Eexcelleeent!!

I am watching the ongoing equities squeeze with deep satisfaction knowing that the confusion and pain of others brings about opportunities for us stainless steel rats. Yes, that’s right – we abide by a strict politically incorrect policy here at Evil Speculator. Unlike in the Disney inspired fairy tale world they indoctrinated into your feeble minds in Kindergarten things out here in the real world work a wee bit differently. In order for you and I to bank some coin someone else will have to give it up – the market is and will always remain a zero sum game. And that’s exactly why I enjoy trading it so much – there is no room for half truths and subjective interpretations. It’s black and white. You either win or you lose!

As you know the fat lady sings at 3:30pm today and what’ll happen then is anyone’s guess. However, that said let’s lean back and review the current situation and then consider our options. I already made it clear that yesterday’s session represented significant technical damage that would take quite some bullish action to counter. Now, perhaps that is in the works but let’s currently approach this from a perspective that excludes this possibility. I think the Zero chart offers us a reasonable gauge of recent market activity:

Up until the push into 1775 price action and participation reflects clear bot activity that managed to squeeze price higher in a tight channel. What followed was rather frustrating sideways activity reeking of distribution that may or may not have terminated with a drop to yesterday’s lows. Now I’m looking at yesterday’s Zero Lite signal and comparing it to today’s it’s clear that there is a lot less meat in this move higher. So it may be a fake out – of course in this QE news driven world one can never know.

What we DO know however is that we’re dangerously close to revisiting all time highs. Eexcelleeent!! The closer we push the better this gets as I want to be short here until the spoos breach the NLBL at 1773.25. Once that expires tonight you can use the prior high of 1774.50. A breach would reinvigorate the bullish case – at least temporarily. I do still maintain that the bulls have breached Bernanke’s Rubicon yesterday (well, it was Draghi’s but you get my point), and at this point the effectiveness of further quantitative easing will need to be proven.

I think that last point bears repeating as I don’t like to jump to conclusions and neither should you. The price action we witnessed yesterday confirms recent suspicions that quantitative easing as pursued by the Federal Reserve as well as the ECB over here in Europe is losing its effectiveness. In order to negate this point of view price action would have to strongly respond to an event involving further premise of quantitative easing. Perhaps Bernanke’s speech today at 3:30pm EST will accomplish just that – but it needs to happen. Until it does the bulls are now on notice.

Quick bonds update – our two entries are proceeding nicely as the 25-week SMA continues to hold up as expected. I maintain that we shouldn’t touch this one right now – simply let ‘er ride.

I actually have very nice setups for tonight across FX and the futures – please step into my Mediterranean lair:

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Franziskaner time for the Mole! I think what’s looming ahead is going to be a lot of fun, so relax and enjoy your weekend. For next week we dine in hell!! 🙂

Cheers,