Context!

I’m getting pretty giddy down in my evil lair – for we finally have some context at a critical inflection point. I’m pretty jazzed about the fact that we didn’t let ourselves be distracted/disoriented by yesterday’s little shake-out. Which may have been distribution – it still remains to be seen. Now let’s look at what really matters at this very stage:

When markets have become this overbought we simply cannot trust regular market indicators anymore. All I look at now are price patterns which define inflections points – in other words we are looking for signs of distribution, accumulation, exhaustion, etc. This used to be a bit easier back in the days and in the past few years we had to shift our sensitivity thresholds considerably toward the bullish end. In any case – here’s where we are at – a double inside day (as of this writing) on the E-Mini. We are also enjoying additional support via a NLSL at 1,537.5 – just a few handles below the ID short trigger.

Similar situation on the YM – except this time the next NLSL is a bit further away.

NYUD is suggesting that we could be looking at distribution – it’s not extreme but it’s there.

I recently partnered up with AVAFIN as they are developing some pretty sophisticated toolsets for all you feisty option and derivative traders. Go play around with some of their free tools (especially those handy block trade monitors) and let me know how you get on. If you sign up then let ’em know the Mole sent you. And no – in case you’re wondering – I’m not getting any kickback 😉

Anyway, their SPY profile shows me a P/C ratio of about 1.25 – a bit bearish but I think it could still fly either way.

We’ve got a whole basket full of goodies today and since it’s a critical juncture I decided to make it a freebie. So no excuses leeches! Here’s the AUD/JPY which also happens to be painting an inside period/day. You know what to do.

AUD/USD doesn’t want to be left out of all the fun – another ID after some indecision – I would favor the long side here as it’s the easier direction (e.g. NLSL crossing through inside). But the context is excellent – good to go either direction.

CHF/JPY – SMA retest after inside day – if you follow the 100-hour then you could already be short with a stop above the hourly NLBL.

GBP/CHF – looking forward to a touch of the 1.423 mark at which I intent to try on some trendy shorts.

GBP/JPY – has been climbing that 100-hour like a champ. I closed my eyes, thought of England, and took out some longs.

Finally the NZD/JPY – yet another inside day. I don’t think this is a coincidence – we’re about to take off across the board. Let’s leave the guesswork to the pikers on the other side of our trades – we’ll focus instead on the clear inflection points I have presented.

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Cheers,