Curb Your Enthusiasm
We’ve come quite a long way since the grizzles were ordering party hats and truck loads of Cristal in celebration of the impending August doom & gloom slide into the abyss. Since those lows we have regained some 270 juicy S&P handles and it looks like we’re ready to transition into the annual X-Mas bear hunting season. However, it’s my duty as the crusty bubble bursting host of this digital domain of trading doom to once again caution you to curb your damn enthusiasm.
Why you ask? For if we complete this week in the plus once again then I count six consecutive higher highs. And that means that probabilities start to lean toward a much less celebrated annual tradition: The pre-X-Mas-Rally-Shake-Out.
That’s right, before the boom usually comes the bust and I don’t think given the current formation on the weekly we’ll be advancing higher from here in one straight line. So prepare yourself for the invariable pig slaughter before we get to talk turkey. If it doesn’t start this week then most likely it’ll be the next.
As a matter of fact, we have an interesting situation here in that a down week by this Friday would actually increase the odds of more upside for the remainder of November. Therefore should we drop today and until Friday then I would be prepared to seek out dip buying opportunities. On the contrary if we continue higher this week then I’ll be looking for possible short entries the next. If you aren’t sufficiently confused by now then I just haven’t tried hard enough 😉
On the setup side I’m keeping rather cautious these days. CAD/CHF is looking like a possible long on a drop lower. If that happens I’d take out 1/3R with a stop below 0.75.
Speaking of forex – Draghi is dropping the mic ECB style later today. Be prepared for some obligatory swings in both directions. The cockroaches are already heading for the exits apparently as the EUR/USD is heading lower this morning.
A few more goodies below the fold:
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FWIW – I’d pay good money to see Draghi walk up, grab the mic, take a long look around and then shout ‘5% rate increase, bitches!’