Clarity

I have to run off to breakfast but wanted to throw out my latest wave count as things are now falling into place just nicely:

We are looking at two main scenarios – aptly named Soylent Green and Soylent Red. The inflection point for red is at today’s lows:

Trading this is pretty easy IMNSHO – and it’s one of those exceptional moments when it may pay to chase the tape down – well, kind of. Let’s start with my favorite scenario – red of course 😉

Red: IF we breach the 1040.78 mark (i.e. today’s low) before we see a meaningful retracement then odds are very high that we are in a third wave and that this thing will drop quite a bit further.

Green: This count says we are done dropping for a while and it’s time for a second Minor wave up which should conclude at around 1095 or 1120. Seems that we painted a clean motive to the downside, which could be done here. Of course in air pocket scenario waves can extend, which is the red scenario.

That’s it for now – although red is my favorite green has the better odds right now, technically speaking. The separation point is today’s low, so you know how to play this.

UPDATE 2:20pm EDT: I got around updating my BAA-TYX ratio chart and the new readings are quite interesting:

Yes, the spread is finally pushing up again in a meaningful fashion – a first in over a year. But what’s a lot more interesting is the section I have highlighted in yellow: Seems that bond traders did not buy the push up and the EU-TARP bailout initiative – well, buy they did and it wasn’t junk it was treasury bonds. This seems to point towards a change of trend here – finally – we have been waiting for a long time. I will keep watching this level on a daily basis now as I have a friendly volunteer named Kevin who keeps emailing those BAA readings to me without ever asking for anything in return.

Many thanks Kevin – your help is much appreciated.

UPDATE 3:01pm EDT: My EUR/JPY chart is close to painting a buy signal:

If we breach that 20% mark it would shift the odds towards higher prices, both on EUR/JPY pair and most likely equities as well (meaning possibly Soylent Green). Nothing however is guaranteed – obviously we were massively oversold yesterday and we still got presented with Soylent Blue (or worse). We are running in the right direction for Green but the bulls cannot take a breather until today’s gap has been filled.

UPDATE 3:39pm EDT: Damn, and I was considering to take today off – look at me now – LOL 🙂

Too much fun watching tape like this, can’t help it. Anyway the gap has been filled in the futures. Now the onus is on the bulltards to break outside that SPY channel I threw together – seems like a good point of resistance to me. We breach through that one and survive the obligatory retest and it’s blast off time.

On the SPX I’m counting a developing motive which has us in a fast third right now. I just pointed that out on the PZI chart. Based on that we should see a push outside the channel, followed by the retest (i.e. wave four), followed by a final leg up. I would count the completion of that wave as Minute {a} of Minor 2.

Closing Bell: Two orders of business before I rest for a few hours. Yes, Mole needs a tea break. As much as I would like it – I am no evil super robot (one can dream).

I think this is almost a text book pattern on the Zero Lite (and on the PZI as well). Observe how we had a huge signal down in correlation with today’s opening gap which almost immediately went completely flat. Accordingly the tape started to slowly melt higher and before the final big spike up I mentioned to my subs that we were pushing the upper boundary of the 2.0 VWAP Standard Deviation (in red) without even seeing a strong positive signal. This was very bullish and I hope my subs got positioned accordingly. Because once we started seeing a push above the 0.5 mark things started to accelerate nicely.

If you trade the ES futures – ask yourself this: Where else do you get signals like this and are they worth the cost of one measly handle on the S&P E-Mini per month? Exactly – here is where you sign up and start to bank coin.

Alright, here’s a pretty cool video presentation from no other than our Überbär (in German) Karl ‘No Slave To Fashion’ Denninger. Enjoy!

Cheers,

Mole