Something Nasty In The Woodshed

Looks like it’s going to be a churner and it’s good to hear that the Mole signals are keeping some of you guys out of trouble. I myself am a bit puzzled right now as I earlier today saw something nasty in the woodshed.

Fortunately I took some incriminating pictures, so let’s review:

Here’s exhibit A: Someone’s got to explain to me why the VIX pushed up by over a handle since yesterday’s close.

Exhibit B: This is the SPX:VIX ratio – as you can see the tape is pushing sideways while the ratio opened quite a bit lower and has been dropping during the session.

Here’s VXV:VIX – if you’re a sub then you know what this chart is all about. It also continues to drop and for the record has been for weeks now despite the advance. Market makers are definitely pricing in some turbulences for 2013. Anyway, this is more longer term but today’s sharp drop also speaks to the short term picture.

Meanwhile the NYSE volume plots are pretty much in balance, like what’s shown on the SPX.

Call me paranoid but I think we may be heading for a quick shake out here tomorrow or Friday. If you have considerable exposure on the equities side then watch your six.

That said I think AMZN is looking rather juicy today – that’s a nice inside day setup after some long preceding candles. In a configuration like that always bear in mind that we could get a retest variation sell setup as well. In that case we may breach the upper ID trigger but then fall back. If that happens then go short on the lower breach – you can take the upper reversal of course if you want to be early. Hope this makes sense – if not check the cheat sheet.

CAT is not a setup yet but is now smashing into daily resistance – we should give this one a day or so to paint something bearish. Don’t grab this one just yet, it may push higher and squeeze the shorts.

Of course there’s more for the subs – please step into my festive Christmas lair:
[amprotect=nonmember] More charts and non-biased commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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While we’re talking stocks – here’s MCP – how couldn’t we love a symbol like that? Anyway, double inside day – you know what to do. I also like the proximity of the 100-day SMA above. If we breach it then the shorts are gettings squeezed. If we drop lower then this could be the beginning of a reversal.

XOM – also inside day setup – stick with the rules and don’t over think it.

XLU – almost looks like the same chart, doesn’t it? Have at it!

Copper has been melting lower and is now at its 25-day SMA. I admit it’s a speculative long but it’s worth a shot with a stop below the SMA. By the way – what I forgot to expressly point out with soybeans this morning applies to this one as well: If we drop through final support (in this case the 100-day SMA) then take a short position.

Another inside day setup – this time on cotton. It’s a pretty well behaved contract and a lot less temperamental than NG for instance.

Cheers,