Gimme All Your Lovin’

So out of the blue some rumor hit at about 12:30pm Eastern suggesting that the ECB was about to prepare a broad based QE package for the January meeting. Which instantly resulted in this over in equities:

Oh sorry – my mistake – here we go:


Nice little schwing - someone must have been really happy to see good ole’ Draghi. Not sure why exactly the EUR/USD also popped higher on QE rumors but I have long given up on trying to make sense of it all.

Now given all that I would like nothing more than to kick this thing into overdrive and collect a mountain of ill-gotten gains all the way into X-Mas and beyond. However, we can’t afford to get caught up in all the excitement as there are signs of trouble on the horizon. Please step into my lair:

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Everyone’s Getting Some

The gloves are off and everyone’s getting some today – a royal kick in the nuts that is! Gold, crude, and a few other futures contracts dropped to new lows this morning, just to turn on a dime and then massively retrace higher. Nasty trippy tape all across and I’m glad my exposure was limited courtesy of the holidays. I only got stopped out in my ST crude entry this morning, fortunately EUR/SEK more than made up for it.


So let’s talk equities – I already know the question rattling around in your dizzy rodent brains right now:

Have we painted a low or are we going to drop even lower?

First up the damage is pretty contained and my trailing stop hasn’t even been touched yet. Second I’m looking at some of the carry trade pairs and there’s no confirmation – so call me a bit skeptical on this one.


Third the hourly SPX touched the 100-hour and so far it’s been holding. HOWEVER, should we close the session below it then odds support a drop into SPX 2020ish.


Fourth – you may recall that the VIX:VXO was dropping early last week, so the current correction isn’t exactly a shocker IYKWIM. Plus almost every year we see a drop lower right after Black Friday before they turn on the rocket boosters in the final weeks. No guarantees ever that history will repeat but what gets me is that everyone acts so surprised, but perhaps that’s part of the entertainment.


But let’s not jump to any conclusions – I stick with my 2050 line in the sand. After that we’re probably starting to run a few stops and it’ll lead us lower into ES 2025 and then 2020. The latter correlates nicely with a NLSL on the weekly. Which is where I would look for re-entry opportunities after having been stopped out below 2035.25. Well, that’s my nefarious plan and I’m sticking with it.



Juicy looking hammer on the GBP/JPY and I’m willing to take it both ways – triggers on the chart.

More setups 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!

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Happy Turkey Slaughter!

I take it by now most of you guys are already heading to to your respective Thanksgiving destinations. Fortunately the Mole will be spared this particular holiday extravaganza as it’s not celebrated over here in Europe (don’t worry, we have a ton of our own). Honestly I never really cared much for Thanksgiving during my time in the States. Obviously it’s the second biggest U.S. holiday season after Christmas and people tend to plan their time off around both, courtesy of stingy employers offering only minimal vacation time.

I remember the very first time I signed an employment contract after I had just received my green card. I couldn’t fathom that I only got 14 days off per year. And that was during the dotcom bubble - I was told that it was rather generous compared with some folks working in blue collar professions. Not that I really take long vacations European style but when I’d like to have them when I need them. Of course once I started to trade for a living it afforded me to travel outside of popular holiday periods. So I tend to take time off in fall or in spring instead of the summer vacation season or in December. I’ve always been a person who loves to go against the grain, which makes me a horrible employee, but I always enjoyed working on my own terms. Which apparently seems to be the way of the future. Less security but if you’re flexible and enjoy controlling your own life then the sky is the limit.


Anyway, although I live in Europe my vacation and holiday schedule is still very much tied to the States, courtesy of my responsibilities to my readers and of course my intrepid subscribers. So virtually I’m still living my life over there which is kind of interesting. Much of my day revolves around my work, which includes trading, blogging, conversing in English, all based on roughly an Eastern time zone. However when I set foot outside I’m suddenly in Spain and I have to completely switch my brain over, in terms of language of course but also culturally. This can actually be quite difficult at times but given the cultural chameleon I have become over the years I’m quite used to it now.


Alright – let’s talk markets for a moment. As you can see participation has now come to a standstill and we all have better things to do then to watch pre-holiday tape.


What is interesting however – or will become so next week – is that the VIX is now dropping below 12 again. That doesn’t mean we’re going to see a jump higher but if you look at the Bollinger (in red) it’s clear that we’re starting to compress quite a bit. This situation may go on for a while – perhaps all through the holidays and into the EOY. However, sooner or later there is always a price to be paid and we are going to run out of buyers at some point. I won’t hazard to guess when that happens but we are clearly late in the current advance. I know that I suggested the possibility of a correction weeks ago – but at the same time I also held my long positions, knowing that calling tops during rocket periods would be rather unwise.


I’m not seeing any signs of trouble on the VXV:VIX ratio but the VIX:VXO is starting to drop a bit and we’re now developing quite a divergence. It could be pricing irregularities due to the holidays so we’ll have to revisit this situation on Monday or Tuesday. But if it persists then we need start paying attention. For now however there is little cause for concern.

Alright, this will be my last post for this week and I’ll resume my usual schedule on Monday. The Zero is going to be running on Friday but I won’t be here posting. Thor and CrazyIvan will continue as usual of course as futures and forex exchanges do not observe Thanksgiving.  However until Sunday night I won’t be sending any new Thor setups – CrazyIvan however may take entries. If anything is unclear or you have problems feel free to email me but please allow 24 hours as I won’t be checking emails around the clock.

Please travel safely now! My revenue milestones don’t permit reader attrition due to traffic accidents ;-)

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