I guess it’s official – the Mole’s travel plans are directly correlated with meaningful downside corrections in equities. So how about I make this a new subscription model – you guys simply pay me to circumvent the globe while you all load up on OTM puts? 😉
The Barcelona evil lair setup has shrunk by 33% due to the tiniest hotel I ever paid good money for – and that includes Korea! I had to remove the flat screen TV and do some creative redecoration to even get my lappy and one iPad running. But this is Evil Speculator central until tomorrow when I head into the country side.
Of course my intrepid steel rats couldn’t care less Molliver’s Travels – after all the spoos have been painting red candles like a Cuban on steroids. I hope you guys were watching the hourly chart overnight as I recommended yesterday. The daily chart above shows us a possible support level near 1357 in the form of the lower 25-day BB. So if you have been short I would take partial profits but perhaps keep a few lottery tickets for a possible drop into 1311.
The reason I’m suggesting this is the weekly SPX chart which sliced through not one but two weekly NLSLs today. Yes, that is extremely bearish and although I talked about a possible VIX buy signal yesterday the situation has changed quite a bit. As Mr. VIX is up by almos 10% today using this candle as a VIX buy signal candidate is purely suicidal. I would wait for a close inside the BB at minimum and accept the fact that we won’t be able to call a precise bottom. The explosion of vega is free manna for any put holders – especially the lucky ones amongst you who bulked up on OTM puts. You just HAVE to take at least partial profits here as such a vega reversal can happen any day.
Also – if you have been long or delta positive it is vega that may have been halfway saving your butt until now. Wait until they drop the VIX whilst keeping prices somewhere down here – you will feel the pain! So if you are sitting on a mountain of miserable calls then accept the fact that you were caught on the wrong side of the tape and get your ass out now. Even if things stabilize here a reduction in vega will kill you in two seconds flat – I have seen it happen over and over again.
Alright – a few more goodies below for my intrepid subs:
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
Interestingly the one FX pair I wish would go to hell in a handbasket right now is the EUR/USD (for obvious reasons – I need a better exchange rate). And strangely I don’t see any movement at all here and I would remain long until we breach 1.30 – basta – very easy trade. I would not flip it around if it breaks – support is too close.
USD/CAD just breached its NLBL today – very nice setup. If you missed it then I would recommend you wait for a retest (which we may just get judging by the hourly panel) or you are patient until we get above that 100-day SMA. Yes, you can also try a short here but we have been range based so long here that we may just see an acceleration.
AUD/JPY – closing in on its 100-day SMA. You know what to do – if you see a stalling and attempt of painting a floor then you can try a long setup. But wait for a wait candle or two – don’t play hero and try to step underneath a falling sword.
Finally we have the USD/JPY, which could get very ugly here. That lower 25-day BB line was all that was between here and the 100-day SMA. I would be short here with a simple stop above 81 – done.
Don’t get emotional and don’t try to play hero by attempting to call a bottom here. Things are sliding and it’s best to wait until the toilet has stopped flushing.