Weekly Trend and Cycles outlook

More Vola will come our way in Materials...

...the Euro...

...whereby the Vola could be of the benign kind in a bullish way, now that many Asset classes have re-entered or defended the Bull..

 ....the final timing on the bullish campaign (we still call it just a BOUNCE) seems uncertain, but a couple of weeks or even 1-2 months are in the cards.

 Remember our early Canary who alerted us of the coming tidal shift?

When we look at the leveraged Bulls the picture looks similar...

Update on OIL:

 ......but there is also a chance that the Bounce gets cut short which we don't view as our base case as of know.

We promised you a volatile week with an upside bias last week and what a week we got !

The next phase should be continuation of this in the end of July +/-.

(This will be out last post before our summer break. We will return in Ausgust. Enjoy the Summer!!)

ISE and CBOE cry 'BOUNCE'

This is NOT a healthy market !!

The Teck Larg Cap Liquidity Index shows deterioration and indicates a Market that bounces from extreme to extreme due to lacking liquidity. This is a clear WARNING sign that the current bounce might not morph into a new BULL.....

Upside Bias confirmed

Crude Explosion

On June 18 we alerted you that the stars were aligning for a turn around in crude. Pls see in the pic how it all came together. Crude shot up nearly 10% yesterday!

Still on a short term bullish path

A perfect Year so far for the Bradley model !!

The Bradley model has done a pristine job in calling the market in 2012. As it stands right now the Bradley had called for the Summer rally with a Top in late july. 

Given that the rally came 1.5 weeks early we should give the model some wiggle room.

Which leads to the $6MM question:

1. Has the summer rally already seen the top ...or
2. will we see another 4 week spasm to the upside before really falling apart ?

A turbulent week with a upside bias ahead?

The Euro is getting ready for some Vola. Bear mind mind that we have not seen the final top in the RRM Indicator, meaning we only know it will com soon but not when...

 The TimeCycles paint an optimistic picture for the risk trade....

 ...The gold miners might need another retest but seem on path to a more sustained rally....

 ....against the backdrop of Gold...

 ....the SEMIs also want to see another week of sun....

 ...Oil being the big looser the last weeks is getting ready for a fight back against the bears...

 ...which is in line with what we see with the Materials sector.

A muddy picture out there painting some rally in the risk trade which probably will not be sustainable with a safehaven like Gold entereing into the next bull phase.....the smell of moneyprinting is in the air and plenty of bail out attempts!

Weekly Trend update: The Bounce could continue

The Euro could see some upside Momentum......but should see it fast...

 Gold is still positive...

 Small Caps seem to have the wind in their back....

 ....but Silver looks precarious..

 ...while OIL looks ready to recoup some of the losses.

All in all we could see some further choppy actio with an upside bias.

How much air is left in the rally

Let me introduce our OptionsFlowExtreme Gage, which we have been experiementing with for some time.

It measures the amount of extreme Money Flow events withing our Institutional Portfolio from a pure Options perspective. You  add some filtering and adjustments and ..voila ...this is the result!

Observations:

• 11 out 11 spikes led to a bullish outcome over a period of 1-2 m (months)
• only 2 rally were shortlived or died too early
• 2 out 9 saw a deeper low before seeing the rally to gain strength

• the last spike was in mid May which projects out to mid June to mid July or even August
• the last spike was not a big one, indicating that this trading low in May was probably not the medium term cycle LOW

VixOsc defends the positive posture

...not more than a early ray of hope, but that's how it always starts. We certainly need more confirmation that this first flower gets not pulled out again.

Breadth has turned up

Breadth  (Institutional Portfolio) turning up is a healthy confirmation that the bounce might  continue.

Crossroads ?

Was this last night the wash out, the final spasm down, the cleansing...or...

the end of the Bounce?

We should know soon.

Bear in mind that if we break from here we should break hard given how bearish the overall PUBLIC OPINION is. Gold and Silver retested their Lows, whereby OIL got hammered and Equities have NOT decided yet.

The overall technical picture still sees a greater likelyhood for the continued , volatile bounce for at least another month and remember VOLATILITY we promised......

JPM, MS, GS all expect lots of Volatility!

Vola can go both ways although a bounce seems more probable ....let's see

Crude is also getting ready for bounce

To go long Volatility in Oil has not been as promising as this in a while....

..in a commoditiy that faces an extreme bearish sentiment (Public Opinion) and where the TREND has turned up.

Aussie and Euro are in position for a bounce

So once again the world has been saved and the AUSSIE and the EURO seem in a good position.

TimeCycles of the AUSSIE cry bull....

...after being exhausted and being shorted by the large Speculators (see Commitment of trade report).

 The EURO Trend has flipped up....

 ...also in a very exhausted state.

.....let the Summer-Bounce begin ( and ignore the 7.20 on the Spanish 10 yrs)

So far nothing more than a DEAD CAT BOUNCE...

The CRB Commodities Index hints at a good trade

The CRB faces triple capitulation:

1. Public Opinion is as bad as in 11/2008 when the CRB bottomed during the crisis
2. Weekly Exhaustion has reached an Oversold level
3. Daily Exhaustion has reached a downside extreme

Opportunity:

• If the Weekly Exh. Index can turn around at this stage then we could see a up to 200% rally in the CRB
• The Daily Exh. Index needs to avoid an evolving divergence as sign of a protracted bottoming

The Canary is singing louder !!

Risk Reward Multiples for combined Call & Put Spread strategies:

Remember our Canary Signal 10 days ago ? The Canary is singing louder and louder and wants to fly that at least shows us the historic analysis of hedged Option Strategies ('going long Vola'!) where you buy a Call & Put Spread and in this case on a key financial name like Morgan Stanley......

By the way we see the same for OIL, JPM, EWZ (Brasil) which seems like the play of choice for the Hedgies to play the summer and also in  FXI, WMT, XLF....

Weekly Trend & Cycles update

The broader Indices are not convinced yet and feel like as if they need another re-test, but that might be yesterday's news after Spain's salvation.

 The Euro is getting ready for a nice bounce....

 ...and so seem the Chinese Stocks...

 ...also Gold wants to join the party...

 ...whereby the 20yr Treasury looks vulnerable...

 ...against confident Materials that want to rally!

ALL in ALL we are either already there yet or are getting close for the Summer.