The Mole Smells A Rat

Let me cut right to the point: I don’t trust this tape further than I can throw the average NYSE market maker, and if you’ve been there then you know that most of those guys aren’t exactly underwear models. Whatever is the source of your paranoid suspicions, you ask? We barely have three down candles and you already getting antsy, you say? That’s right – once again the Mole is smelling a rat. Let’s observe:

Exhibit A: The tape has been dropping (thus far – we ain’t seen the close yet) but UVOL is clearly outrunning DVOL. Rather suspicious and that’s putting it mildly.

Exhibit B: NYUD clearly in ‘meh’ territory. There is no selling pressure and this is all for show. Perhaps it’ll change by the EOD, but for now I’m not seeing any angry bears taking advantage of a clear inflection point as the SPX is pinned below its 25-day SMA .

VIX:VXO – on the rise already and that divergence on Friday before the close looks rather iffy (especially given the late Friday drop). Perhaps EOM artifact – possible – but even then today’s ratio does not suggest MMs are overly worried here.

The only one that’s doing what one would expect is the VXV:VIX ratio. Provided here as the Mole believes in ‘fair and balanced’ charting practices 😉

The Zero Lite isn’t exactly screaming bearish either here. But again, let’s not jump to conclusions and wait for the close.

In the absence of any daily/weekly/monthly resistance levels I would keep my eye on the 25-hour right now. It held up well this morning and I expect it’ll be the decider here.

Remember one of our prime directives – it’s not the first sell-off that counts, it’s the follow up. The Mole is watching in eager anticipation.

Bonus Chart!

I would be remiss in not sharing this prime rib AAA rated EUR/USD setup with my intrepid steel rats. It’s bumping against daily AND weekly resistance, of which the weekly is rather pronounced (i.e. 25-w and 100-w right above). Excellent inflection point for the Euro and if it hops the fence(s) it’s going to be one cold summer for the greenback.

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Cheers,