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To Support, Or Not Support?

To Support, Or Not Support?

by The MoleOctober 26, 2011

That is the question Merkel and her Christian Democratic party answered today, much to the shagrin of her her own electorate. I guess losing one local election after the other isn’t too worrisome if you know you already sold out. Gee, I see nothing but dark clouds looming above the next election season. As you know I’m fluent in German and trust me – to say that my fellow Krauts are not pleased about this would be an understatement. Talking about throwing out a bunch of eurocratic old bums to vote in a flatulent pack of bureaucratic new bums. That’s why I rarely talk politics here… it’s too depressing.

Well, it seems we are now at an inflection point that will determine whether we are dealing with a moderate or more extended downside correction. Not surprisingly the 100-day SMA has offered at least some limited support [for now]:

In case you are hungry for more upside let’s not forget that the Bollinger touch was a good opportunity to trigger a much needed correction, which is healthy for the overall trend. The pigs were getting fat and are asking for a slaughter. I’m looking at the Zero and the whole affair seems fairly engineered and clearly the boyz are having some fun with this.

A few more perspectives below – please step into my evil lair:
[amprotect=nonmember] Charts and 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.
[/amprotect] [amprotect=1,13,9,12,5]

Our treasury map reflects a failed first attempt to push above that 1260 mark. You may recall that I was a bit surprised by how fast we ran up there, in particular expecting a few potholes on the way through new moon week (again, Chris Carolan is the go to man when it comes to mapping market cycles). We are now however running into volume territory that may become a problem for the longs and if we do not hold here it’s quite possible we drop another 10 or 20 handles to the downside.

The E-Mini futures apparently bounced on the lower 25-hour BB line and while I’m typing this it’s getting ready for a retest. Further up near 1230 I see a cluster of net-line sell levels which will serve as resistance should we try to push higher today.

The daily panel is also noteworthy – in particular I would keep my eye on the 1208 and 1192.5 net-line sell levels (NLSLs). If we breach through the former we are talking defcon 3 – a drop through the latter would be defcon 4 and guarantee a revisit of the 1180 or 1160 mark.

Above I already hinted at the Zero being largely unsupportive of the current walk down. And I see a bit of confirmation on the NYSE A/D front – if we are about to fall off the plate and are currently negative for the day then why is the A/D ratio painting a 1.6 reading (as I’m typing this)? BTW, I confirmed this reading on two separate data providers – please let me know if you are seeing something completely different.

My favorite chart for the day – I popped up the SKEW by sheer coincidence again today and am glad that TOS and Prophet are finally accumulating sufficient data on this beast. What I’m seeing is extremely interesting to say the least. Please correlate those data points on your end and let me know your thoughts. Obviously this is not a black & white swing trading tool but possibly a valuable lie detector for assessing market extremes. In particular Volar’s insights on this would be welcome.

By the way – how is everyone enjoying the new TrendDay alerts? If you are a sub and are not getting them please take a peek in your spam folder and make sure that you added alerts@ to your contact list. In a pinch I recommend the use of gmail which is not perfect but quite a bit more reliable than hotmail or privately managed domains.

Finally, contrary to dirty rumors spread by AMCabrera Happy Feet is NOT canceled:


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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