Running On Fumes

It seems that equities these days are merely propelling themselves higher in a step by step fashion courtesy of strategically timed inflationary events. FOMC announcements are always good for a few dozen handles and then of course there are shoddy economic reports which promise the continuation of the current QE regime. After over five years of this your resident market megalomaniac would not dare to guess how much higher all this will lead us but I am often astounded by the sheer audacity of this big monetary experiment. My sincere hope is that I won’t live long enough to see the other side of the economic roller coaster we’re all riding.

Very tough tape in equities right now – not that it’s doing anything abnormal but under the hood all participation has left and I’m seeing a complete flatline on the Zero front. Now a bear will look at this and think – hey, great time to go short. Problem is a bull looks at that and thinks we’re in a sideways correction. Both may be right and that’s why we usually see an accumulation of bets in tape like this – which is why I call them honeypots. They can resolve themselves violently and thus it’s risky business.

The Dow futures are back at a prior weekly resistance level – this time our NLBL sits at 15,455. At the time of this writing we seem to be closing the week above it and that would be a weekly buy signal. However looking at this chart it’s clear that we haven’t gone anywhere since May. Apparently the buck stops at 15,600 and if the X-Mas season doesn’t push us above that then we may see a sell off early in January.

Bottom Line: If you are still long from a lower level or if you’re trend trading then there’s no reason to do anything as there’s nothing bearish on this chart. If you are not in a trade right now then I recommend you stay in cash and trade outside of equities right now.

Quick update on our crude trade from earlier this week. Well, once again we got lucky and thus far the 100-week SMA held up just fine. Again I would do nothing here as moving stops higher may kick us out if we for instance see an RTV-L setup.

Our gold trade also has advanced well and is now knocking on the one big test that I warned you all about. The weekly NLBL needs to be overcome and if gold manages to do so we should be off to the races.

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Enjoy your weekend, folks!

Cheers,