So Far So Good

Apologies for my relative absence today – for one until now there was little to add to yesterday’s perspectives, and second I’m running a bit thin on time today. So let’s cover the basics:

If you recall – I pointed at the 100-hour SMA as our inflection point for a drop toward the lower Bollinger. That very scenario played out overnight and since then we’ve bounced back and are in the process of recovering the SMA.

It’s possible that this was simply a little stop run to shake out some weak hands. The UVOL/DVOL ratio seems to suggest just that. If you look closely the previous sessions ran pretty much on remote control but last night’s sell off took a few folks by surprise (strangely) – at minimum it triggered a series of stops. Now we need to hold the 1996 mark in order for the party to continue – if we drop back below and the cash closes in the red then we probably are looking at a more extended correction. In which case I may consider closing out some of my NQ longs – thus far they’ve barely broken a sweat.

Nothing of substance on the setup side today – except copper which is looking like a pretty good long here. Now don’t read this the wrong way – I’m not saying that copper has high odds of jumping higher. Actually, it’s more of a 50/50 scenario – however we are sitting on double support and that puts the odds in our favor IF (and only if):

• We close above the NLSL and SMA today.
• We hold that mark into tomorrow.

So I am taking a calculated risk here near a potential inflection point – 50/50 odds right now but it’ll increase rapidly the more time we spent here. All that translates into a potentially high payout for a small risk (i.e. my stop is but a few ticks away). Ergo I’m attributing 1/2R here and then will add 1/2R if not stopped out by tomorrow after the NYSE open. If she holds here then a jump higher in the coming week would have very good odds.

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Cheers,