Tape Banging

Most of the time writing about the market is fun for me – I look across my ten trading screens and there is always something interesting to bring to your attention. Then there are days like today where it’s a bit of a chore. I’m trying hard as I owe it to you guys but if it was just for me in the evil lair I’d probably take this day off.

Reason being? What I’m seeing today is nothing but good ole’ tape banging. The /ES is melting higher and higher despite extreme readings on all my short term measures. And not since just now – since about 1156 – twelve handles ago. It’s nothing but one systematic stop run and it’s happening without participation. Heck, I had to magnify the Zero Lite chart just so we could see if there’s a signal. The boyz are at it again – nothing is ever learned and last Thursday is now long forgotten.

Unfortunately for the bears there is an ominous sign on the horizon:

That’s right – unless the floor gives way in the next two hours we are looking at a bonafide VIX buy signal here. Today’s close below yesterday’s would give us final confirmation. Now, this does not mean Soylent Blue and Orange (see yesterday’s post) are dead but the odds are now slowly shifting towards Soylent Green.

Why do I still give Blue and Orange any probability? Not to cover my ass – no – but because of the nature of today’s advance. I was bitching and complaining about this stop run in my intro as it’s annoying as hell when price completely ignores technical analysis that is usually 90% spot on. But if I ignore my emotions for a second it becomes clear that tape banging events like this are unsustainable and will incur a correction.

Oh yeah – and then there is this chart. Equity traders are saying ‘oooh yeah’ – meanwhile copper is saying the opposite. It’s not a huge drop but it’s a non-confirmation.

As long as 1178 (again, see yesterday’s post) is not taken out Orange and Blue still stand a very reasonable chance. But that VIX buy signal is making me very nervous. In the past year all occurances during which we saw contradicting indicators it wound up favoring the bulls. If this is truly Primary {3} then the tape needs to prove it to us. Although eternal hope swells high right after bear market corrections the down trend needs to establish itself with some veracity now – if we keep bumbling about like in the past thirteen months it will only lead to more sustained moves up – manipulated or not. That thought applies to Soylent Blue in particular – an Intermediate (3) of Primary {3} should basically completely anihilate any bulls. What we are seeing today is ‘business as usual’ and a VIX buy signal. Major moves down happen despite such readings – given – but it’s got to happen quite soon. Again, 1178 is where the odds start to shift – even though Soylent Blue technically permits a retracement to very near the very top.

I am hanging on to my long term puts unless the market tells me otherwise. I am comfortable with my short exposure here and will only add short positions if we make new highs for the year.

Hope this helps navigate today’s gyrations. I will keep digging for more evidence and report back.

UPDATE 2:40pm EDT: Here is a chart I wish I had looked at two hours ago:

Quite interesting and more evidence that tape banging was in the works. Sorry guys – I can’t look at everything at the same time – blogging does take its toll in regards to trading and monitoring. Which is why I present all my charts here on a continuous basis. If we all follow them we can alert each other for the benefit of the entire community.

UPDATE 3:16pm EDT: Things are getting really interesting now. Gold just popped big time to new all time highs:

The gold bugs are basically calling the EU’s and ECB’s bluff. Nice…

UPDATE 4:02pm EDT: Mr. VIX closed at 28.17 which gives us an official bonafide VIX buy signal as this is the confirmation signal needed according to my textbook.

Cheers,

Mole