Scaring The Children

The fear is literally oozing out of my charts right now. Hedge fund redemptions are on the increase, various funds are closing, banks are allegedly buying puts on other banks. Retail has been heading to the exits a long time ago, even here in the comment section it’s been suspiciously quiet in the past few weeks.

And who could blame you guys? After all we’ve got Mr. VIX slowly creeping higher and momo divergences are popping up everywhere. The Dollar is taking it up the rear and the Euro is back with a vengeance squeezing the shorts.

Here for example is the NYA50/NYA200 ratio. Boy, that is one scary chart!

VXV:VIX ratio – touched the upper diagonal as expected. So we are heading for a Santa crash landing, right? If everyone is buying puts here then should we as well?

Well, if you ask me – and if you’re reading this then you do – this all looks waay too easy. Since when do markets follow the opinions of the majority? Remember the old adage: What everyone knows is not worth knowing. Don’t get me wrong, technically speaking there aren’t any reasons to be long right now – this market looks like Dr. Seuss’ worst nightmare. But in terms of the timing and the overall mood among market participants and analysts I think we should take a wait & see approach right now. Hear me out:

IF we’re indeed getting Soylent Red then we’re a bit late to bulk up on short positions or puts anyway. We would have to wait for the obligatory first bounce higher which admittedly would bring us near to where we are right now but most likely with a lower VIX and technical context to aid us in getting positioned.

Soylent Orange would be my favorite scenario – meaning support near the ES 2k mark followed by a Santa squeeze and then “after me the deluge.” Whether or not we’re going to get that one I cannot promise you but I don’t think the odds are that lousy either. After all, when everyone is bearish is usually advisable to cash out and head for the hills.

Alright, here’s the current context. I see possible support between ES 2012 and 2000. The latter is courtesy of the weekly panel which dons a NLSL a tick below it – and clearly it’s a psychologically important number the bulls may want to hold heading into Christmas.

USD/JPY is looking juicy here as it’s back to an old horizontal support/resistance line. 1/4R only here as we don’t have much other context. Plus I’ve got another JPY pair in the running…

More setups below the fold – please join me in the lair:

It's not too late - learn how to consistently trade without worrying about the news, the clickbait, the daily drama and misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

Cheers,