Consolidation Plans

Apologies for skipping my daily wrap up post today but my afternoon was booked with appointments and I had to run out of the house at the sound of the bell. I’m pretty tired and have little energy to sink into charts but fortunately the path ahead is pretty clear.  We’ve got two possible scenarios and neither require skill in counting waves – just some good old fashioned common sense.

It’s quite obvious the relentless upside progression has slowed and that the bears [yet again] are hoping for a meaningful retracement. However, a sell off requires more than just showing up for work and praying for one as the bulls are in no mood to sell it seems – as evidenced by the almost identically timed snap back rallies of the past two days (which might or might not have been related to those POMO auctions).

I’ve mentioned today that we need to start breaching support lines and unless that happens all we’re going to get is a sideways consolidation (Blue Con) and bloody elbows from August option theta burn.. If the bears decide to dig deep and not run for the hills at the slightest sight of buying pressure we might actually retrace a little (Orange Con) – maybe not much but perhaps enough to earn a few of the bucks back we’re been surgically relieved of in the past few weeks.

The Dollar is pushing up a little right now but that doesn’t mean they can’t push a button somewhere and make it tank to 77 or even 76. What’s one last equities rally among mutual cronies after all?

I was extremely lucky today to bulk up on some SPY puts right around 1008. However, I burned about 30% of that trying to hedge myself in the futures today during the intra-day rat race. In the end I ended up in the green but psychologically speaking it again was way too much work and stress in return for what came out on the other end. Just look at how easy the bulls have had it in the past few weeks/months – it’s been like taking candy from a bear cup. Although today was a bit different than most of the days we’ve seen lately I still did not get a sense of urgency, despite some long downside candles. I knew where the resistance lines were and we didn’t blow through the one that counted, which was around 990 on the ES.

Had we bounced back from there but then sold into the close, breaching that obligatory intra-day low, then I would be in a more bearish disposition tonight. But we didn’t – again – money yet again bought into the ‘dip’. The bears did not win today – they just didn’t lose and this sell off was condoned. And as of now the futures have not given up anything since the close.

The end of Primary {2} is not in sight unless we see volatility on the bearish side. Which means a panic sell off – maybe even followed by a long candle which at least would indicate to me that the bulls are pushing hard to start unwinding their positions. I think we’ll know when we see it – but thus far I’m not seeing it just yet. Maybe I’m biased and a bit jaded at this point – if so, and if you disagree please make yourself heard in the comment section.

BTW – in the context of that dreaded POMO affair – here’s a great read on ZH on a U.S. Treasury sponsored POMO pyramid scheme Chris Martenson (of Crash course fame – if you remember) managed to uncover. I have not read it yet – but I’m salivating to dig into the details – I’m sure it’s going to cost me several hours of sleep tonight.

See you on the other side.

Mole