Hanging By A Thread

We are literally hanging by a thread here as the bulls have been able to defend the last hurdle separating the winter of tears from the spring the bears. The 1900 mark may look innocuous enough but if we close below it today then the odds of more downside momentum next increase by a large margin.

I’m sensing quite a bit of exhaustion in the comment section and I can’t really blame you guys. Not only did we have to suffer through almost an entire year of sideways churn, but now that things are more directional we still have to put up with an increasing amount of intra-day volatility. Well, better get used to it, because conditions like these is going to be the new normal for months to come.

Just take a look at the hourly panel – clearly ES 1900 is the bull’s Maginot line which continues to be challenged. Dips below are quickly reverted – we can see almost reflexive buying interest emerge in order to stem the tide above it.

On the NQ I just used one of those spikes lower to grab myself some long positions. Let me point out that I’m holding my nose every time I do this as things are most definitely NOT looking bullish here. As a matter of fact if buyers miss reversing only stab lower the whole wheels will be coming off quickly. Keep that in mind when choosing your position sizes as your stop may not be filled where you imagine. DO NOT use limit orders for your stops – trust me, I have been there and avoiding a shitty fill is not worth not getting filled at all in a freefall scenario.

Speaking of hanging by a thread – wheat is currently looking like it wants to fall off the plate. Once again I’m pulling the contrarian card here but with a TINY position only. I’m looking to be filled near the diagonal as the session just opened lower. My stop will be below 470 – if that lower BB gives then better watch out as we’re heading to 455 at least.

UPDATE: Yeah, wheat is off the table – this sucker is going DOWN.

AUD/CHF – I just snagged a long here with a stop below 0.707 – I love that formation on the daily.

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UPDATE 9:55am EST

Equities just kicked me out at -0.7R and things are whipsawing all over the place. I think we’re heading into pretty turbulent territory here. What I’m NOT going to do is to trying to force pushing against the trend here. So for now I’m laying low and wait for things to resolve – one way or the other. Otherwise you guys know the drill – small position sizing, wide stops, and try to keep it frosty. Don’t chase the tape – wait for swings inside your entry range.