Epiphany

I was staring at the E-Mini futures this morning – it must have been almost ten minutes just pondering and trying to figure out what was bothering me so much about this chart. And then suddenly I realized what was going on – and what also became apparent was that, no matter how long you are in the game, the tape still can always pull one over on you. The mighty Mole is not immune.

So the big epiphany I speak of was that nothing really has changed, folks. Remember all the sideways crap we endured for most of this year? And then suddenly we got a big slide (almost) out of nowhere – which we actually played quite well, but I digress. What I’m talking about is the collective assumption we are all suffering from right now: that of an impending RESOLUTION.

Think about it – most of the bulls are most likely seeing this as a prime buying opportunity. Fear and blood in the streets and all. The bears are waking up from their seven year hibernation and are also smelling the blood. They don’t trust it just yet – once bitten twice shy – 100 times bitten and you’re comatose. What they all share in common is a sign that one side or the other is losing its grip, that the stalemate is over and that one side is running for the hills.

I’m not saying that it is wrong to expect the potential for resolution but I also realize that the timing of it could be outside your trading horizon. It could happen today or it could happen three months down the line after NYE – perhaps mid January. Retail put holders would very much enjoy that scenario, right? Exactly – theta burn is a bitch, as they say.

My point here is not that we should not take any action. What I’m saying is that we need to pick our exposure points very carefully. For all we know we could be pushing sideways here for weeks and months to come. Which means NOT chasing the tape – selling major highs and buying major lows when price action paired with diverging momentum permits it. Zero subs take notice here as it will be your very best friend in the weeks/months to come.

Bottom Line: This is prime tape for trapping retail rats en masse. You know our prime directive here: Fade the noise – watch the price action – strike when the odds are in your favor. So from now on before pressing that buy button ask yourself this: Do you think the odds are clearly in your favor?

Well, do you, punk?

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Cheers,