Fuck You Bears Monday Wrap Up

I guess we all saw this one coming – after all the script has been the very same for the past two years. First you whipsaw the crap out of everyone ahead of a holiday, then you kill the bears right at the open the day after:

Now the ZL signal was pretty flat throughout the day which means that participation here is pretty minimal. Even that last big spike up only registered at 0.6 on the ZL Richter scale which is nothing but a hiccup. Which leads me to believe that this thing can melt higher, yes – but I don’t think that we’re at the onset of a protracted short squeeze. I’m looking forward to see the spoos paint new highs because the way momentum is playing out right now I see them running this thing into a wall around 1360.

Geronimo had the right idea but missed the target by a tick or two and in the end got stopped out. The fact that it didn’t get an entry at the EOD is a bit puzzling – there quite a bit of tape banging going on and I would have liked to see a long trade there. Well, that’s how it goes – one down for the day. If we melt higher from here I expect Geronimo to squeeze in a few long scalps as well. In some ways it has served me well as an implicit medium term trend indicator.

Crude completed to target exactly the way I suggested last week (to the subs). I am being super conservative here by taking profits early – yes this thing could run all the way up to 110 but since we are knocking at a resistance line I’m gone in sixty seconds. It’s permissible to hold a handful of lottery tickets for a run higher but I would be rather cautious with the stops.

A few more short term charts for the subs:
Charts and 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 subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

The spoos touched the NLBL which unfortunately expired on Friday. So I don’t see a clear edge but do hold a slight bias to the upside. Still that NLSL bounce was a clear indication that we would push higher – and obviously all Zero indicators agreed. Bear in mind that there’s a lot of resistance looming above and if you play this thing to the long side then be out at 1358.

Mr. VIX cleverly bounced back right at the lower 2.0 BB border – so it seems the longs are playing this by the book. Which is to not cross the line and to instead walk it down slowly.

Silver was scaring the children last week but as the prior candle’s low held chances were we would push higher. I would however consider taking profits here – we are testing that 100-day MA and Scott may just be spot on about a short trade. We had a good run with Silver lately – let’s not test our luck and get greedy.

Last but not least – the Euro which triggered a net-lines buy signal today. Unfortunately we are also sitting right at resistance and I don’t want to take any big bets here – neither to the down or upside. When conflicted I always choose to err on the cautious side – which is why I am still around today.

Bottom Line:

The script is very familiar, yes – but the outcome is much less so at this point. I don’t see sufficient participation to justify going long here, let alone propose maintaining long positions. Let’s wait for either a push higher or a drop to the downside to produce better entry odds.



Awesome setup – rats pay attention to this one

This is a little premature, its not to the end of the trading day yet. But I’m going to jump the gun and lay it out for you, this is a textbook setup.

Silver. This slut is begging to be shorted. The bounce is anemic, way less than anticipated. We have a MINISCULE range on the daily candle, which means a tiny risk. Which means you can take a MASSIVE position compared to usual.

Its a retest variation sell. Sell on break of the daily low, stop at 1 tick above the daily high.

The logic in this case is that we made a high 4 trading days ago. Since that time we have spent 3 days trying to break out to new highs, but not making it. That tells us that the “Silver is a short term uptrend” thesis is close to failing. If thats the best that silver bulls can do, its not good enough.

Supporting evidence. I know you are thinking that that retracement looks pretty shallow, and it is. But compare it with Gold, which is up just above the 61% retracement with a nice proportional abc correction (stupid wavewanking)

Take a look at the bearish non-confirmation between gold and silver here. If metals were about to ramp to new highs in a hurry both metals would be behaving strongly. The fact that silver is lagging so far is a massive hole in the bullish case.

My thoughts here are that a little weakness should set off a chain reaction.

One more bit of bearish non-confirmation for you. This is an interesting one, and one of the BEST INDICATORS OF STINKY PRICE ACTION THERE IS. You have to look closely for it, see how July Silver cant pip the high of a few days ago, but December Silver can? Take my word for it, this type of hard right edge non-confirmation, is extremely bearish.

COT For The Holiday

For the noobs, COT is a report on the commitment of traders (CFTC futures reported data). I keep track of the number of speculators long – short (aka net long). If you see wording like Net Spec as a % of OI, that means the number of net speculators (long- short) relative to the total number of contracts outstanding.

All the definitions aside, here are a bunch of charts to look over.

NQ:ย This just shows that there is still much money “crowded” in NQ futures. Some money has come out, but we are far from levels that say the market is panicking. Some of you may wonder why I dont have the ES on here, well, the answer is simple. The ES is full of day traders and the open interest is really irrelevant. Anyways, it is hard for me to bet on a huge massive short squeeze of epic proportions with nearly 20% of all contracts on one side of a trade…
Charts and 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 subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
Now, the US$ summation. Here I add up all the positions of all the liquid FX futures contracts.

Apparently there are still many shorts, but some money has come in as of late. One must keep in mind that when the trend in the dollar turns, billions must come out, and that will make things interesting.

FWIW here is the EUR.

Some will say this is bearish, some will say this is bullish. I can only say one thing, money came out. The EUR is actually neutral in terms of net $$$ in speculation, the AUD, CAD are the two with lots of potential money to leave.

Another thing pertinent to equities, is Copper. Money has left the room. This is a mixed signal. (1) why did the fund dump the copper market harder than the flash crash; (2) is that too much to fast? (3) can they continue to liquidate like prior sell offs?

I dont know those answers, but it is something to keep an eye on.

Now I think Mole and I are going to do a cool post on seasonality next week, but I just want to give you an appetizer ๐Ÿ˜‰

This just goes to show that seasonality is hard to fight. June is tied for the 2nd worst month of the year….

Bottom line, have a bunch of beer this holiday, but keep in mind how much money is tied up in equities and FX. From NYSE margin debt, to short interest (lack thereof), and COT (futures) there is a bulk of money on one side of the traded. That does not mean P3 is today, it is just something a trader needs to know.

I am on to some quality hooch, and a superb dinner with my wife; I wish you all safe travels.


P.S.: Props to Geronimo, it made a killing on a holiday !

*** and I look forward to some FX comments from that foul mouthed Australian ๐Ÿ˜‰

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