Euro Trash & Presidential Cycles

First some US$ COT, and  then some more seasonality stuff (go figure).

I do not want to type much- not my thing. A chart is worth 1MM words, and I unfortunately need to attend to my recently lymphoma diagnosed 14yr. old dog (not a good day for Volar and family). Going to have some serious scotch tonight. (Sorry to post over Mole’s post).

So with our further ado, here is the Euro. I currently am not long EUR, but I am obviously looking for a big swing trade (up to a year in duration).

… almost a record net short.

…. kids these days…
[amprotect=nonmember] Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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… really? 400K change in bucky and the DX is not even up 1000? Normally a spike in net fund length changes bucky by a bit more than 800.

Also here is 1 sentiment chart. Hulbert daily.

Wow is the sell-side late on the late buss again….

Now to seasonality.

First have a look at seasonality since 1900- not much has changed- a low is expected sometime near October. I will add that the strongest seasonal rally of the year is OCT-JAN (especially for NDX and SPX).

I expect a seasonal rally by mid-to late October.

Now what about analog years? Well here you go. This also suggests a low by mid to late October a decent base should be made. Could we drag this out to November? Yes, but that would be an aggressive bet as the data does not support that a November bottom is very common.

Now how about those presidential cycles? Here is the 3rd year in analog years.

Well to me it suggests that we should visit our 200SMA by January 1.

Finally, I leave you with a custom Volar index of 4 year Presidential cycles. This is a 4 year time-span. For the love of God and the sake of my sanity, please do not start talking politics. There is ZERO EDGE in who or what party gets elected. This has nothing to do with partisan crap. It has to do with uncertainty, and of course psychology.

Well it is what it is…. we have followed the bear momo Presidential script very closely. This sounds odd, but a bear momo is bullish (this time of year) when we are talking about cycles.

Here is the Bull momo (which would be the current bearish scenario).

If this is confusing please let me know. I am simply saying we have been following cycle A, not B. All I hear on the web is about the “end of the world, Presidential cycle collapse.” Bias kills, data wins.

Bottom line:

There is much evidence that P3 is not happening and GREECE STILL DOES NOT MATTER!  I hope you guys enjoy this as I doubt you will get this kind off stuff elsewhere.

Best of luck unbiased trading,

-Volar

UPDATE Sunday 6:15pm EDT: Howdy rats – Mole here. I don’t have much to add to Volar’s most excellent review and thus didn’t want to plaster all over him. There’s one chart I however wanted you all to see as it’s rather salient and complements Volar’s perspective:

My SPXA50 chart reflects what I’m seeing in the SKEW and the VXV. As of the Friday close at SPX 1136 there are significantly fewer stocks below their 50-day SMA than when we painted 1101 and change a few weeks ago. A difference of a mere 35 SPX handles in terms of price – but instead of < 20 SPX symbols above their 50-day SMA we are now roughly in the 140 range.

In other words – the first drop was a lot broader than the one we saw last week. Or in yet other words, the quality and vehemence of the first drop far outweighed the one from last week. Could it be that cash index is being pushed downward to squeeze out any weak hands? Maybe – it would not be the first time – but seeing this it confirms my outlook that it is now make or break time for the bears. We are at the end of September (see seasonality above) and although the tape has felt very bearish we have gone pretty much nowhere in the past two months.

If the shorts continue to miss an opportunity to aggressively lead prices lower on a broad basis then the ensuing snap back in October may be rather violent. I already alluded to this last weekend and the move down has been productive. But it’s still not feeling real to me – if you allow me this rather subjective perspective. Someone in the comment section last week spoke about the tape being ‘walked down’ and that’s the very impression I got. The onus for the bears now is to stop the games once and for all and push this tape across the line. Whether or not they are capable remains to be seen but time is running out.

Cheers,

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