We are nearing the finale of the Jackson Hole Symposium and anyone who wasn’t invited (i.e. the 99.99999%) is standing by with bated breath to receive the latest economic doctrines conceived by our two venerable high priests of modern finance (Draghi & Yellen). I personally couldn’t care less about what they cooked up for us as the real song and dance always happens behind the scenes. So as long as it doesn’t involve virgins*, goat blood, or a temporary suspension of algebra we ought to be fine. My suggestion would be to sit it out and make better use of your time.
They are going to drag this out all the way and I’m afraid markets won’t really have absorbed the full impact of the two statements until Sunday night. So we advance our stops and stand by for new instructions.
On the spoos (and implicitly on my NQ chart) I am of course looking for support levels as we are invariably going to see some wild swings. Markets are skittish up here and any wrong intonation of a single word can drop equities by double digits. On the hourly ES I see 1980 as a soft support zone – but more realistically 1968 should hold a first stab lower (should it happen).
IF we drop lower than that I’m afraid there would be more momentum than we can anticipate right now and the 100-day at SPX 1920 would be my next pick. On the upside of course I see little holding this thing back – we are so overbought that it’s impossible to find resistance clusters here.
Scott asked me about my DX campaign yesterday – here’s where we are on the long term panels. Clearly we have room to run until 83.5 where I would expect heavy resistance as the upper 100-week and 25-month Bollingers correlate there. Of course we may resolve lower and if we drop hard 81 makes for good support right now.
Obviously I won’t be taking any more setups ahead of today’s big announcements. If anything significant transpires later this afternoon I may chime in quickly. But frankly I’m looking forward to my normal routine starting next week – see a schedule with the most crucial events above. We do have a few marketquakes© on the roster but they happen before the open and thus we may actually get a chance to have some fun in between. I see you then.
The squeeze continues on all fronts and we are either at the cusp of some major move in both forex and equities or we are at the end of a beautiful run. And if it’s the former it has to happen today before the close. No, we can’t have it both ways, so let me elaborate.
The E-Mini has made a phenomenal recovery since those 1890 lows – we’re talking nearly 90 handles in eight sessions. If you were caught short near the bottom you just got your ass handed to you. I trust none of your rats were that stupid – if you were then you didn’t pay attention.
The situation we’re facing now is an interesting one. This has massive short squeeze written all over it as we’re but handles away from the old ‘not so fast’ zone delineated by ES 1980. And if it was any other week I’d say we’ll probably paint an obligatory red candle and then take the bears to the woodshed.
However, this isn’t an ordinary week – starting tomorrow we are graced once again by this month’s FOMC minutes – the good ole’ Yeller is so reliable. But expect price volatility to (as measured by for instance ATR) come to a screeching halt as the global cabal of banksters hold their annual conference at Jackson Hole.
I actually was invited but decided to abstain for – ahem – personal reasons. Anyway, as usual the tape will most likely start freezing up starting tomorrow, which also means I won’t be doing much on the trading side. So let’s review some of our recent gems – there’s a good chance that at least one of them is going to hit their stop once things start swinging widely.
You all recall (and some hopefully enjoy) the NQ trade we’ve been holding since 3917. Fortunately I am not employing CrazyIvan campaign management as I suspected that this one may turn into a squeeze and cheated by switching to Heisenberg style campaign. Otherwise I would have technically been forced to close out yesterday as it touched 3R (almost exactly). And there is still a chance that it’ll run much higher – the ES is at 1981 as I’m typing this and we still have 90 minutes to go go go go!!
Now on the currency side you may have long forgotten about that LT campaign on the Dollar. That sucker has banked me almost 5R by now – it’s been one of the best setups of the year. As some of you may recall – that has been a Heisenberg style campaign from the get-go. There was a very low probability it would get above 80 and when it did a lot of Dollar shorts starting running for the exits. I’m holding this one and my stop has been advanced now to 25% trailing.
Now the EUR/USD is looking extremely sweet to this lowly expat – in a way I am perpetually short the EUR as I earn in Dollars and live in Europe. Which is why I hedged myself near LT support (see yesterday’s post) and was happy to be stopped out today. However, it may not last – for the same reasons outlined above. Either this thing drops now – today – or most likely the rumor mill will take over and punish the early shorts. Right now I don’t have a dog in this fight but I hope that it’ll drop a few more pips before things start slowing down.
For the reminder of the week I may mix things up a little to keep you guys entertained. I always considering to post a little series on cognitive biases – what do you think? It’s something most of you have probably come across but it bodes repeating as we humans are unfortunately so easily corruptible. Or perhaps fortunately?
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Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.
Steady as she goes on the equities front – the cash is now in earshot of its 100-hour BB which is just a bagel throw away from our 1980 inflection point. Recall that this is where the bears throw down their claws and embrace their ignominious defeat. A little correction near here would be nice – just to throw everyone off a bit.
However a pop above ES 1972.5 (the current hourly NLBL) looks like a good buying opportunity given the 25-hour SMA right below it. Much potential for a pop higher with minimal risk – you can play this one with 1/2R and if it happens (odds are low) then you’ll probably be rewarded with multiple R returns.
I got two precious metals setups today – the best one I keep for the subs but silver ain’t looking so shabby here either. Long right now with a stop below 19.65. The big hurdle will be 19.75, which is where silver runs into its old nemesis – the 100-hour SMA.
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