Unreal As In Awesome!

I originally planned on posting a wrap up video of today’s session but due to my early morning network issues I don’t have enough screen grabs to make it worth our while. Which leaves me with two charts you absolutely have to see as we are sitting on one juicy setup today. The first one I’ll share with everyone – the second and much more intriguing one I reserve for my intrepid subs:

At the danger of turning into Obvious Mole – yes, per my charts Mr. VIX closed outside the lower BB today. Depending on your settings you may see a close inside but does it really matter when volatility dropped almost 25% in one trading week? So, yes, we are officially in step one of a VIX sell signal (noobs – that’s relative to equities) – check out the cheat sheet if you have an confusions as to the implications and how to get positioned. Please remember that a VIX Sell signal is not final until the third candle confirms it and even then prices may not respond for a few days.

Now let’s get to the good stuff – as a matter of fact this one is so hot I wonder if I need a U.S.C. 2257 disclaimer as it may qualify as chart p0rn for stainless steel rats. Please step into my dusty lair but make sure no young children or animals are present – I also suggest you do not look at it directly – use protective goggles:

And here it is – boy, what a sight to take in, especially given the possibility of a VIX sell signal. Not only do we have an inside day AND a possible RTV Sell setup. No, we also have a record spike on the MMMR – one of magnitude I have not seen in the past 20 years (I did check the weekly chart I posted yesterday).

Bottom Line: I can never promise that a setup will work as expected but we are all in the probability/odds business. This is a prime setup I cannot afford NOT to take and obviously you can structure your stops seven ways into Sunday. You can go short on a breach of today’s lows with a stop above today’s highs. If I’m not mistaken that would also qualify as a RTV sell entry – again check the cheat sheet for the exact rules. And no, I would not be interested in a long trade here – the odds at this point do suggest at minimum that we’ll get some monkey business ahead of a spike higher.

Tips: Watch the AUD/JPY overnight – the spoos have been gunning higher in AH trading but I don’t think they can be trusted right now.

Meanwhile the AUD/JPY is looking weak and is nearing support on the hourly panel. What happens there will be crucial for this setup and I expect it to affect the spoos ahead of tomorrow’s open. FYI – the setup is valid on the SPX (the spoos have already breached today’s highs), so watch the futures overnight and make sure to consider fair value with is currently at ~6.20. Which means you’d have to see a breach of 1360.25 on the spoos to trigger a sell signal before tomorrow’s NYSE session.

Happy hunting – fade your emotions – keep it small – and keep it clean.

Cheers,