Panic Tuesday Wrap Up

I have to run in a few minutes and don’t have much time, so let’s dig right into it:

Three key observations about today’s tape: One, there was little participation and between nuclear reactors blowing up and today’s FOMC statement you’d think that we’d see a bit more participation. Or would we? I think today’s NYSE session is a textbook example for the mantra I keep repeating over and over again:

THE NEWS DOES NOT MATTER!

No ifs and no buts – I simply don’t read/follow the news, especially during trading. I don’t even read other trading blogs for that matter. Yes, sometimes I briefly glance at ZeroHedge but keep my exposure to a bare minimum as it’s one big bearish bias machine.

Second observation about today’s signal – nobody wanted to hold into the close. Which shows that there is little confidence by the longs right now. So we may see follow through here in the coming days. I do not want to be short or long right now.

Third, that sharp spike on the hourly Zero tells me that the marines stormed in to prop up equities today. Without the Fed’s help and more importantly its extended POMO calendar things could have turned a lot more ugly today.

Okay, a few more charts for the subs:
[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 subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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I’m sure you remember that chart and it was no surprise to me that 1260 is where the bulls made a stand. I’m a bit split on that rejection however – yes it happened but with very little participation. So we may see follow through which in the end could push us much lower. It would take an immediate ramp higher to diminish the odds for that scenario.

Now the VIX equivalent of the prior chart is extremely interesting. As you can see we pushed far outside both Bollingers and that is usually good for a snap back. BUT, we also seemingly have crossed the Rubicon, which ties into the May 2010 playbook I proposed yesterday. So it would not be unreasonable to expect a little ramp higher (on very little participation) after which the second shoe drops with a vengeance.

Just as a reference the usual VIX chart. I think we may even get a buy signal – yes – but it could be short lived just like the last one. Of course all that ties into a generally more bearish outlook – but we need to collect a bit more evidence before we make a final determination.

Copper to wrap things up. Yes it has been dropping like everything else but I don’t see anything beyond a regular shake out just yet. If we drop below 1,250 things could accelerate. Let’s see if copper paints a divergence anytime soon – if not it would be supportive of the medium term bearish scenario.

Cheers,

Mole