Holiday Squeeeeze!

Please don’t waste your time correlating today’s tape with anything you saw or read in the financial MSM. As suggested yesterday – we were sitting right on the 100-day SMA and a drop below would have been rather disruptive to any remaining chances of a Santa rally. Plus it’s late December and decreasing volume begets increasing volatility. If you read my weekend update then you may recall that I suggested a short term shift in the near future based on what I saw on the vega distribution side. So I hope you kept things nimble and didn’t get punished in today’s surprise holiday squeeze.

Anyway, ’tis the season to kick back a little and most likely most of you guys are more worried about getting ready for Christmas than to spend much time decrypting Mole’s charts. So let me run through a few of our usual suspects – we start with the spoos:

Yet once again we are breaking free and that inverse H&S is now starting to look rather juicy. If the longs can get the timing right then they may be able to ride this puppy all the way through NYE. Watch the 1244 mark, which in my mind is really the last stop before a big bust higher. If we go through that one and push higher then we are basically at the H&S neckline. Once there I expect a little shake out (again) followed most likely by a push higher – assuming it happens before January. After that seasonality kicks in again and the odds of a reversal increase.

Let’s skip forward directly to the long term – the monthly shows us a very well established descending diagonal resistance line, which if overcome would most likely support that H&S idea I proposed above. So our key levels here are 1244 and then 1267. FYI – we still have a valid daily NLBL at 1266 – although by the time we get there it will most likely be expired.

Two FX charts below for the subs:
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USD/CAD – currently attempting to regain the 1.0319 NLSL on the daily panel. A close higher today would be bullish in my mind and I would consider going long with a stop below that 25-day SMA. If that gets triggered then I see 1.02 minimum as T1. On the upside I would be out near the current NLBL at 1.0422.

Then there’s the NZD/USD which is currently attempting to conquer daily 0.7674 NLBL. That’s quite a bit of progress after just overcoming that 25-day SMA (also see the hourly panel which looks a bit stretched) – so perhaps we see a bit of hemming and hawing here before it pushes higher. Either way – a great spot to get positioned to the long side. On the downside support is now looming rather quickly at the 25-day SMA so if stopped out I would simply walk away and wait for instructions.

Some people asked me about cocoa and this is how I see it: The right place to get positioned here was at 2103 when it was breaching the 100-day SMA. The rest of us who actually require sleep every night will have to wait and see now as it’s doing its very best to shake off any weak bottom feeders. 2210 is our next NLBL and I’ll bet that it will throw a little surprise right there as well. But as I said before – that is the price of admission – if this thing finally gets out of the gate you won’t be able to catch it.

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Cheers,