Shake N’ Bake!

Not much to report today – we’ve got a typical ramp and yawn in the works here. Highlight of the day so far was the cattle prod up the bears’ consolidated rectums at the open followed by a quick gap fill to shake out whoever was masochistic enough to chase that candle up. Of course, if you paid attention in evil 101 class yesterday then you went short at the touch of the 1329 mark with a stop only a few ticks away. The rest, as they say, is history. That volume hole truly is the gift that keeps on giving. Shake ‘N Bake!

Anyway, I’ll be brief today as I don’t see many setups of note – too much noise in the tape right now:

A quick revisit of our volume profile chart – rather obvious that the bulls got stopped in their track right at the volume hole today. But that does not mean it’s all over – usually the first attempt fails and I don’t expect this to be the last time we’ll see them pounce at it.

If you are a sub then you probably remember my P&F chart. Last week, while we were still scraping the floor, I was suggesting that we would need a push above SPX 1295 for a low pole reversal. Once we got that plus a bonafide VIX buy signal the die for a push higher was pretty much cast (Iacta alea est – for you Latin lovers – no not those, the language). What matters now is a breach or failure of SPX 1330. Even if we see a quick washout afterward I would propose that the bulls are running the tape again.

It’s time to take profits on CAD/JPY – that was a nice inside day candle and it did us the courtesy of proceeding straight to target. Why can’t other FX pairs be so well behaved?

It’s possible that it’ll pull a EUR/JPY on us and just keep on pushing yes but I would still take partial profits here and only go in if we see a close above that NLBL. Also note that we’re also right at the 25-day SMA here, thus increasing the chances that we’ll hit a bit of resistance here. So maybe the smart trade is to wait for a breach and a re-test of new established support.

Similar story actually on ZB – the 30-year treasury futures – but in the inverse. We are at the daily NLSL but that 25-day SMA is rapidly pushing higher and will catch up with prices in a day or two. So again the smart trader may wait for a breach below followed by a bounce at the 25-day SMA and then a last kiss goodbye back at the NLSL. Of course it may just run away from us but when it comes to trading the tape there are never any guarantees. And you’ll see that letting good trades come to you instead of chasing them pays off over the long term. After all – we do know an easy trade when we see them – don’t we? 😉

Cheers,