Idiot Bears

nd here we are again – the whole concept of a subtle reversal without triggering a snap back is again lost on those fucking idiot bears. There is so much bearish mojo pent-up at this point that the grizzlies have to shoot their entire load every time they see a few red candles in a dress. Not a smart play and there will be consequences. I’m sure ZH is having a field day with this and the bears are again expecting to find themselves at the gates of P3.

Alright, we all know where this is heading – don’t we?
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Look – a 30% rise in volatility (including an opening gap which nobody could catch after a holiday weekend) will simply not remain unanswered. I checked and guess where we are topping out right now? At the 3.0 standard deviation. What do you guys think is going to happen – we’re going straight to the 4.0 StDev? Maybe – and maybe pigs can fly.

Meanwhile down in the Zero cave the strongest signal we got on the ZL was a -1.0 which is pitiful considering that we dropped over 30 handles since last Friday. I am not liking this the least bit and do not recommend short positions right here.

And here is Scott’s take on the situation. I keep saying that he’s my brother from another mother for a reason. Without reading my post his was titled:

Don’t Be Stupid!

Its official bear celebration day. The NQ top picking setup I posted last week seems to have done ok 😉

Now, the official evil speculator message at the Tuesday close is DONT BE STUPID. Dont get short yet!

What we are looking for to get short safely in this market
1) A drop which qualitatively FEELS DIFFERENT, that makes you WISH YOU WERE SHORT. I’m pretty sure today qualifies, right?
2) A retest of the high which fails to beat the old high

We have dip buyers at every step of the way through this rally. What we want to see is that the dip buyers, even POMO powered, cannot push it to new highs. At that point the fix is in.

Now that big red candle today is a game changer, no doubt. Its hovering around the 20 EMA, which has in the past offered support. It could fall for a few more days, but odds favour a bounce tomorrow. If you got short at the right time, I’d bank at least partial profits, and try for a better entry higher up on a retest.

The currencies got whipsawed around like crazy intraday, and thats the fly in the ointment right here. Euro and Yen shouldnt be whipped up and down like that, unless we are in the process of some kind of trend change. I dont see an edge in either of the majors right now.

The CAD setup I posted yesterday has 1R in profits on the first day. If you took it, my advice is to move stop to breakeven and take a free spin o the wheel 🙂

Now the setup I really like today is in the metals. I jumped the gun on this, taking a meaty slice of June 1375 Gold puts yesterday (during the morning bounce)

I like it in gold, Mole has his reasons for silver. Its the same basic thing. I’m going to post it in Silver. You know how I feel about this stuff, over time selling weakness and buying strength works out best, but in this situation the Gold/Silver ratio makes an argument for taking the trade in Silver.

The setup is one I havent covered.

GAP OPEN SELL

1) Opens above the previous close
2) Makes a higher high
3) Setup complete. Sell ONLY if it breaks the daily low

The rationale is that a big gap up on Monday morning can spook sidelines bulls into blowing their load. This creates a temporary situation where the usual dip buyers arent there, because they have already bought. In this situation a little weakness can set off a cascade of weakness.