Executive Market Briefing from The Research Desk of Efrem Hoffman | Issued Tuesday, Nov. 6th, 2012 | The Price Path Ahead

Executive Market Briefing from The Research Desk of Efrem Hoffman | Issued Tuesday, Nov. 6th, 2012 |  The Price Path Ahead for the S&P 500

Synopsis of Current Market State:

As mentioned on the October 5th update, we said:

If the price trades below the critical support zone of 2797 to 2795.25 for more than 160 minutes — at any point in the interval of Oct 7th, 9th,  or including the window near the 19th, 22nd into the 24th and up to Oct. 29th, 2012 — then extreme downside risk of well over 100 points in the NASDAQ is a high potential. THE CORRESPONDING LEVEL THAT WILL OPEN UP A MAJOR DOWNSIDE EVENT FOR THE S&P 500 DECEMBER FUTURES IS A BREAK BELOW 1437 (especially high downside volatility will develop when price trades below this levels for at least 160 minutes). The downside risk levels start out at 1426.50, then 1398 to 1393, and 1380.75, 1376.50, 1374 to 1371. 

The lower risk levels are wide open as the market now builds pent up energy for the next leg down in November.

Stay Tuned daily for updates on specific downside time-zones, as well as overhead resistance and base-line support levels.  Special Statements will be posted regularly in the Key Levels Daily Blog at TradingTimeAndPrice.com.

For maximum visibility of market structure development, while minimizing transaction noise, your favorite indicators and market analysis logic should currently be centered on the following time-frames, regardless of your trading style.  

For spotting Bullish S&P market divergences and monitoring counter-trend bounces with your indicators, focus on the 15 min, 24 min, and 35 minute charts.  

For identifying Bearish S&P market divergences and monitoring the resumption of the underlying downtrend, home-in on the 137 and 85 minute time frames.

There remains enough Bottled Energy in both the NASDAQ 100 Dec. Futures and the S&P 500 Dec. Contract, to set off a larger scale chain reaction of selling in November, especially from mid month onward, with potentially the fastest range expansion since the late summer 2011 Euro-Crisis, playing out in periodic waves of panic selling into Q1 2013.

What is most alarming is that the VXX Exchange Traded Fund, a widely followed gauge for future Volatility (VIX levels) is not only starting its ascent from exceptionally low historic levels, but its protracted basing structure has been building latent energy for a sharp spike in November and December. There are three momentum jet-streams in place that are expected to become synchronized on the following time-frames — starting with the 55 min, 89 min, and 144 minute.  When VXX levels trade above the 39.42 level for at least one trading session, volatility should be in lift off mode. Pay particular attention, should this level be taken out top-side in the interval of Nov 15th  to 30th, 2012. The next important volatility date to look out for, and the most telling for the intermediate to long term  outlook is the centered on the time window from Dec 7th to Dec 21st, 2012, particularly when VXX levels are trading above the all critical 41.68 level for at least one trading session. 

This market condition will turn complacent market players into panic-stricken speculators, as the VXX will commence a long and turbulent journey back to the high levels experienced near the depth of the Euro-Crisis in Oct 2011.

In the event that either the recent lows put in on Oct 30th or the near-term risk to the 1385 handle offer interim support, any “dead-cat bounces” should be met with formidable resistance near the price zone discussed below.  Thereafter, there is high potential for a steep and persistent sell off.

Until Mid November, the Time Map indicates that sector rotation and market distribution will become more pronounced, with increasing levels of disparity among both asset momentum flight paths and time-windows of potential risk events; thereby causing range-bound trading markets in this interval — between 1388.25 at the low end and 1440.50 to 1441.50 at the high end. In the event of a dead-cat bounce, 1430.50, 1433.75, 1435.25, 11436.50 are levels where volume would start to lighten up. Long term overhead resistance that was originally in place prior to the breakdown remains positioned near the 1463 to 14565.25 level. Traders will need to pay close attention to the balance point level of 1403.75 — if e-Mini trades below this level, it opens up a very larger move down before month end. Given a lot of chatter and news-flow going into the election and lame duck session concerning the fiscal cliff, all eyes will be on tech-laden NASDAQ for leadership. The most bearish scenario would be one last dead cat bounce above 2710 on the NASDAQ 100 Futures (Dec. Contract) to get the bulls trapped like rats slightly before or near mid-month. Whether the dead-cat bounce reaches this level or not, or materializes with any vigor, the bottom line is that not only the there are many sectors that are incrementally shifting their momentum jet-stream bias to breakdown mode as we approach mid month, but also the weakening momentum is now spreading across a wide array of New York Stock Exchange issues. This tells me with high confidence that the broad markets are at the cusp of a major bear attack — watch for signs to much lower prices by month end, after we pass the momentum cliff, particularly after mid-month — and especially accelerating when key levels, as discussed in the foregoing are breached.

Key interim levels on the next leg down are: 1389.75, 1387.50, 1383.50, 1378

with initial downside risks testing 1390 to 1385.25.

The Market is building pent up energy to do another leg down – one to two orders of magnitude larger than 1987, with regard to the number of synchronized decision-makers that are likely to flood the order book and create a series of toxic volatility events into 2013.

The 1421.50 to 1423.50 level is another important balance zone (separating the bears from neutral activity) for the month of November and December.

That means, if the market decides to oscillate around this price or sell into it (upon breaching this level with volume), it will set the stage for repeated attempts at cracking through the 1390 barrier.

There is one of two scenarios. The first starts somewhere in the interval after Nov. 12th or 13th, with highest risk on or after 16th, as well as 19th, 20th,  into at least Nov 22nd, 28th or 29th, 30th, when the S&P 500 cash market will likely challenge the 1385.25 level. At such time that this price is breached on high volume, the 1297 to 1289.75 price zone, dating back to June 2012, becomes wide open for the bears to attack with fierce velocity into the December/January and February period. The decision-maker momentum jet-streams that would be in control at that time would be sourced from the 221 and 85 minute time-frames, which is quite alarming, given that the orientation of their forward momentum flight-paths are strikingly similar to the 1987 crash, on a scale one to two orders of magnitude larger.

Here are some key intermediate dates to look out for, to crank up your risk-off meter: as early as Dec 7th, Dec 12th, 13th, 14th, 18th, 21st, 25th, 26th, all the way into Jan 24th or Jan 25th, and Jan 29th, Jan 30th, and near Feb 4, 10th, and into 26th, as well as into key dates near Feb 12th, 15th, 19th, 21st, 26th, 28th. Long term Overhead resistance remains firm at 1474.50 to 1475.50, 1477.50, and 1482.50, with its outer tail stretching out towards the 1484 to 1489.75  handle.

There is also a potential setup in place for the Euro. Should it trigger, it could spark a tail-risk event that could send the US Dollar Index rising, and take the S&P 500 cash market back just above the October 2011 lows, near the S&P 1140 level, which would become a real and present danger for 2013. In a similar note, a breakdown below 12639 on the DOW Futures (Dec Basis Pricing) for at least one week, would trigger a long-term market meltdown — challenging the 10,950 level from Oct 2011. There is tail-risk back to 2009 lows as early as prior to April and potentially before year end. From a trading perspective, one thing at a time; and it is the June 2012 and Oct 2011 levels that are expected to be tested, but when the end of April arrives, and if Oct 2011 lows is all the markets can test, then the a time stop would kick in, and the short idea generation would be put on hold for another day — sometime later in June or July and in all likelihood prior to the end of Oct 2013.  This down-wave may even be more pronounced, but time will tell.  In the mean time, be on high alert for volatility fireworks after this dead-cat bounce transforms into the first phase of a violent bear market this November and December.

On behalf of TradingTimeAndPrice.com, you are welcome to join me live on FuturesTalk On-Line Trading Educational Forum, for featured updates on high conviction turning points, as I monitor these market developments in real-time. A news announcement will be listed to indicate the time and dates of these special educational events.

TradingTimeAndPrice.com is currently monitoring momentum pressure and upcoming order-flow changes in the key decision-makers and market players — across a wide scope of time-frames — that are influencing a bearish market structure for the NASDAQ 100 Futures market  (December Contract).

This Wednesday, November 7th, 2012, 5:00PM – 6:00PM at the St. Andrew’s Club and Conference Center in Toronto, I will be on a Bloomberg Panel Discussion on the State of the Market at “Toronto Charts Day,” where David Scanlan, Canada Bureau Chief of Bloomberg News, will be moderating 4 veteran strategist and portfolio managers on their year-end market outlook and prospects for 2013.  

Disclaimer:  Review Disclosures On-Line at: TradingTimeAndPrice.com

Stay current at TradingTimeAndPrice.com to get the inside view of high-impact events affecting your markets! Be sure to check out our Live Twitter Feed @TradinTimePrice and our parent company Twitter Handle @NakedSwanTrader for the latest forward commentary on the premier sectors and securities offering relative strength and weakness.  NakedSwanTrading.com and TradingPriceAndTime.com are associated trade-names of Naked Swan Trading Inc.

____________________________________________________

 Disclaimer/Disclosures: Prepared by Naked Swan Trading Inc. For subscription inquiries e-mail to: support@TradingTimeAndPrice.com. This document is not for public distribution and has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. The manner of circulation and distribution of this document may be restricted by law. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. No person associated with Naked Swan Trading Inc. is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this document. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither Naked Swan Trading Inc. , nor any person connected with Naked Swan Trading Inc., accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While NakedSwanTrading Inc. endeavor is to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent him from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. No part of this material may be duplicated in any form and/or redistributed without prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

It is both prudent and required that YOU, the USER, become aware — and fully acknowledge — the terms set forth in the full list of Disclosures, including, but not limited to, the Disclaimers, Policy Statements, and Terms of Usage, as displayed and referenced (via links) at the base of each TradingTimeAndPrice.com web page.

Copyright 2012 © All Rights Reserved, TradingTimeAndPrice.com on behalf of Naked Swan Trading Inc. | Restricted and Confidential Information

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Executive Market Briefing Issued Oct 8th, 2012 : Bottled Energy in the NASDAQ 100 and S&P 500 to set off a Tail-Risk Event this October

Executive Market Briefing from The Research Desk of Efrem Hoffman | Issued Monday, October 8th, 2012 |  Bottled Energy in the NASDAQ 100 and S&P 500 to set off a Tail-Risk Event this October.

What Cycles do You Identify when looking for Behavioral Inflection Points? – 

–  Cycles of Fear & Greed in the Price Structure of Financial Markets or Decision Cycles that actually Drive Market Action!

Listen-up Fund Managers, Futures/Forex Traders, & Policy-Makers looking for a fresh new source of Tail-Risk Intelligence & Actionable Decision-Making.

16 years of Research on Market Uncertainty is being launched Out of the Lab and into Your Trading Room:

Efrem Hoffman, Global Macro Strategist at TradingTimeAndPrice.com welcomes the professional trading community to join him live this Tues, Oct 9 @ 2:00 PM ET for a special 30 min Executive Briefing on FuturesTalk — Powered by WorldWideTraders.com

Instant access: http://futurestalk.omnovia.com/ClassRoom Password: cosmic; Sign In: your email address.

You will learn how to Shock-Proof Your Strategies from Market Noise! — with a Risk-Sensing GPS that has an 82 year history of steering clear of the 35 major market panics!

Discover your Trading Advatange Today and See what Efrem’s Volatility GPS has to say about today’s markets.

Disclaimer:  Review Disclosures On-Line at: TradingTimeAndPrice.com

Synopsis of Current Market State:

As mentioned on the October 5th update, we said:

“To identify the onset of this risk event, it will be crucial to watch market action at the following time and price coordinates.  The time zone of focus for the initiation of a risk event is especially after the evening session of Oct 5th (1:20 AM Eastern — since markets are closed tonight, Sunday, Oct 7th Evening/Overnight Session applies) and into October 9th/10th, 2012.  The critical price level trigger where sellers will try to attack the market with high energy — lots of trade-flow and conviction in terms of trade size — is 2797 to 2795.25.”

This is precisely what occurred in today’s session so far. We have yet to breach the critical level for the S&P 500, as indicated below, and also mentioned in the October 5th update.

If the price trades below this critical support zone for more than 160 minutes — at any point in the interval of Oct 7th, 9th,  or including the window near the 19th, 22nd into the 24th and up to Oct. 29th, 2012 — then extreme downside risk of well over 100 points in the NASDAQ is a high potential. THE CORRESPONDING LEVEL THAT WILL OPEN UP A MAJOR DOWNSIDE EVENT FOR THE S&P 500 DECEMBER FUTURES IS A BREAK BELOW 1437 (especially high downside volatility will develop when price trades below this levels for at least 160 minutes). The downside risk levels start out at 1426.50, then 1398 to 1393, and 1380.75, 1376.50, 1374 to 1371. 

Until such time that these levels are breached, the existing intermediate term trend will remain in tact. There are 3 S&P 500 Futures (Dec. Contract) price levels above today’s high that will offer overhead resistance until such critical risk points are triggered. The first line of potential resistance is: 1467 to 1469;  the second resistance cluster is: 1472, 1473.25, and 1474.50; and the outer resistance band extends from 1477.25 to 1479.75.  In the event of a major headline driven event, then the extreme outer price spike limits are 1484 to 1489.75.

But once risk event trigger levels are breached, all bullish bets are off, leading to a major down-wave into end of October –

Stay Tuned daily for updates on specific downside time-zones, as well as overhead resistance and base-line support levels.  Special Statements will be posted regularly in the Key Levels Daily Blog at TradingTimeAndPrice.com.

For maximum visibility of bearish market structure development on the NASDAQ and S&P 500, regardless of your trading style, your favorite indicators and market analysis logic should currently be centered on the 160 and 99 minute chart. This will enable you to more easily monitor selling pressure and identify bearish divergences. To identify any bullish divergences that may develop after the initial wave of selling activity, it is best to apply your studies to a both the 23 minute and 37 minute charts.

There is enough Bottled Energy in the NASDAQ 100 Dec. Futures and the S&P 500 Dec. Contract, to set off a chain reaction of selling this October, with potentially the fastest range expansion since the late summer 2011 Euro-Crisis. What is most alarming is that the VIX Volatility Index is just coming off exceptionally low levels for an extended period, and is threatening to break top-side when it trades above the 16.60 level (especially when holding above level for at least 144 minutes).  This market condition will turn complacent market players into panic-stricken speculators.

In light of the fiscal cliff uncertainty, of particular note is the excessive forward-looking weakness, as seen by corporate purchasing managers, in consumer spending, sales pipe-line activity, and capital budgets of technology related goods. Furthermore, persistent semiconductor, manufacturing, and transportation weakness will also become a telling sign of market strain and future economic head-winds. Order flow and volume action in the NASDAQ 100 Futures today and since September 24th  illustrates these concerns.

The TimeMapper technology at TradingTimeAndPrice.com is currently monitoring momentum pressures and upcoming order-flow changes in the key decision-makers and market players — across a wide scope of time-frames — that are influencing a bearish market structure for the NASDAQ 100 Futures market  (December Contract).

Stay current at TradingTimeAndPrice.com to get the inside view of high-impact events affecting your markets! Be sure to check out our Live Twitter Feed @TradinTimePrice and our parent company Twitter Handle @NakedSwanTrader for the latest forward commentary on the premier sectors and securities offering relative strength and weakness.  NakedSwanTrading.com and TradingPriceAndTime.com are associated trade-names of Naked Swan Trading Inc.

____________________________________________________

Disclaimer/Disclosures: Prepared by Naked Swan Trading Inc. For subscription inquiries e-mail to: support@TradingTimeAndPrice.com. This document is not for public distribution and has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. The manner of circulation and distribution of this document may be restricted by law. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. No person associated with Naked Swan Trading Inc. is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this document. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither Naked Swan Trading Inc. , nor any person connected with Naked Swan Trading Inc., accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While NakedSwanTrading Inc. endeavor is to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent him from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. No part of this material may be duplicated in any form and/or redistributed without prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

It is both prudent and required that YOU, the USER, become aware — and fully acknowledge — the terms set forth in the full list of Disclosures, including, but not limited to, the Disclaimers, Policy Statements, and Terms of Usage, as displayed and referenced (via links) at the base of each TradingTimeAndPrice.com web page.

Copyright 2012 © All Rights Reserved, TradingTimeAndPrice.com on behalf of Naked Swan Trading Inc. | Restricted and Confidential Information

 

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Special Market Statement — Downside Volatility is Set to Ignite at Critical Levels with Range Expansion into Oct 3rd-5th, & Mid/Late Oct

A SPECIAL & HIGHLY TIME RELEVANT NOTICE from The Research Desk of Efrem Hoffman | Issued Wednesday, October 3rd, 2012 |  Bottled Energy in this S&P 500 to set off a Severe Tail-Risk Event this October – potentially fastest range expansion since the late summer 2011 Euro-Crisis.

Synopsis of Current Market State:

There is enough Bottled Energy in this S&P 500 Futures Market (Dec. Contract), to set off a chain reaction of selling this October, with potentially the fastest range expansion since the late summer 2011 Euro-Crisis. What is most alarming is that the VIX Volatility Index is just coming off exceptionally low levels for an extended period, and is threatening to break top-side when it trades above the 16.60 level (especially when holding above level for at least 144 minutes).  This market condition will turn complacent market players into panic-stricken speculators.

In light of the fiscal cliff uncertainty, of particular note is the excessive forward-looking weakness, as seen by corporate purchasing managers, in consumer spending, sales pipe-line activity, and capital budgets of technology related goods. Furthermore, persistent semiconductor, manufacturing, and transportation weakness will also become a telling sign of market strain and future economic head-winds. Order flow and volume action in the NASDAQ 100 Futures (December Contract) illustrates these concerns.

The TimeMap technology at TradingTimeAndPrice.com is currently monitoring momentum pressures and upcoming order-flow changes in the key decision-makers and market players — across a wide scope of time-frames — that are influencing a bearish market structure for the NASDAQ 100 Futures market  (December Contract).

To identify the onset of this risk event, it will be crucial to watch market action at the following time and price coordinates.  The time zone of focus is especially after the evening session of Oct 5th (1:20 AM Eastern) and into October 9th, 2012.  The critical price level where sellers will try to attack the market with high energy — lots of trade-flow and conviction in terms of trade size — is 2795.25.  The 2755.50 price level is a longer term area of support that, when breached to the downside, has high potential to ignite another bearish risk event.

The Bottom-Line Market Intelligence for the S&P 500 Futures (December Contract) 

To keep you out of trading market noise today, and into October 5th, the immediate support and resistance levels to take note of, along with the time frames for optimally observing price action, volume structure, and order-flow are discussed below:

After the open TODAY, but especially starting after 11:20 AM (Eastern) or near 1:20 PM (Eastern), and no later than the overnight session into Oct 4th, if price trades below 1440.25, then 1437.25 to 1436.25 is the first air pocket to contend with. Especially anytime after 1:20 PM (Eastern) or in the overnight session into Oct 4th and 5th, if and when price trades below 1437 (for at least 160 minutes), then next stop on the way down is near the price zone of 1429.50 to 1426.75.

If, especially prior to the Oct 5th close, price trades below 1422.75 (for at least 160 minutes) then a violent wave of selling has high potential to overtake the market, and bring prices back down to the 1398 to 1393 level. Following a short covering market bounce, thereafter, we will need to be on the look-out for another wave of selling  in later October (reasserting itself in a few sectors near the 19th, or as late as Oct 24th to 29th across virtually all sectors), that has the potential to test the 1380.75 to 1371 price level. 

To keep market scalpers out of trouble, the 1443.50, and 1442.75 to 1437.50 price zone is the neutral zone for the trading day.

Look for sellers to attack the market on any intra-day short lived up-spikes into the first level of resistance, which is in the price zone from 1443.75, and 1444.50 to 1446.50. 

Strong Residual Overhead Resistance from the previous significant local peak is at 1449.75 and 1451 — outside of a major news-driven event, these levels are unlikely. The big threat is to the down-side, and it is important to focus on the levels identified in the paragraphs above.

For maximum visibility of market structure, regardless of your trading style, your market analysis should currently be centered on the 2 min and 1 minute chart for scalping purposes this morning, but for traders looking to capture the emerging episode of downside range expansion, it is best to apply your favorite indicators and market logic to the 160 minute chart. This will enable you to more easily monitor selling pressure and identify bearish divergences.  To identify any bullish divergences that may develop after the initial wave of selling activity, it is best to apply your studies to a both the 25 minute and 60 minute charts.

Stay current at TradingTimeAndPrice.com to get the inside view of high-impact events affecting your markets! Be sure to check out our Live Twitter Feed @TradinTimePrice and our parent company Twitter Handle @NakedSwanTrader for the latest forward commentary on the premier sectors and securities offering relative strength and weakness.  NakedSwanTrading.com and TradingPriceAndTime.com are associated trade-names of Naked Swan Trading Inc.

____________________________________________________

Disclaimer/Disclosures:  Prepared by Naked Swan Trading Inc. For subscription inquiries e-mail to: support@TradingTimeAndPrice.com. This document is not for public distribution and has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. The manner of circulation and distribution of this document may be restricted by law. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. No person associated with Naked Swan Trading Inc. is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this document. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither Naked Swan Trading Inc. , nor any person connected with Naked Swan Trading Inc., accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While NakedSwanTrading Inc. endeavor is to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent him from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. No part of this material may be duplicated in any form and/or redistributed without prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. It is both prudent and required that YOU, the USER, become aware — and fully acknowledge — the terms set forth in the full list of Disclosures, including, but not limited to, the Disclaimers, Policy Statements, and Terms of Usage, as displayed and referenced (via links) at the base of each TradingTimeAndPrice.com web page.

Copyright 2012 © All Rights Reserved, TradingTimeAndPrice.com on behalf of Naked Swan Trading Inc. |  Restricted and Confidential Information

 

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VIX Volatility Index Warns of Clear and Present Danger Ahead for S&P 500 & NASDAQ

A SPECIAL & HIGHLY TIME RELEVANT NOTICE from The Research Desk of Efrem Hoffman | Issued Tuesday, October 2nd, 2012

Market is on the verge of an imminent and severe volatility event — particularly as the VIX Volatility Index breaks above 16.60 level [now at 15.71 as of today's close] — to commence as early as the next 24 hours and before mid month, with rolling market turbulence, pronounced into the end of October, 2012 — Stay Tuned! — details to follow in this evening’s session in the Key Levels Daily Blog of TradingTimeAndPrice.com

Stay current at TradingTimeAndPrice.com to get the inside view of high-impact events affecting your markets! Be sure to check out our Live Twitter Feed @TradinTimePrice and our parent company Twitter Handle @NakedSwanTrader for the latest forward commentary on the premier sectors and securities offering relative strength and weakness.  NakedSwanTrading.com and Trading PriceAndTime.com are associated trade-names of Naked Swan Trading Inc.

____________________________________________________

Disclaimer/Disclosures:  Prepared by Naked Swan Trading Inc. For subscription inquiries e-mail to: support@TradingTimeAndPrice.com. This document is not for public distribution and has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. The manner of circulation and distribution of this document may be restricted by law. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. No person associated with Naked Swan Trading Inc. is obligated to call or initiate contact with you for the purposes of elaborating or following up on the information contained in this document. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither Naked Swan Trading Inc. , nor any person connected with Naked Swan Trading Inc., accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While NakedSwanTrading Inc. endeavor is to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent him from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. No part of this material may be duplicated in any form and/or redistributed without prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. It is both prudent and required that YOU, the USER, become aware — and fully acknowledge — the terms set forth in the full list of Disclosures, including, but not limited to, the Disclaimers, Policy Statements, and Terms of Usage, as displayed and referenced (via links) at the base of each TradingTimeAndPrice.com web page.

Copyright 2012 © All Rights Reserved, TradingTimeAndPrice.com on behalf of Naked Swan Trading Inc. |  Restricted and Confidential Information

 

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Capital Market Signaling Dangerously Elevated Valuations and Expanding Global-Macro Risks for 2013 into 2014

Capital Market Signaling Dangerously Elevated Valuations & Expanding Global-Macro Risks

There are a number global-macro risk factors that are currently creating long-range arbitrage opportunities in the risk premia assigned to equity, housing, and corporate bond assets.

Of particular concern is the dismal performance of the S&P Chemicals Index, both in absolute and relative terms. This merits the attention of the growing bullish community of analysts and advisers, given that this sector is at the core of the supply chain for manufacturing growth; which has been historically a vital component for sustainable GDP expansion.

Traders are also underestimating the impact that both interest rates and volatility changes can have on the broader bond and credit markets. Unlike the FED’s previous promises to inject stimulus through unconventional and unrestrained means — Bond & Mortgage Repurchases and M2 Money Growth — this time the government and corporate bond markets are not responding with similar levels of exuberance.

Moreover, Naked Swan Trading’s Proprietary Risk Index, which monitors North American REIT Indices (IYR, ICF, RWR, IFNA) is also showing alarming signs of rolling over with a vengeance, signaling concerns that the FED may be unsuccessful at suppressing the threat of rising rates from open-market operations — namely, in the longer-term 10 notes and 30 year bonds, which have a credible track record for tracking closely with mortgage initiation, maintenance, and the all infamous mortgage-backed securities markets.

This situation will likely to be further aggravated by the challenge for Uncle Sam to keep existing homes inventory off the market — in its shadow balance-sheet operations — and away from foreclosure. Don’t be fooled by recent strength in new home sales, given the reduced supply of existing homes as defaults mount. Eventually when this shadow inventory comes off the market, as governments embark on de-leveraging their debt, the fallout on home prices and consumer confidence will be painful.

Contrary to the hopes that keeping rates artificially low will increase spending by corporate purchasing managers and consumers in the broader economy, its impact, at best, will likely remain limited to influencing households and the private sector to reset their short term debt obligations at more attractive rates. But, now with open market yields showing few signs of moving significantly lower, any marginal rise in rates can severely impact discretionary spending, and further send signals to the manufacturing sector to further cut corporate spending.

These concerns are founded on the incredible leverage that corporations have built up in credit and debt instruments (countless multiples of equity market exposure), both on and off their balance sheets. The bond and equity markets are priced to perfection, thanks to the unprecedented distortions that Central banks, across the developed world, have created.

Further aggravating the situation is the unprecedented distortions that Central banks, across the developed world, have created, in terms of the overwhelming size of the debt and credit derivatives markets. These are impacted directly by a combination of changes in interest rate spreads, volatility curve expansion, and leverage and credit growth; and therefore, a small unexpected shift in the value of one or more of these variables can create a contagion effect.

Combined with the fiscal cliff issue hanging over the markets by year end, there are plenty of risks that need to be priced in, especially as their effects can start having far-reaching negative consequences on the global flow of capital, with collateral feedback effects on the US economy as we advance into Q2 2013. S&P 1240 is a conservative downside estimate; with tail-risk to near 1120 in 2013, and potentially much greater troubles into 2014.

The in-concert movement of precious metals and gold/silver equities are corroborating heightened levels of uncertainty.

Pay close attention to the FED’s bottom-line message — in plain English, things are likely much worse than they appear. Especially during periods of quiet to rising markets, the FED does not usually enter into radical monetary practices, unless it sees a clear and present danger outside of broader market awareness. Inter-market relationships confirm this message, and indicate a secondary deflationary episode in asset prices, and a sharp contraction in both housing valuations and discretionary spending.

The biggest concern I have with regard to the Central Bank’s policy choices is that once the de-leveraging shifts into panic gear, and comes to a conclusion, the inflationary headwinds that are a macro-risk from a bursting bond market bubble, thereafter, could set off a secular depression in asset prices, as well as materially slower global economic growth.

Stay Tuned! — at TradingTimeAndPrice.com for full coverage on upcoming episodes of volatility fireworks, showcasing pockets of turbulence starting as early as this fall or early to mid Dec, and more widely felt by mid-year 2013 & beyond.
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How to Line Up your Trading Decisions as we head into FOMC Policy Announcement

Disclaimer:  The content of this Blog Memo is strictly for informational research purposes only. It is not a solicitation to buy and/or sell securities of any kind. This Blog content does not serve as an investment and/or trading recommendation or advisory.

How to Line Up your Trading Decisions as we head into FOMC Policy Announcement: (All prices are calibrated to the September Futures Contract):

For further details on specific time-frames to monitor market action leading up to scheduled news events, it is prudent to review the most current Key-Levels Daily Blog on TradingTimeAndPrice.com

In the event that bulls try to take charge with conviction and pass through today’s residual resistance at 1439.25 to 1440.25, and especially 1440.75, 1441, and 1441.75 to 1442.25, left over from this mid-morning’s session slide, then 1435.75 to 1437 will be the initial battleground of support that will separate the bulls from the bears.

If prices find support here, and push back up above residual resistance zone, then there exist a potential for upside action, especially: 

– In the event of a positive surprise, 1445.75, 1446.75, 1447.25 is where bears will come out of hibernation from above; and if there is a dramatic blow-off price spike to 1452.50 to 1454, then bears will attack with a vengeance shortly thereafter.

However, if bulls fail to defend their ground at 1335.75 to 1437, then 1431.75 to 1430.75 is the next interim zone of balance — moreover:

In the event of a Down-Spike, 1428.25, 1427, 1426.75, and 1426.25 should offer a more significant cluster of buyers. If there is a significant reaction to the Fed’s Policy Statements, then 1423.50, 1421.25 to 1419.75, with a price cluster in the 1417.50, 1417.25, and 1418.75 would offer considerable support –

Note: This is the Low of Sept 6th, 2012 price bar ( 75 minute time-frame chart ), at the 11:15 AM EDT bar close sampling interval — calibrated to Trade Station Session Time.

Traders should be aware that in the event of a negative surprise, then downside spike risks exists toward 1314.50 to 1312.50, which is near the level where the S&P broke out on September 6th, 2012. 

Take Note of a tweet posted on TradingTimeAndPrice.com Twitter Handle @TradinTimePrice, which stated: the S&P 100 and S&P 500 component stock, TXN, Narrowed Guidance with Earnings exceeding its Estimate — Current Observation of Composite Market Influence-rs point to TXN asserting a Bullish Volatility Bias when its price level exceeds $29.93 — thereby giving a potential positive catalysts for a short-term pop in technology heavy-weight indices.

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Disclaimer:  The content of this Blog Memo is strictly for informational research purposes only. It is not a solicitation to buy and/or sell securities of any kind. This Blog content does not serve as an investment and/or trading recommendation or advisory.

 

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