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Moment Of Truth
44

Moment Of Truth

by The MoleFebruary 9, 2012

There seems to be a scripted HFT routine dominating the NYSE session as of late. Basically we get a little gap up, followed by a dump and then a recovery and new highs late in the session. Well, it works until it doesn’t – at least the non-confirmation signals on the Zero Lite have been rather valuable in calling out any intra-session sell offs. Otherwise it’s been flat-line all through January and until today – very unusual tape in my recollection.

But as stainless steel rats we are not to care how we got here – what matters the most is that we are now approaching the moment of truth – and indubitably a cluster of stops looming above the two inflection points in close succession. 1356.48 is merely a few handles away and is closely followed by 1370.58 – last year’s top on the SPX. I think the odds of bouncing here are mixed and I would slightly favor the bulls on this one. Why? Let me show you – I have collected a boat load of evidence:

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More charts and cynical 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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The AUD/JPY remains to be a pretty good guide on what to expect on the equities side. And clearly there is little holding it back at this point. Yes, we are now outside both BBs but we may yet close inside the upper 25-day BB line before the end of this session. And even if we get a few days worth reversal – both BBs are pointing up now, indicating that buyers will most likely step in near 82 (i.e. the daily NLSL), should we get a little sell off.

And here’s the USD/JPY – which just pushed up massively putting us nicely into the green, way exceeding my expectations for T1. I would take profits here but keep a few lottery tickets for a push into 78.40. It’s possible we see a reversal here of course, but if we push higher then T2 here we come.

EUR/AUD – señor cabrerra’s favorite pair – by the way he’s been MIA lately. I pointed this one out a few days ago and it’s most definitely trying to paint a floor here. As you know I am waiting for escape velocity once we breach this compression zone. In any case – if it breaches higher that’s also bullish for the EUR and thus bearish for the Dollar, and ergo bullish equities.

A quick update on the EUR/CHF – also looking rather bullish and it’s moving in the right direction after trying to shake off some weak hands yesterday. I think we should be good here until 1.21.

Cable is next – and it’s being denied at its current NLSL. What’s interesting here is that little Net-Lines box which may be good for a few swing trades. If we push above 1.59 then I see you at 1.61. Again, that would be bearish for ole’ bucky and thus give equities a nice tail wind.

USD/CHF – looking bearish as hell here – we just breached the only NLSL on the books and unless this thing reverses quickly I think we are dropping through 0.9. Maybe I should charge you subs in CHF going forward 😉

EUR/JPY is doing what I hoped it would do and that long entry at 101.57 is starting to really pay off now. This is a very bullish looking chart and there’s nothing but air above until 108+. Well, you get the theme by now – bearish for ole’ bucky and thus bullish for equities.

But I’m not done with you just yet – crude is tickling its NLBL and also its psychologically important 100.00 mark – traders like round numbers for some reason. There’s also the 25-day SMA and all that should serve as mucha resistencia. I would be short here but reverse that trade immediately after being stopped out a few ticks above that NLBL. Great setup with minimal risk and nice pay off in both directions, probably within one week as that 25-day BB is narrow.

Copper – also broke above our NLBL and the 100-day BB line resistance, which now will serve as support going forward. And both BBs are starting to point up now – so it’s looking pretty bullish.

Bonds – now hanging on the line of scrimmage – this is a great long trade until it turns into a high yield short trade after a breach of 140’25. Great great setup with minimal risk exposure.

Bottom Line:

Given what’s going on all across the FX side as well as in copper I would be extremely cautious about trading the short side over in equities. Have you noticed that the VIX is creeping up while we push into new highs? Very peculiar and in the past I would have speculated that a reversal is looming ahead. Maybe so – but if it comes then it’ll be a quick shake-out and a nice buying opportunity. But the good news is that we should know for sure in a few handles – once we breach 1370 it’s all over for the bears. Any dips thereafter are mere BTFD setups.

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UPDATE 2:45pm EDT: I’ve got a quick bonus chart for everyone – going to let this one run for free:

Natural gas futures – it’s been a long and painful sell off for NG producers, up to the point where it’s becoming unaffordable to run their wells. As you know I’m not a fundamental trader, thus I don’t care about all the ins and outs of the NG market. What I do care about however is that diagonal that has formed on my chart and currently suggests we may be establishing a floor. Whether or not it’ll take off the very first time around is questionable but it’s a good setup with little risk as we can put our stop just a few handles away.
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.
  • Anonymous

    Hello gentlemen! Miss me? Probably not. 

  • Anonymous

    Who? 🙂
    Glad your baaack!!!

  • Joe_Jones

    Hey AMC. Welcome back. As you can see you didn’t miss much.

  • http://evilspeculator.com molecool

    So all I had to do was to mention you in the post? 😉

  • http://evilspeculator.com molecool

    Bonus chart!! Reload post please.

  • Joe_Jones

    NG set-up looks good

  • Schwerepunkt

    Mole; I saw a guy on CNBC (I know) yesterday who predicted NG could trade as low as $1.50 because of the surplus supply and production from shale. A few companies have started announcing shut-ins for economic reasons, too. 

  • Anonymous

    Mole man. Love the extensive analysis. I am glad I am a sub here. Thx for the hard work!

  • http://thefxspeculator.blogspot.com Onorio

    The break of 1724 on gold will trigger a daily RTV sell signal.

  • Joe_Jones

    Good obs

  • Joe_Jones

    Anybody here still trading equities?

  • http://thefxspeculator.blogspot.com Onorio

    Uncle Ben…

  • Joe_Jones

    LOL! That’s what I thought.

  • Anonymous

    He likes all trash. Everythings on a roll here!

  • Anonymous

    I notice that too. More FX trades are going on. I like it.

  • Anonymous

    must be ESP. 

  • Anonymous

    I see that. But my goodness the roast is what has attracted me to the kitchen..(1350)

  • Joe_Jones

    AMC, I want to change my FX broker. Do you have any recommendation?

  • Anonymous

    Wait for moles report. Hes doing some research for us lazy suckers!

  • Anonymous

    Oanda or MB. Those are the two I use at least. Happy with both. I use TOS for equity trades. Which one are you using now.

  • http://practicalt.blogspot.com/ Darth_Gerb

    just figured you went canoe hunting.
    (insert Deliverance tune)

  • Joe_Jones

    Thanks. I use forextrading dot com

  • Anonymous

    LMAO!

  • Joe_Jones

    I’ve been waiting. I gave up on equities. At least until some sort of normalcy returns to this manipulated market. Plus, Mole’s set-up focus on FX and commodities. 

  • Anonymous

    Yeah.  You shur hav uh puurrdddy mouth.

  • Anonymous

    How are the spreads over there? I currently have terrible spreads for AUD/JPY, so I’m looking for something better.

  • http://evilspeculator.com molecool

    Please wait for my ECN brokers post. I’m very close to wrapping up these partnerships.

  • http://evilspeculator.com molecool

    We have to pick our markets and right now the real fun is on the FX and commodities side. Equities will be back en vogue soon enough.

  • http://evilspeculator.com molecool

    Please wait for my ECN brokers post – I’m planning to put it up next week.

  • http://evilspeculator.com molecool

    Yes, sorry this took so long but will be forthcoming – probably by next week.

  • http://evilspeculator.com molecool

    I do my best – thanks!

  • http://evilspeculator.com molecool

    I know nothing of all this – as you know I’m a technical trader. Maybe – but I don’t know what his time frame is. What I care about is my chart right now today – if we get a spike up then I’ll take profits and do not care if it goes to $1.50 afterwards.

    Having said that – word has it that the NG market has been squeezed lower. In the long term NG cannot trade below producing cost.

  • http://evilspeculator.com molecool

    Cómo no! 🙂

  • Joe_Jones

    Great!

  • Joe_Jones

    What a candle on copper today! And with good volume too.

    Anybody has any thoughts on the short term direction?
    http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&b=5&g=0&id=p86361020191

  • http://practicalt.blogspot.com/ Darth_Gerb


    LA County OKs Hefty Fine For Throwing Football, Frisbee On Beaches

    what?!

    Mole, it’s a sign.
    that or PEAK BEACH.
    😉

  • http://evilspeculator.com molecool

    Oh shit – I really GOT to get out of this f…ing town. Seriously. In Newport Beach you now get a fine for throwing a NYE party. CA has turned into a complete buzzkill zone.

  • http://evilspeculator.com molecool

    Oh and get this: “the ordinance also prohibits digging any hole deeper than 18 inches into the sand except where permission is granted for film and TV production services only.”

  • Fearless

    NEW POST! NEW POST!

  • Anonymous

    Over-regulation seems to be a worldwide phenomenon in the ‘developed’ world, at least
    Is this by design ‘new world order’, or simply a sign of civilisation(s) that have become too long in the tooth?

  • Anonymous

    Watching AUDJPY, Rinse and repeat from last night:)

  • Anonymous

    Nanny state. Just get out of there.

  • Anonymous

    Really appreciate it. Talk about value for money.

  • http://evilspeculator.com molecool

    It’s simple – by criminalizing daily activities you turn citizens into law breakers. Normal strategy of any government and it’s a sign to get out of dodge. As Jefferson said – each society needs a good revolution every 200 years or so.