Don’t Get Too Comfortable

For the past two months we have been gyrating within a sideways range with its center roughly near ES 1850, take or give a few handles. This is also where we see peak accumulation in the E-Mini’s volume profile. And it is also where we now find the 25-day SMA currently offering soft support.

If you ask me where we’ll swing next then I would have to disappoint – nobody really knows and I’m rather intent on remaining objective here and not to fall prey to any directional bias. What I can tell you however is this – do not get too comfortable. There are various ways to interpret the recent formation – some would call it a sideways churn before trend continuation – others may call it an expanding triangle which may precede a medium term trend change.

The best way to survive in this tape is to remain nimble and take it one day at a time. I know this isn’t fun but thus far we have stayed ahead of the game this way – we even managed to play some of the swings. The alternative isn’t pretty and I recommend you stay with the script.

On a short term basis I’m seeing a bit of a divergence on the GBP/JPY – may be nothing as I don’t see any signs of monkey business on the momo and volatility side. But be prepared for sudden swings – obviously the tape is in full shake out mode. That said we do have a very nice shooting star slash inside day setup on the E-Mini today. But before I get excited about that let’s see the close, shall we?

FWIW – the NQ continues to produce a pattern of higher highs and higher lows. I think most technical analysts would agree with me that this chart is starting to look mighty bearish. We’re now below both daily SMAs below a brand spanking new NLSL and there’s a NLBL blocking the way above it all and it’s good for the rest of the week.

Bottom Line: Don’t get too comfortable – the tape continues to swing for the fences and the more it drags out the more explosive will be its eventual resolution. Don’t get over exposed and if you take the setups stick with a maximum of 1% exposure, perhaps even less. If she gets going even humble exposure will make it worth your while.

Meager pickings today on the setup front – what I have I’ll keep for my loyal (and apparently very patient – long story) subscribers:

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Cheers,