Prepare For A Bit Of Turbulence

Statistically speaking summer is the least fun and least profitable period of the year. Great time to take time off and forget about trading until the end of August. Given that I propose that the recent advance, short of pushing us into new all time highs, should be accompanied with a healthy dose of skepticism and vigilance.

Today’s story peels a bit like an onion, with several layers to be taken into account. Let’s start with simply the LT view on the E-Mini which shows us a little over 40 handles below all time highs (assuming the September contract).

The recent push most definitely has returned us back into bullish territory but I have my reservations on it continuing much higher without at least an attempt to shake out a few of the weak hands.

And just for the record, this is coming from someone who continues to hold a long position, so we’re not talking my own book by a long shot. And with a stop I am just now advancing to about 0.3R instead of leaving it at break/even. My reasoning for locking in a wee bit more profit is explained below.

For one we continue to be in the doldrums for another two weeks. #34 only briefly interrupts what is usually bearish season in equities.

Here’s the mean weekly % positive and we’re somewhere near the median from what I can see. So yes, an up week is absolutely a possibility, which means no reason to cut out and head of the hills.

The 12 quantiles suggest that August is one of the worst statistically speaking. No big surprise there unless you’ve just started trading last Tuesday.

Accompanied by the way by June and September as indicated by this quartiles chart. I should just do everyone a favor and take the entire summer off next year.

Alright Mole – August and September have long inspired bearish aspirations. Tell us something we don’t know!

So let’s talk about volatility then – the implied kind that is. Please step into my lair:

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