The Dirty Dozen

As equities march relentlessly higher I must confess that even I am a bit perplexed by the imperviousness to gravity we are currently witnessing. Now I am usually the first one to rub it into your faces that picking tops is a foolish endeavor and to only let price be our guide. However unless there’s a sudden sell off toward the close we are most likely going to count eleven consecutive higher candles on the Nasdaq-100 today. Which means we are now pushing into altitudes with rather low oxygen levels and I’m starting to feel a bit queazy.

To be sure I went through each candle and verified that it wasn’t just a positive real candle body but a higher close. I don’t know what the statistical odds are for a 12th or 13th day higher but it was outside my comfort zone yesterday already. So I definitely don’t want to be long here and since there are insufficient bearish signals in sight I also cannot be short right now. Of course if you’re a trend trader and have been long since who knows when then there is no reason for you to cut your position. Let price guide your way as usual.

NYSE advancing/declining issue ratio – continuing on a downside course, however to be fair I should point out that the VIX:VXO and VXV:VIX ratios have normalized since yesterday.

I didn’t see much on the futures side today so I decided to dig around stock symbols. Here’s a great find – BIDU painting an inside day right after a shooting star, plus it’s happening near its 100-day SMA. Great context and I would take either of the two IP triggers tomorrow. Of course you could just go long on a breach of that 100-day SMA – or be short until it happens with a stop below. Fantabulous setup and plenty of context to boot.

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Cheers,