Dropping Da Bomb!

To the few of you who actually bothered to show up for work today: You are about to get rewarded as I simply cannot believe the plethora of high quality setups I’m coming across today. I could literally post dozens of charts here but we’ll keep it limited to our usual healthy diet comprised of our four major food groups.

Before I drop the proverbial setup motherlode let’s however catch up with what’s going on in equities. I’ll be dropping you at 60,000 feet from which we’ll free fall into our first setup of the day, the E-Mini:

Our SPX point and figure chart flagged us a low pole reversal warning on Friday. This means the bearish case is now officially on notice. This is perfect as it correlates very nicely with an inflection point play I’m seeing across the board:

The weekly E-Mini panel has us at the 25-week SMA. So the question from a more long term perspective is whether or not this is a reversal of the weekly sell signal or a last kiss goodbye (LKGB).

The daily (and hourly) panel provide us with a few more clues. As you can see the daily spoos painted an outside period on Friday which apparently will be followed up by an inside day today. And all of that is happening right at the 100-day SMA. How perfect is that? This is conclusive evidence that we are at an inflection point that separates us from the annual bear hunting season scheduled for December.

On the hourly panel we are currently near the 25-hour SMA – you can use that if you are fishing for early entries.

Now here’s our first setup. As I already suggested the daily currently dons an OP followed by an ID. Thus I am happy to take a breach tomorrow (i.e. tonight) in either direction. Bear in mind that the trigger line may have changed by the time you read this. If you don’t know how to trade an inside day setup then please consult our handy cheat sheet.

Alright, I suggest you brace yourself for this browser busting setup mega-bomb – the Mole has gone nuclear!
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Let’s start with currencies. The USD/CHF is painting a delicious ID + NR4 combination. I only want to be long here tomorrow (or overnight) if we breach the upper trigger.

NZD/USD – inside day after a long candle up. Here I favor the downside although I would consider a small long.

GBP/USD a.k.a. cable – almost identical setup and thus we play the same game.

But wait there is more! EUR/USD – same setup!

Not to be outdone the EUR/AUD is now donning a dual inside day. I would consider it my patriotic duty (I’m also European) to take either direction here once we get a breach.

And even the AUD/USD got the memo – inside day + NR4 – you know what to do.

And ole’ bucky doesn’t want to be left out – also an inside day. We are near 1.3 and I fear my exchange rate may flush down the toilet. In terms of the setup I would prefer a long breach here but as I always say, never underestimate suicidal tendencies in the Dollar pit. Two reasons to hope for a bounce then.

Commodities – we have soybeans right at the 25-hour SMA – very nice long setup but it’s only a short term trade (for now). This could be a nice way to hitch a ride off a floor pattern so let’s look at it tomorrow and then decide.

Bonds – possible last kiss goodbye here. I am currently short with a sto above the 25-hour SMA. Willing to be long if she pushes back above the 100-hour SMA.

Silver – another short term setup. I want to be long here with a stop below the 25-hour.

Gold – almost a perfect OP/ID setup – will take either direction here. If both silver and gold are pushing higher then we could witness a medieval style bear squeeze slaughter fest. But again – I’m ambivalent on both – gold however is the one I trade both up or down.

Now for something completely different. Sugar is looking sweet again – possible floor pattern and I want to be long here near the diagonal. Well, I admit it’s a speculative trade so only get exposed with a handful of contracts.

Nutty gas – as you already know I’m long here with a stop below the Bollinger. But I just realized that this just happens to be below the daily NLSL  – how perfect is that?

Copper – long here if it heaves itself over the 100-day SMA.

You’re into something exotic today? Here’s cotton with an interesting OP/ID configuration.

The reason I’d consider it despite the long ID candle is because of the context. Actually my preference would be a drop below. So if you are a cheeky steel rat you may find an early entry near the upper 100-hour BB, which also happens to be right at the 100-day SMA. How perfect is that? (today’s tag line I guess)

Let’s wrap it up with crude – OP followed by an ID. Crude has been a bit of a mess lately but I’ll take the setup because the doctor ordered it. One of these days it’ll finally pick a direction  In general (considering the LT picture) I would prefer a short entry here. If you recall my recent LT update then you know why 😉

Keep it frosty and don’t get overexposed. Treat it like hor d’oeuvres – take little bites off your favorites and you should be okay. Be disciplined with your stops – and make sure you get a decent entry near the trigger lines. If need be set yourself alerts, there are a ton of pertinent services out there. TOS also has them for free.

Cheers,