Dude Where’s My Moto?

As some of you already know I started the day dealing with a family emergency but it didn’t stop there. Just when I thought that I had a lid on things and got ready to hit the gym for some much needed stress relieve I realized that someone had grifted my moto overnight. You should have seen my face as I was standing there with my helmet in my hand and cursing like a sailor with turrets. I thought it couldn’t get much worse but somehow this day continued to prove me wrong. Well, I’ll spare you the ugly details – nobody likes a cry baby.

Although the Spanish cops don’t have the notoriety of the LAPD I have a feeling they won’t have any problems identifying the ole’ Mole mobile – it has some rather distinguishing features. Well, as the universe seems to have it out for me today I better treat carefully and keep a low profile. So forgive me if I run through today’s charts quickly so that I can curl up somewhere and lick my psychological wounds ;-)

Quick update on CAD/CHF which triggered today. We are about 0.7R in and nothing really happens until we touch 0.8058’1. If we close above it we’ll advance our stop to the 1R mark – if we push above it and closer below it we will exit EOD.

Equities are still on the run and thus far the 25-hour has been holding like a champ. There’s the 100-day BB approaching above and it may mean soft resistance.

The volume profile is running thin but that doesn’t mean that some headline event tomorrow can’t pop it higher. You know how the cookie crumbles.

Possible Failed Shooting Star setup on the NQ starting tonight. I’m not holding my breath but it’s the only ticket on the equities side right now.

I do however think that the bulls may have gotten a bit ahead of themselves here, so I recommend caution on the long side. For example here is the NYSE advancing/declining ratio which is dropping against a rising SPX.

But I got more where that came from – please join me in the lair:

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Alright, that’s all I got for today – time to release the hounds!


Watch Your Six

Mole’s pervasive paranoia apparently was right on the mark. As you may recall I mentioned early Monday morning that I did not care much for the patterns that started to emerge on the Forex front. This caused me to reduce my exposure and recommend small position sizing and wide stops. I hope you followed suit as the tape we are seeing all across the board has been rife with volatility and shake out attempts. Apparently we are getting ready for a big move.

Fortunately I was spared a lot of whipsaw this morning by holding back and waiting for a touch of the 25-hour before considering taking the long trigger at 1851. As you can see we ran all the way to the 100-hour and then bounced back.

Which got me curious and I zoomed out a little. It seems that the 100-hr has increasingly been providing support. The only exception was a week ago when it sliced through it and proceeded to the lower 100-hr BB before continuing higher.

As a sidenote – I pulled up my LT version of the VXV:VIX ratio and apparently we are approaching a signal range that may lead to another correction. When exactly is unclear of course but this warrants caution and taking it easy here may be good medicine.

Bottom Line:

If we get an IP-L breach toward the EOS I intend to take it with 1/2R – after all we have retested the 100-hour and thus far it remains intact. Putting a stop below 1837.25 puts us below the 100-hour, which is good. However I may add a few ticks just to be safe. This rally is getting a bit long in the tooth and I would prefer seeing a few down days before resuming back to full position sizing.

Otherwise I do not have much to offer this afternoon. Per my comments above I am staying out of Forex for now – at least until I’m seeing more directional patterns again. Nothing interesting on the futures front either, it’s time to lay low and wait for better market weather. Don’t force it folks – the good thing about being independent (i.e. retail or semi-pro) is that you don’t have to trade – enjoy that privilege.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.


Scaring The Children

Scanning across the financial blogosphere I’m seeing the usual suspects pimping spurious predictions based on their respective preferred market directions. The Mole will be the first to admit out that it is impossible to know which way this puppy will swing. Market makers are having fun jamming both sides today which accounts for some of the fake out moves we’ve seen earlier in the session. If I was still wave-wanking I’d say that a fifth down may be in the cards but it’s equally possible the tape is catching ground here. Fortunately I have long given up the prediction business and have in the years since instead focused on technical inflection points. Retail however expects directional predictions and if possible for free – which is why the first floor of the woodshed usually dons longer lines than that of a Las Vegas night club. Moving on.

The subs remember this chart which I posted a few days ago – this is the zoomed out version as I wanted to provide a bit more context. The other day I pointed to the 1.0 mark of the VXV:VIX ratio indicating that anything below it suggests that a bounce is in the making. If you take a step back however you realize that we actually have been in a slowly falling channel which suggests that the pricing of three-month volatility vs. 30-days IV (i.e. the VIX) has become more sensitive on the upside and less so on the downside. In other words – it takes a lesser ratio of the VXV versus the VIX on the upside before we see a reversal. The same applies on the downside apparently however there the signal spikes produce a more uneven distribution pattern. What does that mean? The market has become more sensitive to volatility deltas since that big spike up in early 2012.

Where we are now IMNSHO delineates the zone between shallow and deep medium term corrections. Although that does not help us pick a direction right now today it does convey one important point however: IF we continue downward from here or if an ensuing bounce is weak then it’s possible that we will see a deep correction as we’ve seen in 2010 and 2011. Technically speaking this would be a healthy event and I would welcome it – if nothing else it would offer a lot of new technical context for all of us.

Alright – on to equities – the spoos are bumbling around inside their compressed 25-hour BB. As I pointed out above – very tough to pick a direction here. Bears will look at this and expect continuation lower (per the comments I have seen already), bulls will expect a bounce higher. Which is the tape MMs love and take full advantage of. I am ambivalent and technically speaking the inside day on the SPX triggered this morning and may be stopped out today. It’s a tough ride down here and it may take a few attempts to get a seat on the right bus.

The TF futures went deep today – obvious attempt to scare the children. All of it has been recovered since which does suggest that there is a buyer down here attempting to stave off more damage.

The NQ more bullish and attempting to push above an hourly Net-Line Buy Level a few ticks above the 25-hour SMA. Very notable here is the 100-day SMA which held up just famously. So that should be a support level we may be able to enjoy on the NQ while the previous two are pinned somewhere in limbo on the daily panels.

May I remind you that our P&F on the SPX is still pointing downward and based on the current formation I think that 1740 is our new inflection point on the cash. If that one goes we are visiting 1680. Of course a small bounce in between cannot be ruled out and would not disqualify this scenario. The bears are not in trouble until about 1765 after which this chart would produce a low pole reversal warning.

Gold also triggered an IP-L this morning and has since fallen back. Good news however is that the 100-day SMA has finally been touched. You may recall that I was a bit bemused by that invisible resistance line hanging just below it. At this point I will hold this position with my stop in place.

Natgas – talking about scaring the children – this is why Scott and I call it the widow maker. You recall that I advanced my stop to the 1R point last night and that’s where it got touched. Which is just fine with me – I’ll bank one unit and am happy to be alive to tell the story. You don’t mess about when trading natgas – she can be quite a bitch.

A few more futures goodies below the fold – please join 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.


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