The Long Con

As you can imagine I wanted to wait out Draghi’s announcement before putting up a post but that didn’t leave me with much time before the bell. So here we go in no particular order:


Equities still in whipsaw mode but I’m actually starting to give the bears more credence here. Neither side has been able to make much of a dent but let’s not forget that 1) the onus is on the bulls to continue the trend and 2) there are really no bears left. In a late bull trend downside corrections are usually generated by a lack of bulls as opposed to being caused by strong selling pressure. Which is why we have seen the tape plot extended tops followed by a quick fall to the next support zone.

Bottom line: The bulls need to push this turd back above 1997 – if we close the week below it tomorrow then there may be a price to be paid next week.


Bonds are on the way now – my new target area is 123’295ish. Glad I flipped that initial long to a short after being stopped out. A lack of directional bias does have its rewards ;-)


Cotton is accelerating higher and I’m moving my stop to the 2R mark. Very happy camper because I think we may have a runner here. Current target near 76 – if we touch that I may just be able to afford a turkey for Christmas!


The cocoa campaign also back on track and we may have another runner here as well. Target – well, who cares – there’s nothing but air below. I have to say – the fun has been in futures lately!


Coffee is looking great today – inside day candle right on top of a very tested 100-day SMA. I’m taking either breach it’ll throw my way tomorrow/tonight.


EUR/USD – may attempt a bottom here (much to my chagrin of course) – time to hedge, triggers on the chart.


And I promise I won’t boast about my DX campaign (snicker) – but for the rest of you guys here may be a chance to play a shake out. Double inside day – usually decent odds on that as velocity seems to be slowing up here. A breach in either direction is a good play. I’ll put my stop at today’s lows – if stopped out I’ll be short with a stop near yesterday’s highs.  If we get a double whammy (stop out both ways) I’ll continue higher with my current position size.

FWIW - the long con across various futures contracts seems to be the play of the year. This is easy money folks with beautiful prime rib entries and strongly trending tape. If you keep staring at equities all day you may not just go blind but also miss out on a lot of fun. And that – my dear steel rats – would be unforgivable. So get with the program!


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Sitting Pretty

I’m glad I stayed out of that equities campaign as it continues to test everyone’s patience. If you’re short since yesterday then you may be wondering if this is merely one last stab higher before the big drop. Well, maybe – I don’t have a dog in this fight which affords me a reasonable sense of objectivity. And the way it’s looking right now this beast could swing either way. But as I pointed out yesterday, terrible conditions with limited downside potential. But hey if you must dabble – be my guest – here are a few pertinent perspectives:


Rather interestingly we saw a bounce right at the end of a tiny volume hole. Another tick or two below and the bears would have enjoyed a much needed injection of participation. But for some reason the spoos touched 1980 and jumped right back into the dreaded whipsaw zone. Seemed utterly avoidable given the recent lack of participation, thus it begs the question as to whether this may be a bull trap. IF it really is then we need to turn back lower sharply before the end of the session – the more time we spend up here the worse for the much battered grizzlies.


The hourly SPX shows us a touch of the lower 100-hour Bollinger. And boy – is that one compressed to the max right now – we’re talking less than 20 handles top to bottom. So something’s got to give here soon and most likely it will. Now, if our Sorgenkind indeed resolves lower then we may actually drop all the way to that 100-day SMA near 1940.

Here are a few short term momo charts – subs only. The free portion of this post continues further below:

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Alright – I’ve done my duty to your equities addicts – now to the interesting part ;-)


Update on our EUR/CAD campaign – well, it dropped back to whence it came. Fortunately we enjoyed a very fortunate early entry and thus can afford to sit out a possible retest of the 100-week SMA. Nothing to do here right now.


Cotton however has fared rather well and we almost touched 3R today. Which means we’re moving our stop to the 2R mark. This may actually work out fine as it gives us a bit room for a possible shake out day or two. IF this one manages to breach the upper 25-day BB it may just turn into a runner. So I personally will only use 50% of my stop at the 2R mark – the remainder goes to the 1R mark.  The long term potential here justifies a bit of campaign management discretion. This approach has served us well over the past few weeks.


Cocoa – and it’s off to the races! Well, we hope…. excellent entry with minimal risk yesterday. This is why I love those last kiss goodbye entries. So sweet when they actually trigger. Nothing to do here either – it’s do or die time – we have done our part.


Sitting This One Out

My apologies to Scott in advance but this is one of the rare times when our respective outlook differs. First up we are not at a crucial inflection point – the 2k level is simply an opportunity to shake out weak hands. If we dropped from here the downside potential would be rather limited as I pointed out yesterday. So there is no reason to get all all excited here – wake me up if we drop through the 100-day SMA perhaps.


It all started out with a little fun after a tickle of the 2k mark but due to equilibrium on the buy/sell side it has now turned into yet another limbo zone. Nothing really has changed as of right now – in essence you want to be:

  • Long nar 1990.
  • Short near 2010.
  • Long above 2011.
  • Short below 1989.

In all four scenarios your stop would be no more than a handle or two away. Although this seems rather tight it has the highest odds in the current market phase. Any reversals back inside ‘ye ole’ chop zone’ invariably draws us back toward the magic 2k mark. Today’s proposed entry would already have us back inside as we just touched 2k again (and then we dropped again…)


If you’re watching the Zero right now the situation couldn’t be any clearer. I keep seeing statements/complaints about this being difficult tape and I completely disagree. It’s S.H.I.T. – absolutely – but it’s not hard to read at all. Today’s divergence on the Zero Lite should have gotten you out of any short positions you may have taken on.

In a nutshell: The downside potential here simply does not outweigh the whipsaw risk. EVEN IF we close below today’s lows today or below 1990 I would personally sit out any downside correction. Trading against the trend here is not worth the hassle. FYI – I’m posting this at 2:33pm EDT as the spoos are back at 1991 – which now has me long with a stop at 1989.


Update on our EUR/CAD campaign – hey, it’s actually getting its groove on. Better to be lucky than good I guess. I’m not going to touch this one – as the old saying goes – if it ain’t broken don’t fix it. Next stop is either my ISL or I’m moving it up to 1R.


Update also on the bond campaign – I got stopped out and immediately flipped for a short position. My stop is now above 124’3 which ought to suffice to weather out an obligatory LKGB move.

I have some very nice setups waiting below the fold – please meet me in the lair:

More 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 you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Have fun but keep it frosty. FYI – I would love to see a few charts in the comment section.


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