Volatility Strikes Again

If you were foolish enough to short the market right after Monday’s drop then please seek medical attention immediately as you just got your face smashed in. Not that I think anyone visiting my humble lair would be this naive, but let’s not forget the legion of ZeroEdge readers who I recall were partying like it was 1999 as equities were slipping on that banana peel Silvio had dropped earlier that day. You got to love the Italians – they definitely have a sense of humor 🙂

Lo and behold after a 50% rise in volatility in one week we’ve recovered about half of that over the past two sessions. And that’s once again why I follow the charts and not the news. Technically speaking we are most likely going to trigger a bonafide VIX buy signal – which means the odds are now starting to favor the bulls again.

I dont’ think the longs are out of the woods just yet however. The E-Mini is tickling a NLBL which expires today, so let’s call that weak resistance. Well above the 100-hour SMA now and I hope you caught up with my morning briefing when I suggested to get positioned near the 25-hour quite a few handles lower. I’m tempted to cash out at this point as the YM and NQ are running into resistance:

Here’s the YM which is now kissing its upper 100-hour BB plus its NLBL at 14,023.

The NQ meanwhile is looking similar on the hourly but is struggling to overcome its 25-day SMA.

Quick platinum update: We were considering a last kiss goodbye setup yesterday and it seems to be playing out according to our evil scheme.

Gold we’ve been playing like a fiddle once again – nice ST long entry near the SMA cross-over and we took profits just when it was about to fall back below. I’m now seeing possible support but I would not grab any longs unless we see things slow down a bit and test that SMA.

Here’s a little freebie – inside period/day on crude – I like this setup as it’s also right below a brand spanking new NLBL. Have at it but keep it frosty!

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Cheers,