Falling Swords

The best advice I can offer you guys right now is to not resort to guesswork when it comes to when we’ll see a low. We are sailing in dangerous waters and if you’re not already short then simply wait it out – get used to the idea that you missed the boat. Anything can happen down here and it will!

Most importantly don’t fall prey to mental masturbation such as this. So it’s Ebola that’s bringing down the market now? Is that a fact? It couldn’t possibly have anything to do with the fact that the Fed’s money pump is slowly drying up? Or that we’ve been in a raging bull market for five years and counting which is begging for a correction?

It’s strange how the financial media continues to draw correlations between events and market cycles, even if they are disproven over and over again. And even IF those events were the actual cause – it’s useless to follow them as there is no chance of exploiting the information. How many people went long crude thinking that Russian supply disruptions in Europe would swing prices higher? And how exactly has that been working out for you?

Forget about the news – just follow the charts – they tell us all we need to know.

Or NOT. If you recall my write up on market periods – we are in the midst of a rocket right now and there’s no telling when it’ll end. The wave wankers have tried over and over to employ all kinds of measures to project when a ‘third wave’ may end. The last time I tried that was in early 2009 when everyone was looking far below 666 based on their careful counts.

The simple truth is that you’ll never know until after the fact – so stop trying to guess. Don’t think you are smarter than the millions of participants who are looking at the very same chart right now. We may bounce here today and hold the 25-week BB, or we could drop like a rock here and not stop until near 1700. I don’t know – but one think I do know for sure:

Never ever attempt to step underneath a falling sword.

The one chart that’s been a thorn in my eye is this one – the VIX:VXO. It keeps pointing up and I really don’t know why. But we are in rough waters as I said and perhaps whoever is pricing those ATM options is tripping over their own hubris. Or they know something I don’t. Whatever it is – when things don’t make sense then you simply wait it out. We’ve done well this year – no sense in getting caught up in all the excitement (i.e. panic) and resort to forcing the issue. That rarely results in profitable trades.

Gold is looking pretty interesting right now as it’s fighting to overcome triple resistance. My current entry is betting that it’s going to fail but a few ticks higher above 1230 I’ll be long. Dynamics can shift quickly here and this is an important inflection point – which makes for good entries.

A few more ST charts below the fold:

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You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,