All Well On The QE Front

For over a year now I have been telling my stainless steel rats that the real deal is happening over on the FX side. The ones amongst you who have heeded my suggestions have been banking coin and most everyone else is probably long gone licking their wounds or is secretly reading this blog in a cramped cubicle at some day job. Boss alert!!! Yes, the market is a cruel mistress but she happens to be extremely loyal to the forces of reality. As a trader you have a choice to make – every single day – you either trade the tape you are given or the tape you want to have. Hey, I don’t make the tape – I just report it – so please don’t shoot the messenger – I’m trying to help.

If you are sitting behind some sucky retail data feed you may be led to believe that the 2010 highs are still standing. However both DTN and Bloomberg are in sync showing new highs at 1370.89 – it is done and the bears will have to face a new reality. There’s that word again – yes, look it up – in an election year run up the MSM has done its very best to obfuscate its meaning behind political correctness, red herrings, socialism for banksters, and quantitative easing on an unprecedented scale. Which brings me to today’s subject.

That’s right – all is well on the QE front. The length of the diagonal support line on the NYSE A/D has now exceeded that of 2011 and thus far there’s no end in sight. As long as Banana Ben keeps those liquidity pumps in overdrive expect higher prices in equities – and also of course when filling up your oversized SUV at the pump.

The type of tape we are seeing may confuse and frustrate the majority of participants but to me it has been crystal clear for a while now. I have continuously pointed to my volume profile chart when making the point that nobody really wants to be long or short right now. As being short is really not an option anymore for anyone but masochistic permabear disciples equity traders cautiously proceed forward – climbing the wall of worry as you will. There is no volume above 1370 and the only way to produce some is to engender spikes like the one we saw at today’s peak. Followed by a shake out of some weak handed piggies – BTFD – lather, rinse, repeat. That’s how the game is played – better wise up – or if you at least want to slide along by the seats of your pants you may consider a Gold subscription.

Speaking of which – I have quite a bit more for the subs – please step into my poorly decorated lair:

The Ozzi/Yen got a little bit ahead of itself today and we are currently in shake out mode. But I don’t yet see anything bearish on the horizon and those BBs continue to climb.

We finally got a decent red candle on the Dollar/Yen – this was getting ridiculous. But you may want to print this chart and pin it on your wall for next time you think that a trend is done just because it’s been going up for a while. Anyway, if you are considering a BTFD trade then watch that 80.12 NLSL which should pose some resistance. If not then we’ll go to 79.60.

You took profits on the Euro/Yen last Friday as suggested – right? I certainly hope so or you may be feeling a bit nauseous today. Again, BTFD aficionados may try their luck at 107.18 – similar setup and I do like the 100-hour SMA nearby – very convenient.

Watch this DX chart – we are now clinging to 78.39 and if that gives there’s nothing but air below until 76.0 on the daily panel – please make sure to read my weekend musings on the subject.

The weekly/monthly panels look a lot more insidious as we could easily make our way back to 76.0 or even 72.0. The weekly and monthly are in sync on that lower target. I used to joke about charging you subs in Euros but if this support line gives I may have to switch over for real.

I hope you are still in that natural gas trade – thus far we’ve seen a lot of noise but that rising diagonal has been holding just fine. I think we’ll probably see more of this until the upper 25-day BB and that diagonal approach each other – then we’ll either get a reversal or a strong push to the upside. Well, I did get a great entry and there’s little reason for me to do anything but wait right now.

Cheers,