I’m physically and mentally done for the week - let’s look at the Zero chart real quick:
Actually, a surprising amount of activity considering a pre-holiday trading session. Clean signals all the way actually - no complaints at all. That EOD spike above the mark on the Zero Lite was a bit strange - I would call it ‘damage control’ - seems like they didn’t want to let things get out of control too much before the long weekend
Program Trading Report:
evil.rat/ES: +7.5
geronimo/ES: -5.75
Anyway, I’m outta here - off to the gym with me. Have a great 4th of July, rats - please try to not burn anything down with those self made fire spewing intercontinental rockets of yours.
11:13am EDT: We’ve got ourselves a nice channel here:
We basically crossed the hypotenuse of this channel construct in a few trading hours - the majority of it this morning. Karl Denninger put it best in his private blog early today:
Fucking assholes - you have to hold overnight in this market to have a shot at catching these moves, which means you HAVE TO accept the risk of a gap the wrong way - or you just deal with missing these opportunities.
Hehe - I feel you Karl - it’s been rough and trading this tape is tantamount to throwing darts at a board. On top of wild swings we’ve got sector rotation and solid floors coming out of nowhere. Which is why I’m mostly in cash right now - I actually did very well overnight trading the EUR/USD - those currency pairs are quickly growing on me.
Anyway, I am not going to pick a direction yet - yes, this looks a lot like Soylent Green but for some reason this looks way too easy. If we hold here until the close - yeah, I’d be more confident. It really doesn’t matter though anyway - there was no way I was prepared to put any serious coin into a possible down move ahead of the 4th of July weekend - and maybe that’s why we dropped in the first place - the bus was pretty empty. But how often have we seen ‘clear moves’ ahead of a holiday be taken out the Monday after? Exactly - so, I’m not going to call a direction yet today - if we breach 888 then we have confirmation (and it’s probably too late by then to jump in).
What gives me pause a little bit however is the breadth on the SPX - which is currently reading at 20.6:1 - that is pretty bearish. Well, if it’s for real we should see further downside and that soon. But whatever you do - if you weren’t short going into this tape this morning - do yourself a favor and don’t chase it.
Anyway, talking about channel surfing - that doesn’t sound like such a bad idea for this weekend
I would wish you rats all a great Independence Day - but sadly we have long ago lost our independence and liberties to a small group of corrupt banksters. Make no mistake - the bezel goes deep and our administration is an integral and enabling part of it. So, I’ll just have to wish you a nice holiday weekend - relax - don’t think of any of the crap that’s going on - just enjoy a long summer weekend with your loved ones. Life is short you know - it’s too easy to let it pass you by.
Tomorrow is going to be painful and boring - just so you know - I for one plan to catch up on my beauty sleep. So unless you are being paid to sit around all day bored to tears just take the day off and start the weekend early. But for your intrepid die-hards here’s tomorrow’s chart:
Right now the numbers of possible scenarios are frankly outside the realm of what I would call a ‘tradeable market’. EWT rules permit various interpretations of where we might be heading:
Orange: We are in Minor 2 of Intermediate (1) of Primary {3} - or - in Minor X of Intermediate (X) of Primary {2} [in purple] - the path would be identical. Reversal should be around 950 mark (A/C equality). The 956 high should not be breached.
Green: We completed Minor X of Intermediate (X) of Primary {2} today [I know this sounds complex and it is]. We should now drop into an A-B-C decline (i.e. a zigzag) which should get us to 850sih.
Blue: We are in Minute {iii} of Minor A of Intermediate (Z) of Primary {2}. The 888 low should not be breached.
As a side note: For the past two months we have been trapped inside a 70 point range spanning from 880 to 950. Quite frankly, damn the wave count at this point - LOL - unless we finally breach either 880 or 957 (the current high) we are going to be stuck in this rut for who knows how long. My conservative approach of not shorting the market anywhere except the very top has paid off very nicely so far as I have been shielded from potentially painful losses.
I know many of you are greatly convinced as to where we are heading next but I must tell you that I do not share your level of confidence. Picking a direction in such a heavily manipulated market is dangerous at best and possibly devastating to your portfolio. Be careful - don’t bet the farm. The tape of the past two months has defied gravity and any attempt by the bears to bring about a much needed correction has been met by strong (artificial) resistance. It will take a inflection point to break this tape - or perhaps a massive dislocation due to a complete lack of liquidity.
As Joe Saluzzi said the other day:
“I have a feeling one day the door is gonna close, everyone is going to be running for the exits, there is going to be a major move in the market and everyone is going to wonder “what happened?”
There is a problem structurally in the equity markets that nobody wants to talk about. There is intervention, there is manipulation going on. No one has exact proof of what is going on but it’s out there, and the real liquidity has been gone for a while. People don’t understand, the liquidity is not coming back.”
While I agree with him in terms of market manipulation that ‘Bozo the Clown comment’ was completely uncalled for. I think he should stick with trading the markets - never good to mix politics and invest….. oh… you know what - never mind :-}
I also don’t like where the Dollar has been heading in the past few days - probabilities now point towards a 5th wave to the downside - unless we pull up hard and that soon. You all know I’m not a strong correlation guy but the ‘bias’ in that case would be towards more bullish tape in equities and commodities.
Finally - don’t expect any type of resolution during tomorrow’s session - as I said - tomorrow is most likely going to resemble Chinese water torture.
Assuming the H&S resolves I see two likely scenarios:
Orange: We are in Minor 2 of {3} - or - Minor B of (X) of {2}. Reversal should be around 950 mark (A/C equality). The 956 high should not be breached.
Blue: We are in {iii} of A of (Z) of {2}. The 888 low should not be breached.
Probabilities between those two would be 50% Blue - 30% Orange - 20% something completely different playing out I don’t see yet.
12:33pm EDT: I thought this was important to share as well:
Unless we close the VIX above 26.35 today the equities sell signal has failed.
2:30pm EDT: It’s starting to look worrysome for the ole’ buck:
A breach of 79.37 would mean further downside ahead. Somewhere in the murky depths of the Federal Reserve you can hear the echo of Curly’s evil laughter.
Mole is nowhere to be found for the past 20 hours and the number of the comments have been accumulated more than 500 counts. In the mean time, Isaiah is asking me to do a comment cleaner, so there you go.
Mole, if you are somewhere out there, please hurry back home. We are all waiting for you~~
9:00 am EST update: I heard from Mole last night that he is doing fine taking care of his family. He will be back soon.
No changes in any of the scenarios - things are in equilibrium right now and could swing either way - it’s not an easy spot to pick trades at this very moment. We need more time and more evidence.
Any of these scenarios are possible right now and the main reason for the bearish ones are the divergences I see between the Nasdaq, the Dow, the SPX, and the Trannies. The market however needs to show its hand and perhaps due to end of quarter tape painting has refused to do so.
I’m not going to sugar coat it for you rats - picking a direction is extremely tough right now as the count is stuck somewhere in the middle and thus accomodates both bearish and bullish scenarios. Once we see a strong move in either direction we can place our bets, but right now doing so would be tantamount to gambling and you all know how I feel about that.
In a way I am actually hoping for a spike to the upside. A drop here would be terribly unproductive and I would most likely not be eager to participate as I refuse to back up the truck inside of limbo land.
Anyway, I usually stay quiet when there’s nothing to do - and my current recommendation is to keep watching the tape and collect sufficient evidence until we are ready to make our case.
I know trading equities has not been much fun since early March - but like anything else in life - even this shall pass, that much I can promise you.
I told my subs this morning to be cautious as this looked like a classic bear trap - you can see how we dropped at the open but the Lite was not budging. Fortunately I was right and we got a massive swing to the upside. That was followed by a very clear divergence and we did get a few points to the downside but not as much as I had hoped for. Anything after that was pretty much a mess and I didn’t place any discretionary trades.
Program Trading Report:
Geronimo: +2.5
Two scalping trades today - one winning and one break/even - I’m counting this as 8 for 8 - wohooo!!!
In all honesty not a lot of people have been subscribing to this thing - which is a bit puzzling to me (and Eric). This thing keeps on kicking ass and taking numbers, but maybe the audience here does not fit the profile - I thought we had more heavy hitters frequent this devious little den of doom. Well, we’ll keep it running - maybe over time it can earn your love
3:11pm EDT: While the Yen was busting higher today the ole’ buck took it up the rectum:
However, as long as we don’t breach that red line the bullish scenario is still in play - wish they wouldn’t tease it out so much but that’s the name of the game of course.
The 10-year treasuries are bouncing back nicely - as predicted a week ago.
Another perspective on this - the 10-year treasury yield (TNX) - we sliced through an important diagonal support line like butter and to my chagrin we didn’t get a retest (thus far). If we do I’d be shorter than a midget in a limbo contest.
And then here’s some spin on recent market manipulation - wake me up when they say something we don’t know yet. BTW, I love her accent - very sexy - what’s that, Aussie or Kiwi?
10:20am EDT: Last week’s channel remains intact and as suspected this little kabuki dance we just witnessed was nothing but a little gratuitous bear trap:
Good chance we’ll see 930 today.
10:37am EDT: Geronimo just scalped its 7th successful trade in succession
1:00pm EDT: Very tempting to go short here but I’m going to hold out for 930 - let me show you why:
The orange fib is the percentage of wave {v} in comparison with {1}. So, we busted slightly through 61.8 but if you are a Zero sub you can see that we are slightly below the zero mark right now - but no major negative reading either. Breadth on the SPX is 2:1 positive right now - on the NDX 2.6:1 positive. I don’t see any divergences and thus I must assume that we’ll churn around here for a little and bust higher into the close. BTW, who wants to back up the truck in this whipsaw anyway?
1:42pm EDT: We’ve got quite a move in the USD/JPY today:
I was actually planning on going long this morning but then got distracted with blogging (damn!). Well, seems to me that 96 should pose some resistance - anyone trading those currencies (besides lovely Fujisan)?
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