Friday Lottery Ticket

I probably should be easing up on my meds as I have started seeing short opportunities and you all know how that usually ends up. Except of course when Bitcoin once again goes stratospheric and then instantly crashes as it did on Wednesday literally an hour after I posted about that very scenario. Clairvoyance you wonder? I very much doubt it as I never win anything. But I have developed a pretty keen sense of human nature, which fortunately is a lot more reliable than the financial markets. When in doubt during a buying frenzy always bet on the woodshed.

Now in my post I was also joking about equities not wanting BTC to steal its show. And that of course was followed by yesterday’s session which propelled almost vertically, to be then followed by instant profit taking. And could you blame them as they probably were looking at Bitcoin in comparison and thought to themselves ‘hell no – I won’t be the one holding the bag here’.

Whether or not this is the top we can however all agree on the fact that each advance appears to be steepening and although that’s a lot of fun while it lasts it’s also usually the time when you start looking for exits. And clearly I’m not the only person thinking that as market makers are already beginning to price risk higher as evidenced by this SPX:VIX ratio.

Here’s the VIX chart which shows us an expanding Bollinger and judging by the previous spikes we may just be on the way to a spike to ~14 – 16 this time. VIN/VIF is also pointing up strongly, which suggests near term option premiums are increasing relative to premiums a few weeks further out.

UVOL/DVOL has been extremely compelling as DVOL is now starting to lead, even while equities were heading higher. Say WHAT? Yeah, that’s actually pretty rare, and especially with two consecutive sessions.

The volume profile is looking like a mine field as we are in no-man’s land right now and the current spike higher is only supported by a tiny island. Should 2620 give way we may tumble all the way into 2600 and perhaps lower.

So given all the above warning signs I am tempted to propose the unspeakable, which is a short position. But because I do like my sleep especially during the weekends I’m not going to deploy more than 1/3 of a % which I’m happy to blow on small chance of equities pulling a bitcoin (hehe).

USD/JPY is strengthening again on a longer term basis and if the current advance can gain traction it may finally break out of the current whipsaw zone between 109 and 114. Which incidentally is pretty bearish for precious metals – silver is already plunging and I hope you’re not holding long in that sector.

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