Lottery Longs

I just grabbed a small amount of lottery longs near 1835 where I’m seeing a small cluster of hourly Net-Line Sell Lines (NLSLs). Now as the name implies – if those are breached and we push below yesterday’s lows then continuation to the downside is pretty much baked in.

So to be crystal clear – I’m trading against the trend here and looking at the daily chart we can all agree that there isn’t much to be bullish about. However, that said – when things look completely hopeless and everyone’s waiting for a slide into the abyss is exactly the moment I often throw a lottery long on the wall just for giggles. If you follow along here don’t risk more than 1/2R and keep a wide stop.

In case you are wondering what would behoove the Mole to engage in such suicidal trading activities then take a look at the Zero snapshot yesterday. It’s looking pretty divergent there on the hourly panel but of course that’s no guarantee.

Now even IF we bounce today or sometime later this week – it is important to realize that the LT damage is already on the books. The NQ has now given up its last remaining support levels and that completely changes the medium and long term picture. A rally higher from here IMO only represents lower cost short entry opportunities as the current formation does not fit into the scenario of a bull market correction. The monthly panel has not incurred this much damage for years and the 25-month SMA used to be as close to a shoe-in for the bulls if there ever was one. I think we are truly looking at the first ‘sign of recognition’ here.

Gold Update – I took out a small short position yesterday, right after it scraped the 1200 mark. In the interim my paper profits have melted away like snow in the spring sun and I’m only ticks away from being stopped out at b/e. No matter though – the daily is looking exponential like heck and if it pushes higher from here I’ll probably jump in again at the first sign of weakness.

I’m not seeing anything I like on the setup front today. Things are starting to look pretty ugly here and I’m seeing a sea of red across all verticals with the exception of the EUR, gold, and the bonds. Strap on your helmets folks, this is either one big bear trap or we’re heading into rough waters today or tomorrow.

Words To The Wicked

Keep it frosty and keep it small – don’t try to force entries just because you want to catch a seat on the bus. Things are in flux and intra-day volatility continues to increase. Which means the odds of even your most conservative stops being swiped increases exponentially. Remember that we cannot force the hand of the market – we only can control our own activities. If in doubt cash is a position.

One of our intrepid steel rats copied my 10 rules of surviving a bear market a few weeks ago and turned it into an image. Thanks for that because I actually meant to do that myself but then completely forgot about it. Given the drama I’ve seen unfold in the comment section I think a friendly reminder may be in order.