I Smell A Trap

Clearly I shouldn’t be the one complaining as equities have been sticking to my script so far. Unfortunately for you however I a) love to complain and b) am seeing irregularities that suggest we may be looking at a bounce produced by distribution.

Or maybe I’m just being paranoid. And if you got a problem with that I refer you to the late Andy Grove.

Great entry obviously and my stop has now advanced to break even. Technically speaking we are now looking at two major hurdles here.

The first one is obviously the top of the current range and the second is the ES 2700 mark which also happens to be where the 100-day SMA still manages to point upward.

Those same levels are mirrored by our E-Mini volume profile chart, so I think we have high quality technical evidence here.

What does not chime with me to the slightest however is the UVOL/DVOL ratio which has been lagging the current advance. As you can see in the past two sessions DVOL has been outrunning UVOL. Not good… not good at all….

Plus SPX:VIX continues to lag the SPX and that’s not good either.

Now I’m positioned well for next week which is supposed to be the most bullish week of the year statistically speaking. My stop is at break/even and if we drop today then I’ll expect to get out clean.

But the discrepancies highlighted above compel me to NOT add additional long exposure at this point. Perhaps next week when I see a bit more order in my charting universe.

I didn’t take that entry on Bitcoin shown above (I missed it) but thought it would be educational to feature it today. That exhaustion spike recovered pretty quickly and once it managed to push > a three candle high (i.e. a Net-Line Buy Level or NLBL) chances of continuation were high.

It’s basically one of those situations where the bears are salivating at getting a chance to trade the reversal but are quickly steamrolled by buying pressure.

Now if you’re a HODLer and the above went straight over your head then this may make more sense to you:

Alright, some crucial perspectives on precious metals below the fold:

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That’s it for this week – see you guys on Monday!