Biding My Time

You may have noticed the lack of setups in the past week or so and I can assure you that it’s not for a lack of trying. However at the current time good directional entries seem to be few and far between. Fortunately we are in the mid of earning season and that may open up some opportunities for some nifty neutral volatility plays. If I take any I’ll be sure to share them here of course. In the interim I prefer to bide my time and wait for better odds to present themselves.

The Dollar keeps getting slaughtered and that’s been providing a lift to equities and precious metals in particular. At the danger of sounding like a broken record here: I would be extremely cautious betting against the bulls here. Despite my repeated calls for caution some of you guys continue to look for short opportunities in what now has grown into an extended 2-month short squeeze. And a healthy one I may add with the obligatory but small pullbacks which have served as reloading opportunities.

Caveat auctor!

All bearish momentum notwithstanding (see my massive momo update a week ago) the bulls are playing the tape like a fiddle, burning down any resistance in their path. We’ve seen some wild intra-day swings which doesn’t really speak to the long term quality of this rally. Notwithstanding the spoos continue to burn higher and were able to breach through not just one but two monthly NLSLs overnight. Although I’m sure there will be a bit of back tracing during the session (it already had begun) I don’t think the bulls are simply going to take profits and quietly walk into the sunset. The S&P cash is trading a little over 100 handles away from its historical highs – the bulls have smelled blood and surely have that target in their sights.

Silver is a long way from its former glory days (who still uses one of those silver bars as a paperweight?) but has been enjoying quite a bid overnight as well. It’s now touching its 100-week SMA, a weekly NLBL at 16.17, and a monthly NLBL at 16.41. The 25-month SMA isn’t far away either, so I would expect to see a bit of profit taking to take place here shortly. If you’re long then you may at least lighten the load a little and set your trails accordingly.

Words To The Unwise

My fingers are itching and just like you I would love to start dipping into setups – but I must exert restraint and so should you. Don’t try to call a top here – many have tried and failed in the last week alone. The tape is not giving us much in technical context on the way up here and until we see price paint some of that we need to sit tight and continue to wait it out.

Now if you happen to be long – do nothing. Set your trail and don’t overthink it. This is the type of of tape that can keep running way beyond your wildest expectations and that means it’s your chance to let your winners run. And that really is half the game 😉