Coffee Is For Closers

Equities are firing on all six cylinders and overnight we’ve held the line near the magic ES 2100 mark. Given the momentum over the past few days (consistent and small) this suggests that institutional traders are milking this short squeeze for all it’s worth.

This is the S&P cash has us only ~10 handles away from our all time highs at 2134.71. There is no telling whether or not we breach it this week, but if we do then I’ll be keeping my eyes peeled for weakness starting the next.

On the volatility front we’re just about to head into more turbulent waters. As you can see we are now back in the lower range after a low volatility trending phase has recovered everything that was lost when equities fell off the plate in August. More volatility means we’re most likely heading into a shake out, which once again is in line with the scenario I have been pimping over the past few days, e.g. shake out due before X-Mas bear slaughter.

We’re actually a wee bit early and thus I would caution you guys against blindly taking out short positions next week. We may just paint one more exhaustion spike higher on the weekly – I strongly recommend you watch the Zero like a hawk. As long as it’s supportive (like yesterday) just bide your time and wait for your opportunity – it will come.

Crude Update – I didn’t catch that SOB yesterday as I was too stingy on the entry side. If you did however then good for you and I recommend you take at least partial profits as there’s a hurdle ahead on the daily panel.

But it’s time to roll up your sleeves ratlings as we’ve got setups crawling out of the woodwork this morning. Bonds – the 10-year futures are looking like a possible long position here – I’ll be playing it very safe and only take out 1/3R.

USD/JPY – also small position sizing on that one as we’re heading into a veritable brick wall of daily resistance. The play however is in anticipation of a surprise push through which should trigger a short squeeze. Low odds high rewards on this one.

Alright, are you getting warmed up? Time to join me in the lair:

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That ought to keep you guys busy for a while – have fun but keep it frosty.

Cheers,