Sons Of The Lair

So I’m officially a biker now. That’s right – the Mole has been issued a Californian M1 license and driving in SoCal will never be the same. Well until the 21st that is – that’s when I’m heading to sunny Mexico.  I can assure you that this was no easy feat given the time restrictions as I’m only spending a bit over nine days here in Los Angeles. As you know I’ve been riding a scooter back in Spain for the past few years and quite frankly it’s getting old. Unlike over here in the U.S. the Spaniards permit you to legally ride everything up to 125cc with a regular driver’s license.

But if you want to hop on the real stuff then you’re out of luck as passing a motorcycle license anywhere in Europe is a royal pain in the neck. We are talking red tape galore, weeks of driving lessons, and thousands of Euros in expense. I think in Germany they make you take 20 hours of driving instructions minimum, there’s a full day First Aid course, and that’s only to get you started. Which may make sense for the average 20 old hoodlum trying to impress his lady friends but a bit much to ask for someone who has been riding two wheels for years and has carried a driver’s license for over 25 years. Heck, I drive stick shift like a mini Schumacher – my accent is way better though.


Of course over here in California things are a lot easier and more fun, so I didn’t want to miss this opportunity to finally get my proper M1 license and start riding in style. Which I then could easily convert into an international permit courtesy of the AAA. So I studied up via some iPad app until I knew all 250 possible questions by heart. Off to the DMV waiting in line for four hours (couldn’t get an appointment early enough), fortunately there’s plenty of eye candy up here at the Hollywood branch. Finally get to take the test and it turns out that there’s a new test now which has nothing to do with any the 250 questions I memorized. Plus those bastards make me do the written test for the car as well – and I didn’t study for that one! Oooops!

Well, I passed them both anyway. So yesterday I’m heading down to San Diego to take a three hour course with Brian at SoCal Super Moto. Awesome instructor - he apparently even taught some of the guys from the show Sons Of Anarchy (I was a big fan). Turns out he broke two of his ribs the day before while skateboarding – yeah, he’s a bit of a speed nut. But he showed up anyway and just sucked it up – big props to this guy and if any of you are considering to pass the M1 then head down to SD and learn from the best.


Anyway, this morning I get up at the ungodly hour of 6:30am PDT and head over to the San Diego Clairemont DMV. Brian apparently has an arrangement with those guys and he’s able to pass a whole group one by one in the morning. I’m there with five other guys and all of them are already accomplished riders. The Mole’s the only one who just learned to shift a motorcycle a day ago. Well, to make a long story short – I nailed it like a boss and I’m as happy as punch. Mission accomplished. I already have my eyes on some of those sweet custom Bünderbikes they make in Switzerland.


So let’s talk markets. Seems I didn’t really miss much there – sideways session suggesting indecision. Note the complete lack of participation after the little ramp higher. Follow up matters but given that we just held a critical inflection point at ES 2040 chalk me up as being a bit suspicious.


But okay, I bite as we have a nice inside day offering a binary entry. The long side seems to be the easy one right now – once again the 100-day SMA has held and we have four touches which is going to bolster support down there. But no, it’s not impossible that this resolves to the downside – I’d give it a 20% chance. Which means I’ll take it if it breaches lower but only with 1/2R – adding the other 1/2 at 2040. On the long side we need a breach above today’s highs and our ISL will be the low or wherever you feel it’s clever.


By the way – I wouldn’t even consider the short side if it wasn’t for this. The subs will remember this chart – it’s the VXV:VIX ratio which shows us premium deltas between 1-month and quarterly CME options. That little divergence is holding up, leaving the door a crack wide open. But not by much – again, I give the downside little credence as of right now.


Otherwise it’s pretty slow on the setup side today – the only ones I like are GBP crosses. Here’s GBP/JPY which I like short with a stop above 179.75. A long above 180 (i.e. the 100-hour SMA) is an option but I think the downside has the momentum here right now.


You can also play cable instead – triggers on the chart. Or if you like ‘em in pairs split your exposure between them and Bob’s your uncle.

That’s it – I’m going to relax a little now. Perhaps head out for some L.A. style shopping – the list is long and I only have a few more days to go until I head out to Mexico. See you guys tomorrow.

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Day Of Truth

I’m running a bit late this morning as I have been shifting my circadian rhythm over the past week and am already operating/living on Eastern time. Fortuitously the change to daylight saving time yesterday works hugely in my favor as it shaves off yet another hour in preparation to my journey to Los Angeles.

It seems that we are at important turning or inflection points across various markets so I expect this to be a turbulent week. Some of you senior rats recall that every time the Mole travels we seem to experience big moves – so let’s see if my streak continues ;-)


The E-Mini managed to bounce toward its 25-hour SMA where it seems to meet resistance. We don’t have much context on this one right now but the NLSL at 2066.25 should be considered the gate to a significant drop lower. I am keeping my short positions as is and have moved my stop to break/even.


NQ futures look quite a bit more bearish this morning as we’re back near last week’s lows. Keep an eye on this one as it may be our canary in the coal mine in all things equities. However the reason why I titled this post ‘Day Of Truth’ is that the follow up days are the true measure of assessing potential trend changes. This thing has to continue lower today or, as we have seen so often, support will start establishing itself courtesy of a lackluster or sideways session. The onus is now on the bears to lead this lower. Watch the Zero for signs and/or lack of participation in either direction.


Cable – I want to be long above 1.512 – stop below 1.507.


Gold – I’m short here with a stop above 1175. The odds for a bit of whipsaw here are pretty significant which is why I’m only attributing 1/4R.

More 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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Alright – that should keep you guys busy for a while. See you guys later this afternoon.


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.


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