Swing Traders’ Heaven

The last few weeks have truly been a swing trader’s heaven – for the directional trader (and many analysts) it’s been more of a purgatory. Let’s look at where we are and what to expect moving forward:

Yes, it’s been rather exhausting for both bulls and bears but if you take away all the noise I see three salient facts:

1. Stalemate: We have a market that is incapable of either rallying or falling. Whether this is by design or not does not matter – clearly the 100 handle channel between 1120 and 1220 remains impenetrable to either camp.
2. Correction: I do see a correcting market however – Prechter and his ilk can count this turd any way they want, fact remains that whatever sub-divisions you can think up we are losing a lot of bearish momentum here without progressing to the downside. This is key, in that represents a small victory for the longs.
3. Confused: After nearly a dozen course corrections nobody I am talking to wants to take any chances at this point. This is a market that has turned into a swirling mess courtesy of a self fulfilling prophecy. In the end only the bots win as they are having a field day in this type of tape.

If you look at seasonality (proudly presented recently by Volar and on occasions by yours truly) then you know what the bears are up against. Steering the tape toward the 1120 mark and below before we hit the mid point of October is key and they are running out of time.

The current stalemate will resolve itself one way or the other by the end of October, most likely a lot earlier than that. In the meantime the worst thing you can do is to get positioned in the middle, which is right now near the 1160 mark. Just say no and wait for either 1120 or 1220. Yes, you can play the intra-day bounces via the Zero or your own favorite indicators but don’t make any large bets and leave it up to the Euro-trash to flail around wildly and to change their story on a daily basis. I ceased to be amused a long long time and and for me this is sitting and waiting tape. Fade all rhetoric and wait for what happens, not what anyone out there says.

Now here are two short term goodies for the subs:
[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]

The AUD/JPY is finding itself at an key intra-day support level. I think the 75 mark must hold or we most likely find ourselves at 74 or lower. Which is also near the current NLSL on the daily panel. Suffice to say that if we breach that things may finally swing toward the bearish end over on the equities side. But alas we are not there yet and most likely will have to endure a bit o’ whipsaw and scaring of infant traders.

Not so coincidentally the setup on the spoos is rather similar. We just tested the lower 25-hour SMA and bounced a little. The 100-hour at ~1150 needs to hold or we probably visit 1110. Which is a few handles above our current NLSL of 1102. And you know what happens if we get past that.

So here you have two short term and daily charts to structure your swing trades around. Enjoy life in purgatory and don’t make any directional calls until the house is making its play.

Cheers,