And Down She Goes

Yesterday’s speculative Net-Line Sell Level entries have produced rather nicely in less than one session. Knowing my audience I would be surprised if you guys weren’t looking for possible support zones and thus reasons to lock in some of your winners. The Zero signal is also showing somewhat of a divergence although I am not certain yet that this dog is done just yet.

Here’s what we’re looking at as I’m typing this – a pretty pronounced diagonal forming on the Zero Lite. Only thing is that it would need to produce a swing back before the close of the market. If not then we may be dipping lower in tomorrow’s session. So just in case let’s look at possible support on the equities side:

The Dow futures are on a collision course with the 25-day SMA – not a guaranteed support candidate but we also have recent resistance on the weekly panel. I’d point toward 15830 here – things should start slowing down around there or we may just go all the way, and by that I mean 15500.

The spoos also falling pretty consistently today. Again I hate to step under a falling sword but may look for signs of life near 1780. If you went short yesterday after we breached that NLSL then there are two way to handle this. Either start scaling out toward the EOD and be done with it. Or if you’re a sub watch the Zero indicator – if that diagonal I pointed out is being breached again and we see lower spikes toward the close then this sell off may have legs to continue further.

This may be amusing – about a week ago I pointed out the bollinger compression on the VIX and I suggested that we were probably heading into more volatile conditions. Little did I know that it would happen so soon!

Crude was a short entry on the hourly yesterday and after some consideration I decided to not pursue a long trade on a breach of that 25-day SMA. Big mistake as it has gone gang busters and the landscape has changed considerably now. As of right now we are touching the upper 25-day BB, the 100-week SMA, and the 25-month SMA. I hate to suggest it again but this may be a good spot to be short. However, unlike last time I would very much entertain a long position should crude manage to push above around 96.35 (above that upper BB).

Where I didn’t fail my intrepid rats was on the Dollar – textbook short entry near the 100-day SMA and it’s been a sea of red candles since. I’d say we had enough fun and it’s time to start scaling out. Yes, nothing here that tells us that it couldn’t drop further. However, there is a defined falling flag formation on the daily and we’re near the lower boundary. So let’s call it a trade and look for easier victims to toy with, shall we? 😉

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Cheers,