Let Me Ride

Pretty exciting tape today and I’m seeing some very solid setups. No, I’m not kidding – and no I haven’t been snorting bath salts. I took a quick look at the spoos earlier this morning and mentally checked out of equities. Instead my focus is on the currency side as that’s where I see all the action right now. As a matter of fact – we seem to be reaching an inflection point on several fronts – more on that below, assuming of course you have your secret decoder ring handy.

I know you want me to talk about equities anyway, so let’s get this over with. In a nutshell – don’t waste your time! We are remain stuck in Groundhog Day Central and the volume profile cluster highlighted above appears to define our current trading range. The Zero Lite shows almost no participation and until that changes I don’t expect any changes here. Could be a topping process – could be a sideways consolidation.

We all wanted to see the VIX buy signal resolve today but no such luck and we are effectively resetting the count today. Let’s not lose sight of the fact that we could also continue upwards here so I suggest to not jump to any conclusions until we see a bonafide confirmed VIX buy signal.

Alright, now on to the more exciting stuff. The CAD/JPY gave us a nice entry a few sessions ago and is now starting to climb its 25-day SMA. That’s good news and although it’s moving slowly there’s little reason to touch this one right now. She’s telling you ‘let me ride!’

You just can’t beat those classics – I’m looking forward to cranking this one while cruising my convertible up and down Sunset in October when I’m back in L.A. Alright – on to the good stuff – now  we have much work to do on the FX front. And since I’m in a good mood I’ll throw in two commodities setups for good measure:
[amprotect=nonmember] More charts and non-biased 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.
[/amprotect] [amprotect=1,13,9,12,5]

USD/CHF continues to tickle its Maginot Line. No bias here – let the SMA sort this one out. I would love to see a decisive breach lower but will take any direction it’ll pick. I know – tough to not being stopped out here a few times but I think the ensuing resolution will be worth the pain.

NZD/USD – approaching support. I want to be long here with a stop below the 100-day SMA. If she breaches I will flip this sucker as there’s nothing but air below. Note that this ups our Maginot play count to 2.

Cable revisiting its NLBL – if you snoozed last weeks’ breach then this is your second chance. Set your stop below the Net-Line and forget about it. I am not interested in a short trade here should I get stopped out.

EUR/USD is increasing our Maginot Line play count to 3. We all want to see a long breach here but once again we should not jump to conclusions. You can be short here if it stays below the line. The falling SMA is working in your favor and Thursday’s low may be used as confirmation.

EUR/AUD – not sure why you guys all keep looking at equities. Now THAT is some directional tape! But the easy ride seems to be over for now and we are slowing down at the 100-day SMA. Which brings our count up to 4. I am short but ready to jump into a long if she decides to continue higher. But boy – that was a beautiful run!

AUD/USD approaching its own 100-day – and that gets us to count 5. I expect support here – even if it’s temporary.

ZN – the 10-year treasury futures contract. It’s back at its own 100-day SMA and this offers a great entry with a cheap stop. I have no bias here but would love to see the shorts get burned for a little.

And then there’s sugar which at the point of this writing is right at its NLSL. Great long entry but of course by the time you’re reading this it could have moved on. A breach through the NLSL would most likely lead us down to 131’305ish.

Bottom Line: Once again the real action is on the currency side – even if you are trading equities only I recommend you keep an eye on the pairs posted above. Whichever direction currencies go will eventually be followed on the equities side – much bigger and smarter market. Whatever you do – keep it frosty and don’t have an opinion. That policy has served us well throughout this brutal summer and what hasn’t killed us made us stronger! 😉

Cheers,