Party Like It’s 1999

A sea of red candles across the board with the exception of the Dollar of course and the bonds. In my last post of 2014 I mused that the new year would be a tough one for equities but little did I know that we’d start it off with a down slide.

I strongly suggest you don’t try to step underneath this one as it’s very much possible that we’ll retest the ES2k mark. Both the 100-day SMA and the 25-week SMA are waiting there, which doesn’t mean it’ll stem the sell off but it’s our next best support cluster.

Today’s DVOL curve suggests a very well organized sell side – don’t take this lightly – the bots are inflicting as much pain as possible and I don’t think they’re done just yet.

Even if they were – there’s no technical context for us to dip into long positions here. On the volume profile chart we see the volume hole at 2020 having offered practically no support whatsoever. And that’s pretty bad news as it’s testimony to the strength of this sell off. Even if we bounce here there may be another leg lower – the (very abridged) Santa Rally brought us to new highs but remember what I said about late stage bull markets. Things are only going to get more volatile moving forward.

The big news of the day however is crude which actually dipped below the coveted 50 mark. At the danger of sounding repetitive – do not try to pick a low here yet – price will tell us when it’s ready to produce a floor. Trust me, a many have tried and failed over the past few weeks, and hopefully you have heeded my advice and ignored any urges to buy the dips.

More importantly however is that we’re also scraping the lower 100-month BB. I had to zoom out quite a bit to find the last occurrence, which was back in the 20th century – mid 1999 to be precise.

Aaah – the good old times… when $30 crude was considered a selling opportunity. I remember filling up my car for 99 cent per gallon, and that was in West Hollywood. I doubt that we’ll ever see those prices again and as a matter of fact we are at a pain threshold that already has huge implications for an entire industry. My chart suggests that a bounce will present itself here shortly – if it doesn’t then I may have to eat my words as there’s nothing but air below. Statistically speaking however a bounce sometime this month has high probabilities, especially after six consecutive lower months (not counting January).

That doesn’t mean we’re buying the 50 mark – however it does mean that I’ll be on the lookout for possible buying opportunities on both the hourly and the daily charts. You know how I operate – I rarely take weekly entries – instead I take hourly or daily ones and let them turn into weekly campaigns. That’s how we rode the Dollar last year and it banked us some very nice coin.

The other chart which touched very long term technical context today was the EUR/USD – so we’ve got a  twofer today! Please step into my lair for a bit more detail on that front:

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Cheers,