I suggest extreme caution – we are seeing toppy looking tape but since we are still dealing with conflicting evidence this may be nothing but a sideways correction. The main problem is a lack of context – our daily NLSL on the E-Mini is about to expire and most likely we’re looking at a failed VIX buy signal today.
The recent gyrations can be easily interpreted in favor of a bullish or bearish outlook. When faced with lack of information/intelligence it’s human nature to resort to guesswork or gut feelings during such times and you know where that usually leads. For more meat on the subject I strongly recommend you catch up on my post on market weather, you haven’t already.
It is my not so humble opinion that we are currently in a limbo period within a still up-trending higher degree advance. Until we collect more bearish evidence I suggest you simply stay out of equities and keep yourself entertained with minimal pertinent exposure.
Our volume profile map shows us that there’s no ‘there’ there – a complete lack of context. As we are heading up we are gaining more volume but we are in pretty uncharted territory and that is often exploited by large market participants. It’s not unusual to see the tape run higher on fumes playing on the frustrations of over-eager hobby bears.
A little glimmer of hope on the horizon as we are most likely going to paint an inside day on the spoos today. A breach of either side may be worth a small position but I would play it cautiously until we see more context. In the past seven sessions we have effectively gone nowhere fast.
The Dollar is showing strength but is running into resistance right where it counts – and by that I mean that diagonal resistance line that’s now lining up with the 100-day SMA as well as a daily NLBL. There’s also the 25-week SMA above and that has been a wall for months now. I would remain short ole’ bucky until we see a breach of the 80 mark. Yeah, maybe if pigs learn to fly.
BIDU – quite a sell off yesterday and it’s being followed by an inside day. I think I’ll grab a few positions tomorrow if we get a clean breach during the session.
Not much else on my plate today – see you all tomorrow morning bright eyed and busy tailed.
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