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Let Me Ride
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Let Me Ride

by The MoleSeptember 4, 2012

Pretty exciting tape today and I’m seeing some very solid setups. No, I’m not kidding – and no I haven’t been snorting bath salts. I took a quick look at the spoos earlier this morning and mentally checked out of equities. Instead my focus is on the currency side as that’s where I see all the action right now. As a matter of fact – we seem to be reaching an inflection point on several fronts – more on that below, assuming of course you have your secret decoder ring handy.

I know you want me to talk about equities anyway, so let’s get this over with. In a nutshell – don’t waste your time! We are remain stuck in Groundhog Day Central and the volume profile cluster highlighted above appears to define our current trading range. The Zero Lite shows almost no participation and until that changes I don’t expect any changes here. Could be a topping process – could be a sideways consolidation.

We all wanted to see the VIX buy signal resolve today but no such luck and we are effectively resetting the count today. Let’s not lose sight of the fact that we could also continue upwards here so I suggest to not jump to any conclusions until we see a bonafide confirmed VIX buy signal.

Alright, now on to the more exciting stuff. The CAD/JPY gave us a nice entry a few sessions ago and is now starting to climb its 25-day SMA. That’s good news and although it’s moving slowly there’s little reason to touch this one right now. She’s telling you ‘let me ride!’

You just can’t beat those classics – I’m looking forward to cranking this one while cruising my convertible up and down Sunset in October when I’m back in L.A. Alright – on to the good stuff – now  we have much work to do on the FX front. And since I’m in a good mood I’ll throw in two commodities setups for good measure:
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More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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USD/CHF continues to tickle its Maginot Line. No bias here – let the SMA sort this one out. I would love to see a decisive breach lower but will take any direction it’ll pick. I know – tough to not being stopped out here a few times but I think the ensuing resolution will be worth the pain.

NZD/USD – approaching support. I want to be long here with a stop below the 100-day SMA. If she breaches I will flip this sucker as there’s nothing but air below. Note that this ups our Maginot play count to 2.

Cable revisiting its NLBL – if you snoozed last weeks’ breach then this is your second chance. Set your stop below the Net-Line and forget about it. I am not interested in a short trade here should I get stopped out.

EUR/USD is increasing our Maginot Line play count to 3. We all want to see a long breach here but once again we should not jump to conclusions. You can be short here if it stays below the line. The falling SMA is working in your favor and Thursday’s low may be used as confirmation.

EUR/AUD – not sure why you guys all keep looking at equities. Now THAT is some directional tape! But the easy ride seems to be over for now and we are slowing down at the 100-day SMA. Which brings our count up to 4. I am short but ready to jump into a long if she decides to continue higher. But boy – that was a beautiful run!

AUD/USD approaching its own 100-day – and that gets us to count 5. I expect support here – even if it’s temporary.

ZN – the 10-year treasury futures contract. It’s back at its own 100-day SMA and this offers a great entry with a cheap stop. I have no bias here but would love to see the shorts get burned for a little.

And then there’s sugar which at the point of this writing is right at its NLSL. Great long entry but of course by the time you’re reading this it could have moved on. A breach through the NLSL would most likely lead us down to 131’305ish.

Bottom Line: Once again the real action is on the currency side – even if you are trading equities only I recommend you keep an eye on the pairs posted above. Whichever direction currencies go will eventually be followed on the equities side – much bigger and smarter market. Whatever you do – keep it frosty and don’t have an opinion. That policy has served us well throughout this brutal summer and what hasn’t killed us made us stronger! 😉

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Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Ashish Agarwal

    Looks like a hammer today on S&P, Nasdaq Daily chart- now that is bullish

  • Ashish Agarwal

    oops- thats a Bullish engulfing on nasdaq

  • amokta

    Ok, what happened?

  • Ashish Agarwal

    who cares.. 🙂 .. though i do see lot of ending diagonals on currencies and major indices.. along with Vix at lows.. maybe ECB would… 🙂

  • Skynard

    /DX just ran stops both directions, move coming. /ES just filled the gap and Aussie keeps printing new lows:)

  • StrikeFirst

    I made the mistake of turning on the news.

    The headline was “A Tuesday Turnaround”.

    So now you know!

    😉

  • amokta

    Looks like someone dropped a hammer on the permabears collective heads 🙂

  • BobbyLow

    Who knew they were talking about the stock market 40+ years into the future?

    http://www.youtube.com/watch?v=r0yXqU-w9U0

  • bdoone

    BB’s getting awful tight!

  • Curiousmind3861

    $VIX actually filled the morning gap and closed inside BB, so we don’t even get step 1 today, interesting!!

  • Darth_Gerb

    reservoir tip

  • http://evilspeculator.com molecool

    Yupp… I am very much looking forward to fall as this summer has been a complete bust on the equities side.

  • http://evilspeculator.com molecool

    What’s even more ridiculous is that we were painting VIX 13.3 20 ES handles ago and today we almost touched 19. 20 ES handles lower and we are 30% higher in volatility. 

  • Darth_Gerb

    oil.
    http://s9.postimage.org/7dp33gwpb/temp1.png 

    best to say I dunno. the weekly price has hovered around the 30sma.
    94 is a technical spot from last Dec, and I believe it was touched last week, and gobbled up.
    make’s no matter. best to recognize on the fence behavior, and plan accordingly.
    -DG

  • Curiousmind3861

    Wow EUR and AUD just fell out of bed!!

  • Curiousmind3861

    Yeah, 20 ES handles and AUDUSD is already down 300+ pips from the high, if you look at AUDCAD, it is 5oo+ pips, unbelievable. 

  • BobbyLow

    Could be dangerous territory here as in slice and dice kind.

    On the daily, the 20 EMA has been steadily increasing while BB’s are compressing.  

    This is all happening while we have an over supply of oil and gasoline is creeping closer and closer to $4.00.  This situation could be exacerbated even more as fall brings a seasonal changeover.   

    Over the last 15 trading days price has been basically flat so I’m currently neutral.   

    Soooooo, let’s see what tomorrow brings.  

  • Darth_Gerb

    yes.
    If oil were $10 higher, past history shows the risk:reward.
    but it’s not currently.
    http://stockcharts.com/h-sc/ui?s=$BPENER&p=D&yr=2&mn=0&dy=0&id=p50584243982 

  • Skynard

    A break of 80 could be catastrophic. (j/k) If 80 is broken the next stop is 79 (50%). 

  • antonio nab

    Those watching AUD;
    Australia’s economy appears to be struggling.
    Iron Ore a falling knife at present which will hit TOT.
    Interest rates are bound to come down as a result to help.
    Surely AUD has peaked (unless China performs another massive stimulus resulting in big bounce in commodity prices) and at some point the first stop for AUD/USD will be in the 90’s.
    Any thoughts?

  • gsavli

    Storm comming up. This market is devoid of volume and there have already been 20 or so days up here so far – up and down in a flat channel. Last time the distribution went on for a very long time, DAX fell from 7300 to 4800 in a few days. We still remember last year, right – distribution went on for 2 months or so, before markets finally collapsed.

    Of course, I am presuming this is distribution, not some kind of pitstop on the way higher.

    And of course, I might be wrong.

  • Skynard

    Definitely at a crossroad, EURAUD at target to the upside 1.233 (100sma) and /6A to the downside 1.016 (100sma).

  • Schwerepunkt

    It’s a twist day. ~$5bn in 10-years will be purchased by 11am. 

  • MrMargin
  • bdoone

    I was looking at that also. If pattern holds, then short-term bullish (Day’s 1 & 4) then bearish?
    Be nice to get a retest of highs before a drop…use tomorrows ECB & Fri. employment as bull food/bear trap material then take ‘er down. 

  • MrMargin

    That appears to be the most likely scenario while the long term data still shows good odds of a new recovery high. I’m thinking some downside in September and then the start of the next major leg up in Santa season. That at least would be the best fit for the current data.

  • fuw

    IF I was playing currencies I would definately look at the 4hr eur/jpy for a breakout (in either direction). Really tight and well defined range. Personally, I’m only looking at this for stockmarket clues.

  • Skynard

    Very nice to see crude dump out again, going lower. Screwed up and did not take profit on EURUSD and got stopped out. Trying another short at resistance.

  • Schwerepunkt

    Zombie walking . . . even tight ID’s wont’ resolve in this environment.

  • http://iberianviews.blogspot.com/ catracho

    yes been watching that and playing the range small..but a break above 99.10 could see another decent leg up, and below 97.8…could see down trend resume..

    FWIW GBPJPY also could be interesting…maybe a sign that BOJ may be soon to do something like they did at end of last year..

  • http://iberianviews.blogspot.com/ catracho

    daily chart shows tight range..MACD could be turning down..but could just as easily resume up..

  • Darth_Gerb
  • BobbyLow

    It’s Dead Jim.

    Its Brain is gone!

    Too much HFT I guess.   🙂

    RIP

  • http://evilspeculator.com molecool

    “Personally, I’m only looking at this for stockmarket clues.”

    I’m glad you guys are starting to do this – have been preaching this for years.

  • MrMargin

    Some coiling up going on on the 5 min ES chart. A decisive break of either 1407 or 1400 should give us at least some kind of movement.

  • BobbyLow

    Hey Skynard,

    You might have noticed but almost 10,000 Contracts of /CL got dumped at the 9:40 AM 5 Minute candle and price took a pretty good hit.  

    But since 11:00 AM, there has been a steady march upward on “normal” volume to where price is back to where it was before the dump.

    Slice and dice indeed.  

  • AMCabrera

    hello all, not much happened I’ve pulled my shorts in the aud/usd and clearing all orders. I have something for you too chew on. I have noticed something. I’ve bought some too. It is the EUR/CHF. Yes I know but something strange is happening in that currency pair. Very eager shorts right above. 

  • http://evilspeculator.com molecool

    I like his work but I think he’s often missing context. For instance, he uses measures like SMAs and discrepancies with other indexes. I don’t have access to his engine but if I did then I would include more context like trading range, volatility, perhaps even volatility of volatility. Just some thoughts… you always need to make sure you are comparing apples to apples.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤  S H A K E   N ¤º°¨ 
    ¸„ø¤º° B A K E !“°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

    And I better see some f…ing comments on my charts, people!! 😛

  • Darth_Gerb