Canary In The Coal Mine
That’s right, I’m going to go all 80’s on your asses now:
This song goes goes out to copper, which was truly and once again our canary in the coal mine:
Copper continues to call the shots and it doesn’t look it’s done just yet.
Short term we are looking at a possible developing VIX buy signal. But if recent history is any guide then I would recommend to wait for final confirmation, which is at least two days away.
Another reason to expect a quick bounce in equities in the next few days. We sliced through two net-line sell lines and are now outside both hourly Bollingers. Does that remind you of the charts I posted on the currency side? 😉
This chart comes with a warning – downside moves interact differently with volume holes than upside moves. Either we pause and bounce right here as we are sitting right above a huge volume hole – OR we slide further down and that hard. Which makes taking long positions here a very precarious endeavor. FWIW – do not make the mistake to buy naked calls while IV is sky high – you will get taken to the cleaners. If you don’t know what a vertical spread is then you should not be trading options in this market anyway – hit the books first and wait for calmer waters.
Now, the medium to long term picture is a bit more interesting – but that’s reserved for the subs 😉
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The weekly SPX is technically painting a channel breach, plus it’s currently in a retest variation sell setup (rvs). Maybe Scotty can chime in on that as he’s Mr. Convict Candle Pattern. In any case my chart suggests a target of 998, which is more likely the psychologically sensitive 1000 mark.
My thoughts on the monthly – we will most likely close lower for five months in a row now. Without consulting the odds calculator I’m pretty sure that we’re probably due to close higher in October. Of course that’s all relative as we may just slide a LOT lower here in between – hope that is crystal clear. My target clusters are on the chart – again, that’s on a monthly basis and a lot of whipsaw can happen in between.
Keep it frosty!