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Canary In The Coal Mine

Canary In The Coal Mine

by The MoleSeptember 22, 2011

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? πŸ˜‰

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 πŸ˜‰
[amprotect=nonmember] Charts and 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.
[/amprotect] [amprotect=1,13,9,12,5]

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!


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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