Let’s Get Creative
Barring a meteoroid punching a hole through our moon or the St. Andreas Fault leveling the West Coast it seems that the collective sideways churn will most likely extend all the way into the November 8th presidential election. No matter where you stand politically I’m pretty sure you hate this tape even more than either Hillary or Trump. But let’s remember that bitching and complaining is the domain of losers. Instead let’s think about how we can take advantage of the situation.
In case you are wondering – no, I didn’t acquire a glue sniffing habit over the weekend. Let me explain the four scenarios above and it’ll all make sense:
- Soylent Orange is the most likely scenario in the coming hours. Which means we are short below ~2159 with a stop > 2160.5.
- Soylent Green assumes that Orange got stopped out. Instead of grabbing a long position right away I would wait for a retest of the 2160 mark after the initial blast higher. That may take a day but if you don’t want to get whipsawed you need to be prepared to miss this opportunity.
- Soylent Yellow assumes that we got away with Orange and that means taking profits and going long near 2140 with a stop below 2138 plus minus a tick or two.
- Soylent Red means we either immediately continued lower or were stopped out after Soylent Yellow. In either case I recommend waiting until a retest of 2140 and then grab a short position or two.
In all these scenarios I caution you against playing full R sizes. There’s too much volatility and the tape is bouncing around like a pinball caught in group of bumpers. Good for scoring points if you’re nimble and willing to work for it.
Soybean meal was a Friday entry and it just got a bit cheaper. I still like this one but would only play it with 0.5% max. Put your stop below ~296 and you should be good to go. A drop through that and we probably head lower here.
Two more setups below for my intrepid subs:
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Words To The Wise
The next few weeks will most likely be tough but console yourself with the fact that it’ll be smooth cruising into X-Mas and beyond. No matter how the market will judge the new president, I expect momentum to return and hopefully a bit of house cleaning while we’re at it.
In the meantime don’t do anything stupid and keep your exposure small and nimble. While we remain stuck in sideways mode it’s best to hunker down and keep your powder dry for when the fireworks begin. No worries – I’ll make sure to guide you through this mess with your sanity and hopefully your trading accounts intact. Of course your mileage may vary