While equities are pressing everyone’s buttons at once let’s take a quick look at some targets we touched today:
USD/CHF – clean entry a few sessions back and I decided to reap my rewards today.
Copper – same deal but in the other direction. Also at target – yes, it may overshoot but I’m not in the gambling business – out and about.
I went long wheat on the 10th with a stop below 595. Unfortunately that one got stopped out but I went back in when we painted an inside day. Which paid off handsomely in the past two sessions. To my dismay I think I forgot to tell you guys about that second entry – I went back and looked and don’t see it. My bad!! :-} Doesn’t happen often but sometimes the timing does not permit me to include everything.
Natgas is not at target – yet. But I wanted to put up this chart as I remember some of you heading for the hills for no reason. And once again it pays to sit and do nothing – my favorite type of job!
So we crossed the Rubicon and I wanted to spend a little time to review the implications right here and over the longer term. What we know so far is that yesterday the starts were perfectly lined up for a textbook reversal but instead the tape suddenly fell off the plate late in the session. The timing of this is particularly interesting and suggets that there may be follow up. However, as the dynamics have now shifted it makes bottom calling a very difficult and probably foolish endeavor. On top of that we have quite a bit of conflicting evidence – much of which I’ll present this morning:
As usual the easy stuff first – and again let’s keep it simple and stupid. Fact is that we breached that 100-day SMA and in combination with that NLBL 1350 will now pose resistance, assuming we push back there in the next few sessions. I would also watch that 100-hour SMA near 1342, which is entangled with the upper 25-day BB.
The weekly as well as the monthly panels also show us possible support. But that’s less important than the fact that we are now trading below the weekly NLSL. A close below ES 1359.25 is medium term bearish and possibly leads us to a test of the monthly NLSL at 1316.75.
Now, none of this excludes a bounce right here – these are long term charts. But it’s something to keep in mind – whether or not we bounce or continue further. Of course if we breach through that monthly NLSL and close May below then we have official confirmation of a long term trend change. But we are not there just yet – and it’s not clear that the abyss awaits. The fat lady may have to wait a bit longer. Quite a bit more about that below – secret decoder ring required:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
I really like where things are going and for the first time in a while I’m actually getting excited about equities. It’s been a while and I better mark my calendar! As you know I always try to fade the hype and try to glance below the hood to hopefully see early signs of market reversals. Not that reversal plays are what I a constantly focus on. As a trader I know that reversal plays are highly speculative (and most difficult) – it’s an aspect of trading many fledgling traders waste much time and even more money on.
However, for some mysterious reasons I have made a good share of reversal calls in the past. And frankly it’s not so much that I have a secret formula of sort. All I do is to look for what I would call ‘vertical market convergence’ – basically when several of my charts come into sync at a particular time – this can be indicator or price based, sometimes it’s a mixture. Even then you can totally blow your call but at least you know that you have reached a fork in the road – and that makes trading easier and also more profitable.
Frankly, those are the times I live for as a trader – when things start coming into sync and I suddenly sense a certain order in my trading universe. Which is rare – especially these days the tape is very difficult to negotiate on a daily basis. I really don’t exactly know how to convey that but in essence what most traders are looking for is that one ‘holy grail’ indicator that addresses all their trading needs. Well, that is a mistake as it does not exist. The best you can hope for is a small collection of market measures (again, indicator, oscillator, system, or price based) that works for YOU and allows you to bank coin consistently on an annual basis. It its possible – and the first step in getting to that point is to overcome your own prejudice, your own ego, and in particular your emotions and cognitive biases.
Alright – on to the charts – at the danger of pointing out the obvious: Unless we drop like a rock before the end of this session we are most likely at step 2 of a bonafide VIX buy signal. If you don’t know the rules then please check the cheat sheet.
On the spoos we got one more stab down this morning which nailed that volume hole I have been pimping since the weekend. Not a bad spot to be long if you had the cohones to take it. The Zero Lite painted a slight divergence but frankly it wasn’t strong enough to justify a trade, so the volume hole was the only thing we could count on. Of course whether it holds up or not remains to be seen. But per the above – I do like the VIX chart in conjunction with this one. It does suggest that a reversal may be in play. Whether or not we will be wrong does not matter – it’s a setup and it has the luxury of offering us a very tight stop.
But that’s not all – the daily Dollar chart appears to be in sync with the proposed perspective. I also have a few setups for my intrepid subs – please step into my mediterranean lair:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
UPDATE 3:30pm EDT: The line has been crossed and the game is O-V-E-R for the bulls – at this point we are talking a possible medium/long term trend change. No VIX buy signal and the volume hole is officially K-A-P-U-T-T. If you are short enjoy the ride – at this point there is no edge in being long and there is no reason to take exits if you happen to be short. Most likely we are fulfilling the bearish price objective I proposed on my weekend P&F chart.
Most importantly the market once again taught us an important lesson today. Even when things come into sync they sometimes swing the other way – there are no guarantees. At this point we are back into watch and learn mode – no setup in equities until we find support. If you went short on the breach – good for you! Please look at my weekend post for possible target zones.
UPDATE Closing Bell: At the danger of sounding like a broken record I want to make something crystal clear based on the comments I am reading below:
We crossed an important inflection point. A reversal is NOT what we should be thinking about right now. We watch the tape and IF we get a reversal then we may take entries once we get back above SPX 1340.
My rules are very clear on this shit. Some people claim that I swing with the wind – but I do only when it comes to my setups. My analysis is very binary and where we are now gives us ZERO edge for going long.
No, it’s not pig latin – it’s the real thing with a creative twist courtesy of your resident market megalomaniac. Most likely I screwed up the grammar – is there anyone with higher education among you guys? So, this is what we know: We are crossed an important support line – just barely – but then snapped back. It’s like like Caesar crossing the Rubicon but heading right back because he forgot to turn the gas off in his tent. Judging by the Zero Lite momentum completely fizzled after the initial stab down which we also know stopped out a lot of unhappy dip buyers.
What really put a smile on my face today however was the VIX. I posted this chart yesterday for the subs – including that resistance line of course. And where did we touch and turn? Just where I thought things would get really interesting. Are the bulls out of the woods as we are trading back above SPX 1340? Not my a long shot – as one of my intrepid rats mused today – this tape is looking like crap and that little bounce better catch a bid by the close. If you are sub and read my weekend post then you know the implications of failure here – and it’s not pretty.
This chart I posted last Friday – it’s our volume profile map on the spoos. That volume hole I pointed out thus far has been holding and as you can see there is some participation past 1325. The bulls better get positioned above that.
And here’s basically what all the futz is about – that 100-day SMA shows a similar support cluster as my SPX P&F chart (also posted over the weekend – if you’re not a sub, you’re missing out!).
Crude is looking UGLY – not that I mind as European gas prices are not for the faint hearted. Technically I cannot propose a setup here yet and I don’t suggest you try anything brave. Commodities do not move like stocks, people – easy to get shot to hell in a hand basket if you try to be brave and cannot afford the pain.
Cotton way overshot its target – I didn’t point out our original inside day entry, which was near (drum rolls…) 89! Quite a profitable little trade if you sat through all of it – I was out at 84.5 – the rules are the rules. But the fun ain’t over yet – there’s a new setup and since I’m in a good mood I decided to make today’s post a free-for-all:
That’s right – inside day. But don’t even think about taking the short side if it triggers. I’m only interested in an old fashioned polish polka short squeeze here. So if 79.9 gets triggered then Bob’s your uncle.
Gold – shot to hell as well – still sucks to be a gold bug. I am not eager to go panning here. Just yet that is – let’s see a floor pattern first.
ZB (30-year treasury futures) – this time I did point out our entry – another satisfied customer over here. And yes, if you haven’t yet – convert your position into the currency of your choice.
Old bucky has me all hot and bothered – could it be we finally make it to the 81 mark? If you’re a sub then you know that this is an important long term inflection point. Yes, we probably reverse there for a while – but that’s part of the journey. Either way – as I live in Europe now and getting paid in Dollars this paints a big smile on my face.
USD/CAD – continues to be a nice short opportunity at 1.005. I’m going to keep scalping this beast until it hits my stop and I can flip it into a long with a target near 1.02. Until that happens I’m perfectly happy to steal pennies from the hapless souls on the other side of my trades
Obviously I’m reaching a little with this title as nobody can ever predict what the tape will do. However the purpose of this weekend post is to demonstrate that we have reached a level of retracement that now necessitates a bounce or equities may be heading for a crater near you. I have collected quite some interesting evidence today but let’s start out on the P&F front.
If you are a sub then you probably recall my time based charts which strongly suggest that SPX 1340 ought to be holding. And my SPX point & figure chart is basically saying the very same thing. What the regular chart may however fail to point out are the implications of a continuation lower here as the bearish price objective currently lurks at 1279. So if we drop below 1340 make sure you’re wearing your helmets, your seats and tray tables are in their upright positions.
Interestingly crude is looking very similar and a breach of 95.0 may lead us quite a bit lower. So this is a great spot to be long with very little risk. And being the promiscuous stainless steel rats that we are we have no compunction about taking the other side of that trade should we see a breach below support here.
Gold on the other hand is getting near its bearish price objective of 1550. Boy, it really sucks to be a gold bug these days. Actually it always sucks to get married to one’s trades – divorces are usually painful and lossy. Always remember – it doesn’t matter where it’s coming from – all that matters is where it’s going. Ponder about that over Sunday dinner tonight
Silver is not too far behind and we have another two handles before we hit that bearish PO.
Interestingly my gold/silver ratio chart has been leading the decline on the equity side. But a bounce (on gold/silver nd possibly equities) seems imminent based on that long term support line in green. Either way – one of those two trend lines is gong to be breached rather soon and it’ll be interesting to see which side wins this one. Are we bouncing back or are we looking at a medium/long term trend breach here? To answer that question I have collected quite a few correlation and momo charts that describe important inflection points that will either hold or lead us to a new episode on the equity side.
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
After ten days of being tortured by street musicians offering a very limited repertoire of Vivaldi we left Madrid behind this morning and took the high speed train (AVE) to the magnficient city of Valencia. What can I say – it’s absolutely gorgeous over here – although Madrid as the capital stands on its own I think I may just like it better here.
We rented a very charming apartment in the center for a whole month, which henceforth will serve as the official evil lair. The first thing I did was to to do an Internet speed test and I am happy to report that connectivity kicks some serious butt over here. The area we’re in is literally paved with little coffee shops, restaurants, bakeries, you name it. All in all I’m a very happy Mole right now and I’m not missing Los Angeles one little bit.
I have been ignoring equities for the past few days as there really was not much to add to the support clusters I have pointed out on various charts. I would like to revisit some of my charts today however as the dynamics are slowly shifting. Basically the bears are wasting a lot of time right here and momentum may just swing the other way. I’m not fully convinced just yet however and I will show you why.
As you can see the spoos have been dancing the polka on my 100-day SMA for the past few days. A decisive breach here really was necessary to hand momentum over to the bears and once again they seem to be blowing it.
My volume profile chart shows me a deep volume hole at 1330. What does that mean? Well, even if we drop from here then odds are that we’ll see momentum fizzle out quickly near that cluster. What may be necessary is some weekend screw the longs gap that pushes us below that. Otherwise I’d say good look to the grizzlies. But there is more.
I have not shown you my medium term RSI_EMI chart for a while because there was nothing to see. We are now however back in bounce territory – at least judging by previous fractals. It’s of course possible we see a repeat of an August 2011 wipeout but those seem to happen very rarely.
Also suggesting a loss of bearish momentum is my Market Maker Mind Reader 1 – a proprietary volatility ratio indicator I concocted a few months back.
The MMMR2 seems to agree. Now that does not mean a continuation down here is absolutely unthinkable but at least market makers seem to be pricing in a little bit less risk here.
I would be amiss to not show you the one bearish chart that may eventually trump them all. The weekly spoos chart looks like as if we’re going to get a close below that NLSL and that is medium term bearish. A bounce may happen on Monday or Tuesday but if we drop below again by the end of next Friday then I think we’re going to see some fireworks.
And before we move on to commodities and forex I really wanted to point out that picture perfect bearish divergence on the Zero Lite today. Granted, we didn’t have a super strong signal but that divergence was very pronounced. Unfortunately the Mole was unable to trade it as he was sitting on a high speed train. Truth be told – I had 4G the entire time – I just didn’t want to risk losing the connection in the middle of a swing trade. Anyway, if you weren’t a sub then you really missed out – a situation that can however be easily remedied.
Silver – that was one sweet entry and we’ve enjoyed the ride. But if you’re still in this then it’s time to say goodbye and call it a trade.
Gold jumped into the fray a bit later – but who’s complaining – we nailed that entry and it’s officially at target. Now we are going to watch for signs of a bottom but I’m not ready to get positioned just yet.
Not all setups go our way however and I will never claim that. I got stopped out of a low probability but low risk setup today but wanted to show you this chart for another reason. As I have developed a pretty good feel for commodities over the years I told everyone to only take out a very tiny position here – first up it was a low probability setup and second commodities do not move like stocks. They often overshoot and when they do it happens in a big way. This is a good example and it’s exactly why I only took out a handful of contracts with a tight stop nearby.
Alright – before I let you enjoy your well deserved weekend I do have a few more juicy setups for you. That’s right, the Mole is always on the prowl – please step into my Semi-Medieval Ersatz Lair:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
I love times like this. Everyone is running around with their hair and fire screaming about death and destructions. And plenty of blame to go around when things suddenly find a bid. Unfair market manipulations, insider trading, the Fed’s casino, you name it. But only a few selected people know the secret of what has been moving the markets in the past few years. And I’m about to share the truth with you. I hope you are ready to embrace the truth: It’s the Gremlins!
I kid you not – it should be rather clear at this point that Gremlins are loose at the Federal Reserve and most definitely at the ECB. Don’t they know about not feeding them after midnight? But alas my letters to various authorities have been ignored. And we all have to live with the consequences now.
Alright, let’s get serious for a moment or two. Some of you guys (names omitted to protect the guilty) are sending me long emails about why the news matter and how headlines move the market. Please don’t send me those – most likely I’ll just respond with one single sentence:
The news do not matter. Period.
First what you are reading has already happened and thus has no bearing on what the tape is doing. Secondly, what everyone knows is not worth knowing. Thirdly – trading the news is like driving on a freeway whilst looking in the rearview mirror. Most likely you’re going to crash. If you want proof then let me assure you that I rarely even look at financial (or even common) news reports and you all know my trading record by now – it’s all in the open. Any more questions?
Our low probably but low risk crude trade is treating us rather fairly. That’s what we want to see and there’s nothing for you to do right now.
Our DX trade is also pushing in the right direction. If you’re already in this one – good for you! If not then have no fear because you just have been given a 2nd chance:
Inside day – which is really beautiful as a breach below would be confirmation of our previous higher risk trade. Of course if it resolves to the upside you have just been given a chance to exit with a small profit. How do you like them apples?
USD/CAD – yes, I’m all over the place again today – but we’ve got a lot in the running right now and this one was one sweet entry I hope you did not miss. Nothing for you to do right now but wait for target. Again, set your stop above 1.0075.
Gold – told you to get out yesterday – and I hope you did. I have a nice setup here – sorry, for sub’s eyes only. And there’s a LOT more where that came from – please step into my lair:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
Seems equities are playing ping pong down here at the Maginot line. During the European session the spoos are being killed and as soon as the Bruce Bernanke rolls out of bed and reaches for his nunchaks.
Let’s see how long we can hold this up but if we don’t see a decent bounce here soon things are going to turn ugly Triad style. As in there will be screaming, blood and tears. Of course SPX 1340 remains our inflection point and until that happens nothing happens. A few ticks of support make the difference between an intact (although damaged) and technically broken trend.
Let’s mosey over to the currency side where the AUD/USD has proceeded to target. If you’re still in this then consider this your final cue to head for the hills.
EUR/JPY – picture perfect entry yesterday and you may recall that I was pretty excited about this one. It’s definitely moving in the right direction thus far. No guarantees here (or ever) but there’s nothing to do for us right now until it stops us out or proceeds to target. Which by the way is several miles away.
Great entry also on the EUR/USD and since I live in Madrid now (and am getting paid in Dollars) I full heartedly support the current direction it’s been taking. I would be happy to volunteer at the EU currency suicide support hotline if necessary.
I hope you took that USD/CAD short trade I suggested yesterday – thus far this seems to be where the Canadians are politely making a stand. Again, nothing to do here until we breach that resistance line – in which case I would join the long side of course.
More where this came from – we’re also revisiting the commodities side:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
I have a boatload of charts to lurking below today, so if you’re reading this on an iTampon then buckle up Dorothy because your mobile browser is going bye bye. As a matter of fact I would say that I have a veritable plethora of setups today:
That was enlightening! Let’s kick start things with the equity side – which quite frankly is the least interesting sector I’ll talk about today. Yes it’s going down and there may be a setup on the horizon – but really – we have been literally killing on the currency and commodity side for weeks now. So much so that I am starting to get a bit paranoid. Long winning streaks usually make me nervous – this is not supposed to be happening and when it happens you better keep your ego in check.
S&P 500 cash index – we are at the proverbial Maginot line now. A close and drop below that and I’ll see you at 1240. But let’s take a peek at Mr. VIX as it should be part of your equation.
Now that is the kind of stuff I was hoping for yesterday. We got our touch of the 2.0 BB – but at least while I’m writing this we are on the inside. Which is medium term bearish – again. I would prefer to see a close on the outside and you probably know why.
Our inside day on soybeans is coming along just nicely. FYI – I’m holding with a stop above that 100-day SMA. Super nice setup and although holding here may cost me my profits the potential benefit outweighs the risk IMNSHO.
30-year bond futures: That was a very nice inside day entry and I’m taking profits here. Yes there is potential for continuation higher but in the context of my next chart I decided to be conservative.
My ZN trade has gone to target in two days – not going to push my luck here. Also, the hourly is looking due for a bit of a shake out – I’ll be happy to watch other suffer through it
Seriously – it’s been pouring inside days lately – incredible! And gold resolved beyond my wildest dreams. I’m outta here and smiling all the way to the bank.
You may recall that silver gave us an ID as well – way ahead of gold actually. I’m also out of that one as of now. Not going to push my luck for a few handles more.
Crude – what can I say – this should be illegal. At target – get your ass out. And then back in – let me show you below. And there’s a LOT more where that came from – I’ve got setups crawling up my ass today. So fetch your secret decoder ring and step into my evil mediterranean Ersatz-Lair:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
Unfortunately I don’t have much time to put together a comprehensive post today. However let the record state that the Mole went out on quite a limb calling for the possibility of a bounce yesterday when Europe was already reporting impending doom and gloom and way before the spoos even opened. Which of course looked bearish as hell at first and over the course of the night slowly reversed upward. Did I have a crystal ball? Of course not – I’m as clueless a schmuck as the rest of you rats. What I do have however are my charts which suggested the possibility of a bounce here was very real.
The support cluster I proposed last week worked like a charm – we snapped back right at the 100-day SMA. Does this mean the bulls are out of the woods and we’re reversing upward? I wouldn’t be so rash as to suggest that. As usual it’s the follow up that counts and the next two days will be rather revealing.
Disappointingly the VIX today didn’t make it all the way to my upper BB. Which seems bullish but it’s actually bearish on a medium term basis as volatility did not snap higher to justify a good long opportunity lasting more than a day or two.
The weekly SPX has us back above that NLBL but since it’s only Monday the bears have four more sessions to push it back below. Actually they have several more weeks as this NLSL just got started. What’s really fascinating is that we are seeing two weekly NLSL right next to each other. So the SPX 1360 mark will be the proverbial Maginot line separating a continuation of the ongoing trend from a breach and start of new market dynamics. We shall see – as we are not in the guessing business we will simply observe and follow the tape wherever it leads us. Opinions are for losers – I prefer to be wrong but bank coin irrespectively. If that concept confuses you then you haven’t been coming around here long enough.
UPDATE: I just came across a few setups I simply could not let pass us by. Please step into my Madrid Ersatz Lair:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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