Patience Pays Off

For weeks now we have been scheming and plotting – waiting patiently for bonds to make a move. Yesterday afternoon we once again were presented with a short signal and being the robotic stainless steel rats that we are we cautiously went short:

And I quote (myself – yes, I’m tacky like that):

We are officially below a daily NLBL and it’s permissible to be short here with a tight stop slightly above 130?190. As you know I am completely 50/50 on this trade as I have no directional confidence at this point – maybe she drops and maybe she doesn’t. Until the tape tells us what’s what I’ll be short here and as soon as I get stopped out at 130?190 I’ll swing around and be long again. What can I say – my only allegiance is to my trading account.

Well, if you took that trade yesterday then I am sure you don’t need me to give you an update:

Thank you, thank you – yes, I’ll be here all week. Of course what I did NOT expect was the vehemence of this move – but then again – it has been coiling up for a while now and if you’re patient and wait your turn you will harness the sweet fruits of success. Have to say I’m smiling rather smugly over here. Suffice to say that you should be taken profits here as we are sitting on daily support. And for the record: We’ve milked this setup all the way to the max – first on the long side via ZB and now to the short side via ZN.

Of course the long term chart is now getting even more interesting. The daily tells us to get out but if you are a long term trader you may want to consider the technical damage inflicted on the weekly panel and even the monthly is now sporting some alert signs.

Plenty of more goodies below for my subs – please step into the lair:

I’m pretty excited about ole’ bucky here – that’s a sweet push above the 80.5 mark and I frankly did not expect to see it scrape 81 today. Technically we have now established some support above 80 and the onus is on the Dollar bulls to keep it that way. This bodes very well for my international exchange rates I may add.

What’s a bit more tantalizing is the weekly NLBL we just punched through – very positive. The next almost guaranteed resistance cluster is around 82 as the 100-month SMA and the upper 25-week BB coincide right there. Well, let’s see if we get there first.

Yesterday I mused about what would happen if we dropped to 1650 and little did I know we’d find ourselves there today, actually quite a bit below. Now yesterday’s NLSL breach has been confirmed and we may go all the way to 1580, which is my preliminary target area.

The only issue I have is that my P&F claims support around here and if it gives we may drop a LOT lower. I would suggest we close out 50% of positions and keep the rest as lottery tickets. Don’t ask me about a good stop right here – it’s a long ass candle so be creative 😉

Before we get to equities here’s a quick pointer on the FX side – seems like we are at target on the USD/CHF, so I strongly recommend you take profits. You may recall that most of us (me included) missed this trade. However, this is a pretty bullish move and IF we are so lucky to get a retest of the 100-day SMA then I’d venture a long position with a tight stop below.

Here’s today’s MMMR update – looking mighty toppy here I got to say… As I said yesterday, you don’t want to be long here as things are pretty volatile and could blow up in your face at any moment.

I find it humorous that we are painting a negative volume profile on the very day we made new highs and almost painted 1400. Ever heard of a ‘blow off top’?

And yes – unless we ramp into the close we will most likely get to step 2 in our VIX sell signal. All we need now is one more closer higher tomorrow and we might be going to bear town. If you are confused about the VIX sell signal rules then please consult the cheat sheet.

Cheers,