Storm Clouds

9:49pm EDT: Yesterday was an extremely telling day as downside breadth was negative all day and the tape never caught a bid. Also mysteriously the $7 Billion POMO auction never as produced as much as a whimper in the tape and the overnight action was pretty muted. The tape also ‘feels different’ (if you allow me such subjective measure) and the weather seems to have changed. I still think that it’s possible we’ll get one last leg up but if it happens it’ll have to claw itself uphill against 80 mile winds and heavy showers.

The regressive to the downside appears incomplete, so I am expecting at minimum a push into the lower 970s once the early morning head fakes are done sweeping stops. If that doesn’t hold next stop would be 960, but at that point we’re getting fairly close to that lower diagonal which, if breached, would greatly increase the odds that the green scenario might be in play. It’s extremely tough to say at this point, but I’ll keep my eyes peeled.

The Dollar is hanging on so far – which supports the bearish scenarios. Do, I see a little inverse H&S on that thing? Nah, must be my eyes seeing things… 😉

10:20am EDT: Just to be perfectly clear on this – I’m now using every spike to the upside to add to my March puts. Yes, this might only be Minor B of Intermediate (Z) of Primary {2} – but we won’t get final confirmation until it’s way too late, so this is how Homie plays this game now.

12:55pm EDT: What makes me a bit nervous today is the NYSE a/d ratio which is the strongest reading since August 3rd – at least intra-day. It’s possible that I bought yesterday’s March puts at the bottom of B of (Z). However, it’s almost impossible to pick the top here as we’ll see plenty of head fakes before we drop into {3} – so, I decided to hang on and to add to my positions if we rally up.

The Dollar is still hovering around the 79 mark on the DXY – a push towards 80 would be welcome just about now but it’s very much possible we’ll see both the Dollar and equities make new highs in the final leg of Primary {2} – so be cautious about relying on that correlation for your trades.