed to provide access to equity market volatility through CBOE Volatility Index® (the "VIX Index") futures. Specifically, the S&P 500 VIX Mid-Term Futures™ Index TR offers exposure to a daily rolling long position in the fourth, fifth, sixth and seventh month VIX futures contracts and reflects the implied volatility of the S&P 500® Index at various points along the volatility forward curve. The Index futures roll continuously throughout each month from the fourth month VIX futures contract into the seventh month VIX futures contract.

Correlations (As of 08/31/2009)
S&P 500 Index -0.69
CBOE SPX Volatility Index 0.66
S&P 500 VIX Short-Term Futures™ Index TR 0.90
S&P 500 VIX Mid-Term Futures™ Index TR 1.00

Sources: S&P, BGI (12/05-12/08) based on monthly returns.
Index returns prior to 1/22/09 are hypothetical and are an illustration of how the index would have performed based on current methodology. This data does not reflect actual performance of the index.

iNAV (Indicative Value) - $86.90 - Close price $87.29

iNAV is defined HERE.

Performance Chart - $VIX, VXX and VXZ (Better viewed HERE)

I can't really define or describe why some of the MASSIVE variances in price exist as I have just begun following these two strange breeds other than it happens as a result of the futures traded relating to the index. I would like to think the bots trading the futures on these bad boys would get a GPS and tack it on the VIX (think Santa). Might help a little. Both ETNs at one time or another have had GLARING price divergences (both to the good and bad) of up to 25% from the underlying index. Now tell me how much that would suck if you know the market is falling and your corresponding VIX ETN is falling with it?

Thus these should be purchased with severe caution and care. They should be compared (my charts update real time and can be found using my chartbook in stockcharts) as to their relative position to the VIX before purchase. Their iNAV relationship should be reviewed as well.

Other than the price divergences the one thing that gets my attention on the chart is that they all meet at two points, the top and the bottom (in black circles). Here we find the happy family all gathering together for a special occasion, but after the party is over they will invariably go their separate ways.



$VIX weekly chart - (Better viewed HERE)

What can you expect from the VIX? Well, if it all goes according to plan, the down trend line gives way to a possible breakout. The ABC pattern for the fall from grace has completed. A nice triangle formed on the bottom and price divergence to SPX has happened since July. It appears that a game plan can be made using the fib targets for the triangle breakout, the upper resistance line and the fibs for the B to C fall since they all nicely come together around $39. This would make the P3ers pretty happy and might coincide with the move for the end of wave 1 of 3. REMEMBER - you can not just look at this chart and go plunk some funds down in one of these ETNs. It ain't that easy.



BE CAREFUL with these delectable little devils. They will bite you if you do not do your homework prior to purchase. These IMO are NOT RELIABLE performers and you can either get the timing right or wrong and you won't have a clue as to why. One thing is for sure, they have not really had a down market to perform in, so maybe on the way up they will work better. Apparently I am one of the few and the proud to take on a post on these bad boys. Hell, even the Barclays sites description sucks on describing their own product. Always use stops and do your homework when playing with these fireballs.

UPDATE: I would like to suggest that you read this link from Vix and More: Why VXX Is Not a Good Short-Term or Long-Term Play

Let me ask this - if you like this post please promote it with links scouring the web and blogosphere. I believe it is important. Thanks.

I am long VXX.

GL trading,

Shanky

Weekly VIX Chart

Looks like a completed ABC to me. You can see the black fib that is used to measure A and C. 200ma supporting price that is having a positive divergence with SPX. All indicators dramatically oversold. One last trendline to cross.

Will it cross it or will it be rejected? If it does cross look for a 5 wave move up. If not, then this may be a 5 wave move down and we're gonna get a truncated 5th wave. Believe it or not there is still plenty of room of the VIX to fall yet and the triangle formed here could be a 4.

VIX - Measured Moves?

Choppy? Predictable? Measured? Controlled?



Disclaimer - I am long VXX from 50.65.

A Quick Look At The Weekly VIX

This is the big boy, not daily or 60m. This is a weekly chart of the VIX. Price is running along in a positive divergence to SPX since July with the 200ma acting as support now. The indicators are all oversold, have been embedded and are showing divergences to price. When the RSI crosses the 15ma it should be all over IMO.

Is this going to be "the" breakout? Hard to tell with possibly two head fakes already in the books. I think a dead cat bounce has been completed and a double bottom is possibly set. Some (including me) have had other trendlines that possibly show a breakout and back test of the top wedge line. If the move down was an ABC the target for C=A was missed by .10 by my calcs. BB's getting pretty narrow indicating increased volatility again.

No one knows which way the market will move (except on POMO days and every afternoon around 3:30). There is no reason the VIX can not continue to flat line like the dead meaningless index it has become. There is a chance that this is the 4th wave of 5, but 5 would have to truncate given price levels. This could also be a 1,2 move as well. I prefer the ABC mentioned above. Given the current state of the other chart I have been presenting, it looks like a storm is brewing to me.

I am long VXX from 50.65 since last week with a 5% stop.

Chart Better Viewed HERE.

VIX Breakout?

The last time this happened it got sucked back in. I don't think so this time given the dow vol donimance this move has vs. the last time.

VIX About To Bust Out O Here?

No comments necessary. It either does or does not.

We Better Turn Soon - Or Else Something Is Really Wrong

NO! I am not showing that it is OVER, but to those that have been comparing "this bottom to that bottom" blah, blah, blah sure looks like you can make a great case that the bottom is in looking at the monthly chart.

Point of this is with the dailys and 60m topping out and the weeklys beginning to roll over, then the trendlines on the monthly indicators just may hold. It is gonna take some serious whipsaws in some of these indicators to make the turn in time. The VIX falling wedge ending pattern would confirm the turnaround suspicions as well.

(Disclosure - GS and the manipulators will take the market wherever they want to and TA nor EWT nor fundamentals works anymore so all this might not mean jack. Also - my target for "option 1" call looks like total crap on this chart. Not giving up on it yet. Note GS came out with a target of 1060 today for SPX - Uh, Shanky has been at 1050 for quite some time now as his target. First MW copying my shit and now GS? This is a great compliment and to have "THE" market manipulator agree with my target is quite the compliment - especially when I was over a month ahead of their call.)

For those asking for a UNG update, I have updated charts, but have not come to any definitive conclusions. I did find this interesting article on nat gas and oil prices. I'll post on UNG soon.

Still digesting comments on the new look. I'm not all that stoked about it either. Might change again soon. I mainly want something wider than the old format. If anyone would like to send me a suggestion it would be appreciated - email in top right.

Still struggling with SC support to get the new computer to allow me to annotate charts, so my time to update charts has become severely limited. I'm not happy. Sorry.

Thanks for the views and comments. GL trading!

Chart Link For better Viewing


Chart Link For better Viewing

Let's Try This Again - A Possible Bounce Here?

I hate being wrong. Let's get that out of the way. A few days ago I made a weak case for a bounce and got about 7 points before further collapse. Admittedly very wrong. Why? I have become so accustomed to the PPT, GS and the marry gang propping up the markets every time the 60m bottomed out I lost all focus.

Well, here is a little more versed shot at why we have a minor correction here before further weakness.

Notes are in the chart. Here goes - The ABC move off of 956 to here is complete. A=C. The yellow fib in the chart is the measurement. The C leg of the C leg measures .618 of the A leg of the C leg, so it can be technically complete. 60m indicators are all turning north from a short embedded stint. The red and black trendlines I believe are solid and were meant to hold this fall. There is another way of looking at the red falling wedge that may be breaking out. It could also play as an A-E count with a truncated E. That pattern would be completed as well or will be with another touch of the lower trendline. The steepness of the fall and some recent candle action are assisting the call. The 60m VIX looks to be turning as well.

Again, I will note that the dailys and weeklys are not ready for any major turn, so this call may be premature, but I am only looking to the fib retracements at the 900 to 902 level for the bounce. If I miss this call, then I got too good at reading manipulated markets and need to brush up on some real TA. Maybe GS has lost their touch since the cat got out of the bag with their proprietary market manipulation software. If that is the case, I'll surely be wrong.

On another note, I have gotten some comments and emails on the upcoming earnings season. My thoughts are mixed. First, the analysts are part of the game. They are in it to sell you something. If you are not buying then they don't make as much money. Second, the banks earnings will miss at some point, just not sure when. The manipulated bullshit that happened at the end of last year where they decided to just exclude a month of earnings will come back to bite them in the butt eventually. When is the question. Thus I have mixed views on how earnings will be. Rightfully so they should suck. How any retailer is still above water is beyond comprehension.

Note: Still on vacation in Colorado, so posts are few. Saw a big damn brown bear last night. Walked out of the restaurant after dinner and there down the side street about 50 yards away was this huge ass bear looking for some food. The marshall chased him around a few houses and he got away. I was hoping that would be some sort of sign.

GL trading and thanks for the views and comments.