More Kangaroo Steel Rat Fun

I’m frankly not surprised to see us reverse today – as a matter of fact in one of my comments yesterday I offered this after the close:

“I think it’s 50/50 right now – this was some technical repair but the bulls now have to show that the first move was a bear trap. And spending more time below 1260 would give the bears an opportunity to land a lethal blow. You don’t halt here at the very edge – you either give it more space to complete or you bust through to be done with it. Parking at the Maginot line is usually done to draw in both sides and after a big push up like this the bulls are the next best prospective victims.”

So when I fell out of bed today I laughed out loud when I saw that opening gap (I live in LaLaLand – so hold your snarky jokes). Anyway, what is a constant state of apprehension and frustration for most retail schmucks is pure manna from heaven for us steel rats. Today is shaping up to be one awesome setup for Monday, and I’ll offer more on that further below.

Let’s get a feel of where we are right now and then work ourselves up on the time scale. The hourly spoos ran into what appears to me a swarm of buy net-lines that thus far have proved to be a brick wall. The daily on the right is pretty much useless to us as we are in the center of Kabul and everyone’s shooting from all directions (and elevated positions I may add). Tough tape!

The weekly has us back above that 25-week SMA and the monthly is above what is now an expired NLSL. Both of which is positive of course but the one Million carrot question right now of course is whether this is a last kiss goodbye before a big flush or if we merrily continue higher, thus resuming the over uptrend.

The statistics point upward as you know – the charts are a bit mixed at the current time – both bearish and bullish evidence abound. And I have been around long enough to know that the market can throw you a major curve ball when you least expect it. That is when you operate cautiously but at the same time confidently when you see inflection points being breached. Given such modus operandi it appears that Monday should be a very crucial day for all of us.

So how do we know which side will get their season? Well, please step into my dimly lit evil lair:
[amprotect=nonmember] Charts and 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.
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It’s quite elementary, Holmes! Unless the SPX shoots above 1260.82 before the close the Kangaroo Steel Rat is looking at both, an inside candle buy or retest variation sell setup on Monday. That’s three times in a week – does it get much sweeter than that? That’s right – leave it up to Mole to see the forest for the trees 😉

Stop logic is a bit more tricky as we have a pretty long candle today so I would recommend using 1/2 of ATR-14 instead which is currently around 28 – so our stop would be 14 handles (~1246 for the ICB and ~1254 for the RTVS). Of course your mileage varies so use whatever stop logic works for your particular system and trading window. BTW for the record – never ever set your stop to an even handle – always deduct a few ticks and you may just avoid those stop bots and live another day.

We’re not done yet – a few FX setups for you currency aficionados:

AUD/JPY – since I took that snapshot it pushed to 81.27 and if it makes it above that upper 25-hour BB line we may be good into 82.4. The daily panel also looks interesting as the 81.49 NLBL is being tickled but not breached yet. Obviously that may be as far as shell shocked Yen traders are willing to push their luck this week and that’s why I recommend following that hourly BB for signs of weakness as well. Follow the tape – not your opinion.

EUR/CHF – I see a cluster of resistance forming on the daily – very interesting and if you are short this is your triple bolstered Maginot line. We are in a sell setup on the hourly as that 1.2204 NLSL was breached and is currently being retested. Not to be biased here but it seems to me that short is the higher probability trade right now.

NZD/USD – that 0.7913 NLSL on the daily panel has been holding thus far – which incidentally is coinciding with the 25-day SMA. For more clues that compressing BB on the hourly may be of service – a push on either direction will most likely give us a clue as to whether we go to 0.82 or 0.76.

I leave you with this (because I can):

Enjoy your weekend!

Cheers,