On The Mend

Just in case you care – I’m feeling much better this morning and what a difference one day can make! Yesterday I literally had difficulties walking upright without yodeling out loud. But after a good night’s rest and special care by Mrs. Evil I managed to take the taxi to my chiro today who then took great pleasure in inflicting all sorts of pain whilst putting me into embarrassing positions. I swear he does half of them just for the giggles and I think they should insist on a Myers Briggs personality test before handing out those licenses to blatant sadists.

Well, I came back late and although I’m ready for action the market waits for no man (or woman). Let me share what I scraped together over the past half our or so. Equities continue in scorched earth no prisoners ramp mode but if you look closely things are starting to slow down which is causing that 25-hour Bollinger to start getting pinched. Which tells me that a big move is coming but the direction is yet unclear.

The NQ however has already picked one (down) and I currently consider it the canary in the coalmine for what happens next on the S&P futures. It’s a bit too early to get involved however, so let’s see what happens over the first few hours of the session.

What’s making me a bit suspicious is the obvious bot dominated tape I also belabored yesterday regarding the Zero’s participation signal. The UVOL shows us a very smooth line which suggests that the bots were simply bouncing the ball back and forth.

My Take

I say let’s remain vigilant and wait for the right entry opportunity. The last time this happened I expected continuation higher and that’s what we got, AFTER a quick shake out to the downside – much to our chagrin. We will never be able to out guess the market but clearly the odds for success are much better after a dip followed by an entry pattern.

Otherwise I don’t see much of interest on the futures, equities, or bonds side right now, so let’s turn our attention to FX. The EUR/USD has reverted back the apparent median of its current sideways range. Honestly this could go either way but obviously market sentiment seems to support the EUR for some strange reason.

I know there is an entry to be had here but I’d be damned taking one here. As long as these gyrations continue we are better off getting exposed near the outer ranges of that sideways zone. For example a push higher toward the upper BB followed by a retest would a long opportunity. Why not play the short side in that case? Because the range has already compressed so much and there’s not much meat left on that bone.

The USD/JPY however seems like a long opportunity IF (and only if) we see a retest of the still falling 100-hour SMA. If it was trending higher already I would risk a long here but until that happens I must remain cautious and make sure I have the odds on my side.

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