Stomping The Bears

Yet another attempt to breach the brick wall on the equities side. A breach of 1886 had the bears running for cover like cockroaches with tiny battered tails tucked between their legs. Good for them – they deserve it for putting us through the past two months. If you bother to drop by their habitual watering holes expect obligatory snarky commentary with a general emphasis on how unfair it all is and how idiotic a market for not crashing back all the way to 666. After all – life would be so much better for all of us then, wouldn’t it? Snark.

I told you guys this morning what to watch out for and I hope you paid attention. But that’s yesterday’s news – what you really should care about it is what comes next. So let me paint the picture. First up we have a huge divergence on the GBP/JPY – which suggests that the bulls may have gotten a bit ahead of themselves. And quite frankly, they’re not going to make it this easy, are they?

VIX:VXO ratio – running completely opposite – that’s strikes #2.

UVOL and DVOL on the NYSE – wow, that’s a smooth curve – isn’t it? This looks like a bot driven squeeze to me but there are not too many buyers up here.

Our home brewed Zero indicator – rarely lets us down. Nice spike there in the morning and any blue reversal signals should be ignored on ramps like this. However notice how momentum has completely fallen apart like a botched soufflé?

The VIX is now back at a medium term trend line  – sure it could drop a bit more toward 11 but give it a session or two and we’ll see some green/white here.

So this is seems to me the most likely scenario – a revisit of the old stomping ground just to reel in a few hobby bears and then she takes off and takes the bears to the cleaners. And guess what – if it just walks higher and leaves us all behind then there’s nothing we can do anyway as there were no good entries to the long side. If you managed to jump on board this morning then congrats to you but start taking partial profits.

So now on a daily basis let’s see how we can play this thing – setups below fold:

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Cheers,