I’m Buying

The intoxicating smell of fear is in the air and I’m ready to buy as we are scraping previous support/resistance level near SPX 2040. Don’t get me wrong – the odds are 50/50 here but it’s the second best opportunity before the bullish case dies for a while. The final line in the sand is 2033.5 after which the bulls will get stomped on by Santa Bear.

The levels are almost identical on the December ES contract but as we’re about to roll over I am grabbing the March contract (ESH5) which is trading near 2037 right now. If we drop through SPX 2035 I’ll be short with a stop above SPX 2040 (on the ES futures equivalent levels).

UPDATE 1:50pm EST: I’ve been parsing around and although there is plenty of movement across the board I’m seeing an increasing number of traps and fake out moves over the past few days. Treacherous tape and on my end I took a few hits this morning (exception being USDCAD and ZB). The way it’s looking the current long position I mentioned above is going to bite the dust shortly as well. Which tells me that it’s time to slow it down and not get caught up in shake out gyrations.

On the other hand this is good news as I was hoping for another leg down and the way it’s looking right now we’re going to get it and then some (i.e. very juicy sell signal on the Zero). I expect to take 1/2R short on stop out near SPX 2035 but leave it at that. FYI the Zero is still showing the old contract which is almost on par with the SPX.

Since I only have one other setup I’ll throw it out for free today. Gold is looking pretty good – bidirectionally. We’ve got an NR4 and IP just below the 100-day SMA. There is no rush of course as I expect a few make-everyone-guess candles before it picks a direction. But the IP at this inflection point is a good basis for getting positioned.

UPDATE CLOSING BELL: Moving stop to ES 2035 (break/even) now. That was quite something! Let’s see if we get continuation lower now.

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Cheers,