The Squeeze Is On!

And as we all suspected – the squeeze in equities is officially on. In a little over a session we went from dangling by a thread near lows to threatening a daily NLBL. Unfortunately it was not a setup we felt comfortable taking. The tell tale signs were there and we reported on them – in particular divergences on the NYSE volume ratios plus a monthly NLSL had been touched and reverted. However Fed announcements are times when I stand aside – I’ve been through this game in 2007/8 a few times and then swore to stick with the easy tape.


I did try some lottery tickets near the very lows but unfortunately got stopped out on that last late day drop on Tuesday. Yes it sucks but that’s how it goes. And you know the saying by now: Better wishing to be in a trade than wishing to be out of one.

Look at that NLBL on the daily panel – if it can be conquered today then the bulls are in much better shape. Not out of the woods just yet but they’ll have a pretty good chance to at least fight their way toward 2050. Let’s see if we can get there.


Opposite situation on the bond side and it’s quite possible we’ll slide off the plate here. That hourly Bollinger is clearly threatened and if we don’t see green here soon then momentum will start kicking in.


The Dollar is scraping new highs – no setup here but it’s pure chart p0rn for this lowly expat :-)


I did however get to keep my crude longs. Of course those haven’t budged very much – just my luck ;-)

But they are still looking in good shape and I have now moved my stop to the break/even spot near 56.

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


Post Fed Musings

A lot of soft language came out of the Federal Reserve today, as expected actually. You will probably see a lot of nit picking regarding the actual statements presented by Yellen today, i.e. what does ‘transitory’ mean or how being ‘patient’ exactly chimes with the interest hike schedule set for next year. That’s all a lot of huey and I suggest you quite wasting your time interpreting FOMC tea leafs as the Mole is going to break it down for you:

  • We have seen crude prices being cut in half in less than half a year. Do you really think that was coincidence and natural market forces were at work? This was nothing but an economic hit job taken out on Putin.
  • They’ve now managed to not only cut Russia’s core energy revenues by half but they also managed to blow up the Ruble in the process, up to the point where trading was suspended yesterday.
  • And that certainly got Putin’s attention! Imagine the scene where his Swiss bankers very politely explain that Russia’s Ruble denominated assets are no longer margin collateral for trades or able to be used for wire transfers out of the country. I mean you’d have to think some of the top guys over there will be facing margin calls over long bets on western exchanges or USD denominated debt secured by worthless RUB assets. Ouch.
  • This is all part of what the British once referred to as the ‘Great Game’ and there was simply no way that our hapless Fed sock puppet Yellen was about to get in the way of the concerted bitch slapping of Putin initiated by the State Department.
  • Bottom line is that most likely we won’t see any changes to the interest rate hike schedule outlined for 2015 – it will more or less proceed as expected. However by generating doubt and confusion today it left enough space for imagination and thus keep the thumb screws on Putin.

And that’s how the game is being played, ratlings! I only feel bad for all those Russians who are caught in the middle – they are an acquired taste but I happen to really like the Russian people. You can say a lot about them but they are not hypocrites and they mean business – that means a lot in my book.

Anyway this battle clearly went to Obama but winning the war is completely different story. See, as a born German there’s one lesson they drilled into our heads when we were young: Never ever under estimate the Russian bear. Those guys are used to dealing with hardship and Putin’s popularity is as high as ever – the current situation may even give it a little boost. In the long term the Russians are going to dig themselves out of the current hole but this economic hit job orchestrated by the West (i.e. the U.S. and it’s Western alleys) will not be forgotten for a very long long time. I never understood why the West is so hellbent on making an enemy out of Putin.


But then again I’m a very small player and whoever is pulling the strings is fully aware of the points I’m highlighting here. I just hope the situation doesn’t escalate. The world is better off without a Russian nation thrown into  a deep recession, alienated from prior economic partners, and feeling threatened militarily. That could quickly get out of hand – black swan anyone? Never ever under estimate the unexpected consequences of your actions.


So real quick a few snapshots of some key markets. The Dollar most definitely positive here and we may just hold that 25-day SMA now. Let’s see what tomorrow brings but I’m pretty stoked about this one.


The spoos still bumbling about below their 100-hour SMA. We are at the 100-day but this candle is not exactly looking bearish. So there is potential for more ugliness.


Which is a bit surprising as we had solid buying mojo today – look here the UVOL/DVOL plots – green and very organized it seems. So maybe this is a last drop before it’s being punched higher?


I wish I could offer a definitive yay or nay here – the advancing/declining NYSE ratios also look positive. So I would have to conclude that we have a reasonable chance for at least an attempt to push this puppy higher. No setup opportunities though here. I tried a lottery ticket long yesterday and quite frankly this is not important enough for me to throw any more capital into this volatile tape.

Some more thoughts on crude below for my intrepid subs:

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Strap On Your Helmets

Fasten your seat belts and strap on your trading helmets – it’s going to be a rough day! I was chatting with Scott this morning and his take on the whole Ruble/Fed/Crude situation was “Anything and everything can happen today.” Exactly right but that makes for shabby blog posts, so let me try to shed at least a little light on what we’re heading into:


I’m actually considering to get myself one of those predator helmets – super bad ass. Would look pretty silly on the little moto I’ve been using here in Valencia. Perhaps better to get a Ducati first. No worries – very safe bike as Mrs. Evil would never let me ride it – she has seen the stunts I pull in traffic.


Okay, this is the laundry list of event risk we’re up against today, starting at 8:30am with the CPI numbers for November. I don’t think it’s going to matter as much as the Fed interest rate decision. Don’t expect much movement on the equities side until Yellen’s announcement.


So far we’ve seen nothing but lower highs and lower lows, with two attempts to overcome the 100-hour SMA. The game has been played however and today’s resolution will come after 2:30pm – brutal and inflicting as much damage as possible.

Frankly speaking – as tantalizing as the situation may be here, it’s a very tough trade unless you are on the inside. It’s a coin flip and it’s fine to take out a lottery ticket unless you risk more than 1R. Options are impossible here given where we already are on the VIX front – so screw the vega play (unless you’re selling but let’s not go there). I’m going to stay out of this one – sorry – cyclone level conditions like these are beyond my pay grade.


EUR/USD is the only setup I like this morning but given what’s going on I’m only in it for 1/3R – AND I’m hoping to be stopped out as the rising Euro is a big thorn in this expat’s eye. ISL actually below 1.242 – I changed my mind after realizing the flood of events we’re facing today. So it’s really just a teeny weeny play and chances are it’s going to get shaken out.

Bottom Line: Plenty of excitement in the works today but very little entry opportunities. I’m keeping a bucket of popcorn ready and see how it resolves. Forget about support levels on the equities side – if 1955 goes for whatever reason today then we’re dropping to 1900 like a rock. Similarly, if rates are being kept lower than anticipated then we should see a massive jump. Word on the street says that Yellen is not going to mess with the state’s department’s plan to declaw Putin once and for all. But I’m not going to bet money on macro economics/politics, leaving that for people smarter (and more connected) than me.

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    1. The Squeeze Is On!
    2. Post Fed Musings
    3. Strap On Your Helmets
    4. When There’s Blood In The Streets
    5. Monthly Support
    6. Thrashed
    7. Under The Weather
    8. Not A Game For Adrenaline Junkies
    9. I’m Buying
    10. Forex Wednesday Morning Briefing