One More For The Road
Our time in Sète is nearing its end as we are scheduled to head up into the mountain areas NW of Castres which is about 100 miles away. The weather report has actually improved a bit and we may just see a few rays of sunshine intermixed with a some rain showers during our time there. Could actually be nice as the air is going to crisp with temperatures ranging between 55F and 68F.
Quite frankly I can’t wait as the hustle and bustle here in Sète is highly reminiscent of what we are dealing with in Valencia all year long. As I already mentioned last week – Internet access in those parts is going to be spotty which is why I decided to step aside and hand the keys of the lair to Tony, my trusted quant trading buddy.
Not to sound like a broken record but I strongly recommend you sharpen your pencils and absorb as much as possible of what he deigns to share with us. As always you are encouraged to ask questions in the comment section should anything be unclear. Tony is a great guy and will be happy to sort you out.
Now as I won’t be trading during my relative absence (again I’m really not sure what awaits me there) the emphasis of today’s post will be to point you into potential setups that may come into focus in the coming week.
On the E-Mini side I do not see any indications of weakness thus far, which most likely will mean a stop out at ISL in my current lottery short position.
Here’s the SPX:VIX ratio on top of the cash index. No divergences there as the VIX has continued to drop in the past few sessions.
Now look at that UVOL signal over the past two sessions – nice and smooth – no drama whatsoever. So given the probability of continuation higher I’ve already placed a stop limit order near my current ISL to put me into a long campaign with a new ISL < yesterday’s entry near ES 2791.
Chart Voyeur Victims
Okay now these are the charts I want you to keep a close eye on over the next week.:
Gold has been quietly pushing higher and seems to be engaged in a LV short squeeze – which can be among the nastiest as short holders are slowly being simmered to death on a flow flame.
Any dip back toward that 100-hour SMA is worth taking but I would probably wait for a spike low followed by a retest. Since gold is in a LV phase there are good odds we’re going to get at least some time of ST floor pattern.
Crude is looking like it’s ready to run after completing what is starting to resemble an ascending inverted H&S pattern. I’m hesitant to suggest an entry right now and since I am potentially offline for several days the best I can suggest is a drop back to that green support line I plotted on the hourly chart.
What is interesting to observe is the stark contrast between the hourly and the daily panel. While the hourly is experiencing HV cycle the daily ranges seem to remain within less than one standard deviation. That’s not unusual for futures actually but it’s what makes trading crude a bit challenging.
Make sure you place your stops with the perspective of the hourly panel – for example if there’s a dip to 57 I would put my stop to < 56.
Finally the USD/JPY is an entry right now if you want to get in early in this move. A more conservative approach would be to wait for a breach of the 100-day SMA near 111.6.
Alright – that’s it for me for the next few days. I’ll do my best to pop by here and there as connectivity permits. À bientôt!