Three Strikes You’re Out

Equities have been whipsawing near our inflection point at 1982 which led me to lose 1/2 R twice (one short and one long) and it looks like my third short entry is about to meet its maker at any moment. Looking at equities across the board the odds seem to support a continuation higher but this is where I have to draw the line.

Three trades per campaign is my maximum no matter what. Either way this one swings it’s going to be annoying as I did not have any directional bias and thus attempted to get positioned near inflection points. But as I internalized my emotional response today I realized that this was exactly when I needed to step back and follow what I preach – not let my emotions get in the way of trading. Fact is that right now I don’t see a good entry here and let’s be clear: the worst thing one can get drawn into are revenge trades or attempting to chase a big move.

Fortunately however my AUD/JPY campaign has made up for some of the damage on the equities side and then some – plus it may have legs. Nice breach there yesterday and today it managed to climb just a few pips short of the 2R mark. I’ll be putting my stop at 1R now and now we see if we got a runner here.

By the way, this goes to show that it doesn’t make sense to fall prey to one-ities (a.k.a. an obsession) for a particular symbol. I’ve said it before and I’ll say it again – I don’t HAVE to trade equities just because it’s on everyone’s radar all the time. As a matter of fact if it wasn’t for the blog I would probably only look it once or twice a week. The forex side is actually where most of the action is these days which is why I have been trying to get more of you retail rats up to speed. More on that in the coming soon – I actually have an exciting announcement planned for next week.

Two more goodies below the fold for my intrepid subs:


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You have been briefed – now have fun but keep it frosty. See you guys later tomorrow.

Cheers,

Whipsaw Galore

In the past two weeks the S&P has been riding the express elevator several time between the penthouse (i.e. the volume abyss above 1980) and the attic (i.e. the volume hole below 1940) and then back again. There is no telling how far this trading range is going to extend (see Scott’s weekend update) but what’s rather clear is that getting positioned anywhere in between is tantamount to committing ritual seppuku – it’s not going to be fun and you can be sure there will be blood left on the carpet.

Which means if you insist on playing the S&P futures then being short near 1980 reduces your risk significantly. Yes, one of those days it’ll break higher but it doesn’t make sense worrying about that – simply put your stop above the volume abyss and if she breaches you can always flip sides with little lost on the short side. Same applies if you feel an insatiable appetite for long positions here – choose a salad instead and then wait until at least 1945.

Meanwhile at the VIX cave all those gyrations have been lifting us off the record low IV readings we’ve been enjoying as of late. As you can see by the ATR(14) panel – volatility of volatility is rising. And per Mandelbrot that big spike higher last week suggests that we might be seeing more. VIN/VIF is also creeping higher which means some folks are getting nervous.

In case this means nothing to you: It is a little known fact that the CBOE actually maintains separate indices for the near-term month VIX (VIN) and the far-term month VIX (VIF). Just pop those tickers into your streaming quotes and you too can watch not just the VIX, but the two components used in the VIX constant maturity blend.

And frankly speaking a meaningful correction is way overdue at this point. After all we have have not seen one since 2011!! Since we tested SPX 1100 it’s been but one directional crawl higher. Get this – counting all monthly green candles since we marked that low gets me to 27 compared with mere 7 months lower. Quite mind boggling – had you simply bought on the first of each month you would have won 74% of the time! Heck, I’d kill for these odds and so would you.

Of course – until that green trendline is broken the bears will most likely have to endure more of the daily pain they have learned to live with in the past five years. Calling tops is for losers (apparently) and until important LT trend lines are broken the trend remains intact.

Now having said all that let me present a short setup on the equities side ;-)

Well actually it’s a bi-directional one. Obviously the Russell has been clearly lagging all other indices and as you can see has not been participating in the sideways churn we’ve been seeing on the equities side. And if I am going to short ANYTHING in that sector then it’s going to be the weakest bitch boy I can get my claws on. The long side doesn’t look shabby but quite frankly I would be more excited about a failed failed hammer short here – plus it’s also an inside day. Pick your poison.

Gold – very juicy RTV-L plus IP-S today and I wouldn’t be feeding this one to you leeches if I didn’t have a lot more waiting below the fold. So grab your secret decoder key and meet me in the lair (we have air-conditioning):


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.

You have been briefed – now have fun but keep it frosty. See you guys tomorrow.

Cheers,

Monday Morning Briefing

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.

Once again the bears absolutely blew it last week as the tape was lined up for an grizzly homecoming party which was rudely cancelled without further notice on Friday afternoon. If you look at the daily S&P cash you can see how perfect this configuration was – another five handles or so lower and we may have seen a significant stab to the downside. Just like Argentina last night the bears can add this one to a long and growing list of ignominious failures.

The spoos are currently scraping 1970 which puts us near 1976 on the cash should we hold the upper BB line here until the open. Obviously my remaining short positions met their maker at my break even point at 1968.5. This is pretty much what we expected and given the probability/payoff ratio at the entry I would take this trade every single time. The way it is I eeked out a humble 1/4R out of this campaign – nothing to write home about but I think it was nicely executed.

On the setup front it’s very quiet on the futures side this morning. I was able to dig up three Forex victims and I’ll throw one out to you leeches. The NZD/USD has been pushing sideways in a triangle like formation but it’s starting to run out of rope as the 100-hr and 25-hr SMAs are closing in. Thus far odds suggest that the 100-hour will hold and thus I’m risking an R to be long with a stop below the moving average.

More below the fold for my intrepid subs:


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.

Today’s event schedule:

And here’s the spike controller for you Forex traders:

Cheers,





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