At The Banks Of The Rubicon

We haven’t been seeing much weakness across equity futures during the Sunday night session and there’s a pretty decent chance that the bulls are preparing to attempt a crossing of the Rubicon.

Unlike Gaius Julius Cesar in 49 BC they will only have to cross the range between ES 1940 and 1960 – a mere 20 handles on the current March futures contract. However even if we see the crossing and the proverbial dice have been cast, I don’t see a lot of strength here right now and let’s not forget that any additional handle above 1960 puts the medium bearish case into question. So I would expect some resistance if we push that high.

On the other hand – it would most likely represent the single best short opportunity we’ll get this year. Of course, a final judgment should be rendered once we a) get there and b) assess that there is sufficient lack in participation to warrant a contrarian position.

Since my crystal ball is still in the shop my only recourse here is to simply take things one step at a time.  Which means currently I’m tentatively short the NQ with a long position on the ES set to trigger around 1940. If that one triggers I intend to run it into 1960 and then reassess the situation.

Bonds – I’m long here with a stop below all that short term support. The 100-hour BB is starting to compress and it’s time for this one to get out of the gate or I expect a bit more downside on a medium term basis.

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