Long Term Update

It’s been a while and today seems like a good day to catch up with our long term charts. In general it seems like we have touched major lows in various key markets – most importantly on the Euro and crude front. The former much to my chagrin of course – how much I have enjoyed the favorable exchange rate and I’m not looking forward to seeing that change. Alright, let’s cover some major symbols, starting with equities of course:


The long term panels on the S&P futures look in pretty good shape at this point, however it seems that we remain pinned below our weekly NLBL at ES 2088.75. It would be preferable to overcome this one by tomorrow as it would issue a weekly buy, thus almost guaranteeing new highs and a final departure from a two month trading range spanning over 100 handles.


The SPX point and figure however shows a lot of positive evidence – in particular I like that support cluster near 1990 which in the future should provide some very solid support during any attempts to drag equities lower. On the long term chart we already have strong context courtesy of the 25-week SMA which has been attacked several times in the past months but managed to remain intact. However I must point out that this is the first horizontal defense line in a long time – which means the trend is weakening and most likely in its late stages.

In summary the bulls remain large and in charge here and if you’re holding long term then there is no reason to second guess the advance, despite all the bearish musings across the financial media and blogosphere. Yes, the bulls were in big trouble a few weeks ago but managed to throw a last minute Hail Mary. So far it’s working and until we see signs of exhaustion again the bear goes back into hibernation. He had his chance and he blew it.


Gold looked like it was ready for take off and then suddenly deflated like a French soufflé. Quite frankly the gold bugs are in big trouble here and if we breach through that 100-week SMA and below the NLSL at 1130 there’s no telling how low it’ll go.


The P&F totally agrees it seems as the bullish PO is still a possibility but signals a high pole reversal warning which is about to turn into a sell signal. The gold bugs are on notice here and perhaps in a few days we’ll have a chance to take out a few lottery tickets to the long side. As I said – below 1130 we may just fall off the plate. Until that happens the long side is worth a shot as I expect 1130 to be defended fiercely.

More LT musings 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.


My New Best Friend

My apologies for being relatively quiet on such an exciting day. Unfortunately there was a death in my wife’s family and I had to be there to offer some moral support. Which means I haven’t been trading (much – the systems are always on) and earlier this morning there was no reason to grab positions ahead of Draghi’s announcement.


So let’s talk about the big news first – most likely I’m not telling you anything you don’t already know but in a nutshell: Despite strong dissent by both German members of the ECB’s board the decision is to issue €1.1 Trillion in QE at €60 Billion per month. That’s a mighty chunk of change aimed at countering the threat of a supposed deflationary spiral. Obviously much of that had already been priced in but the expectation had been around €50 Billion per month but what’s another €10 Billion among friends, right?

Accordingly the EUR/USD is now at 1.13 and change and there’s no telling when this free-fall will end.


Clearly Draghi didn’t win any popularity contests over in the old Vaterland today, but he’s now officially my new best friend. Looks like I’m going to save a lot of money on toilet paper and may be able to move operations into my favorite Valencian palacio. Because unless the U.S. Fed is interceding somehow in the near term future we may see the Euro on par with the Dollar at some point this year. How about we organize an Evil Speculator Euro-Par-ty over here in Spain when it happens?


On the equities side we’ve been getting exactly what I suggested yesterday – more upside and we are now approaching the point of no return for the bears. Given my post I had a very tough time taking an NQ long position via Thor last night – the short campaign had previously ended at break even. It’s interesting how I was emotionally uncomfortable about placing this trade. Scott and I were on the phone and the consensus was ‘yes, we absolutely have to take this trade’ – especially since we were both pretty bearish. Practice what you preach, so to say.


Bottom Line: Nothing has changed – 1600 is where the bears fumble the ball again and we most likely are going to see new highs. Which however wouldn’t mean that this bull market picks up where it left off a few months ago. I maintain that we are in the late stages here and I also don’t like the participation I’m seeing on the Zero. This may turn any day and I suggest that you slim down any significant equity exposure (i.e. large stock portfolios, stock based funds, ETF/ETNs, etc.).


Our gold campaign is looking very good now as we are only a bagel throw away from the 100-week SMA at 1310. Not shown on the panel above is the monthly NLBL at 1290 which we’ve already crossed. A close above this mark on January 31st would be a monthly buy signal and excellent news for anyone already long (i.e. this lowly Mole). I’ve told you guys that I intend to hold this one into 1500, that would be one trade for posterity given my 1212 entry.

That’s all for today – see you guys tomorrow.

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.


Swiss Only Learn The Hard Way

If you just woke up and found your Forex account in flames then let me give you the skinny. The Swiss National Bank finally realized the errors of their currency pegging ways and decided to suddenly throw in the towel. Which of course triggered a massive dislocation across Forex markets as the Swiss Franc surged by 30pc. As I’m typing this the Swiss stock exchange is a sea of red dropping as much as 14%. Well done!


Now when I was a young kid traveling in Europe a Swiss train conductor kicked me out of the train in the middle of nowhere somewhere in the hinterlands of rural Italy because I couldn’t afford a pass for the sleep wagons (there were only sleep wagons on that train). Since that day I can’t stand the Swiss and for good reason. They are stubborn as heck and they only learn the hard way. And that’s coming from someone who actually went to Kindergarten there! I hope the SMI gets cut in half you cow tipping alphorn blowing wankers.


So let’s observe the damage. Here’s the EUR/USD – dropped toward 1.15 and has recovered a bit of that first wipeout. Word has it that the Swiss will now have to sell a ton of Euros (at massive losses) and that probably means more downside on that front.


Is that an ugly chart or what? EUR/CHF – back from whence we came back in 2011 when they screwed with everyone the first time around.


Dollar got kicked in the head and then in the balls. I don’t recommend you pick any direction here at this point – let it settle down.


U.S. equities rather tranquil in comparison. But look at all that volatility over the past few sessions. So far that support cluster appears to be holding however – the onus is now on the bears to take it lower. Today. If they can’t drag this sucker lower on a day like this they’re toast (again).


Gold update – jumped higher as should be expected. My entry at 2012 is starting to look solid now.


Crude is taking advantage of all the confusion and is trying to make a run for it – the 50 mark is in its sights. This would be a long/buy if it breaks the daily NLBL.

A few juicy setups below the fold – 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.

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


    Zero Indicator

    Darth Mole Alerts

  1. poll

    • How many discretionary trades to you place per month?

      view results

      Loading ... Loading ...

  2. NinjaTrader

    search warrant

  3. recent misdeeds

    1. Setups Deluxe
    2. Thor Back Tested Past Five Years
    3. Long Term Equities Update
    4. Introducing Thor.0
    5. Awesome Thursday Morning Briefing
    6. Ring Side Seats To The Freak Show
    7. Waiting Out The QE Storm
    8. Evil Speculator 101
    9. Event Risk
    10. Slow Drift Morning Briefing