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Archive for February, 2011
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February 28, 2011

Quick n dirty post

I have a kung fu student who needs a can of whip ass opened on him, so this is a quicky.

I differ from Mole a little this morning. Hes still bullish, and with good reason. BUT I have a short setup, its a valid (textbook actually) short setup. IMO the bullish case becomes stronger if this short setup fails (which would be a retest of the lows).

Basically today we have very positive $tick readings in the first hour, indicating that the market was going to try and go up, probably going to try and be a trend day. The fact that this didnt happen indicates that buying pressure is fundamentally weak. Thats what I was looking for as a sign to think about the shortside. POMO or [...]

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February 28, 2011

Business As Usual Monday Wrap Up

And here we are again – Scott and evil Mole eagerly anticipated today’s tape and it pretty much turned out as expected. Maybe less fireworks than hoped but here we are closing at SPX 1328 again. Forget about cross index divergences – the bears seemingly lost another battle and it’s POMO business as usual.

The ZL was on fire today – it never believed that mid day drop an started to paint a small but textbook divergence. I did not recommend long positions as the signal was way too weak. I however pointed out that we may find ourselves at the top of the StdDev line should we make it above VWAP. And that’s exactly what happened – [...]

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February 26, 2011

This is getting complicated

We are at an extremely interesting juncture, there are several ways things can develop. I’m going to present some unorthodox thinking here.

Lets start with what happened. We saw from the market internals divergence on the way down that the market was going to *attempt* to rally on Friday.

And rally it did. So the market is doing EXACTLY what its supposed to. Now, the big question to ask is “how does that rally fit with what was expected. Does it totally invalidate the bearish case? Does it make it stronger?

My current working thesis of what happened is in line with the 60 min chart setup I posted a few posts ago. For the Asian session on [...]

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February 25, 2011

Attack Of The POMO Monster

In late 2008 The Bernank was not happy at all. The Fractal monster had become way too unpredictable and even worse – it had acquired a taste for prime rib steak. So it was time to create a creature ready to take it on – one that Banana Ben could strut around on a leash and use it to scare Congress every once in a while. After much genetic engineering its incubated nucleus was sent into the FOMC breeder which after a few weeks gave birth to what we now know as the POMO Monster:

Yes, there is a reason it’s got a green tongue – as its diet is a shredded bundle of freshly minted treasury bonds. Let’s look at our updated POMO consumption [...]

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