The Wedge Of Hell

If nothing else the gyrations in equities as of late are designed to lure out the worst in you – specifically the little voice in your head that likes to form a directional opinion and then makes you bet on it. Let’s be crystal clear here ladies and leeches – market makers as well as institutional trading desks love a perceived crisis. First up – they’re on the inside – and you are not. You can pretend that you know better/more than they do but that’s pure illusion. If you have an opinion then that means you can be wrong – and that may cause you to panic. When’s the last time you made a good decision whilst sweating bullets as your (over exposed) position is depleting your account? To quote Yoda:

There you have it. Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering. And then losses – Yoda skipped that part.

So let me show you were we are and then propose a reasonable course of action. If you zoom out of the spoos on the daily a little then you’ll see a pretty decently defined rising wedge. The Monday drop confirmed the third touch which is a minimum for drawing any type of support/resistance line. Basic TA 101. Mind you, that line ought to be drawn with a crayon and not with a pencil. Until we breach either the green line below or the red one above we are in chop fest 2013 and any directional opinions of any kind ought to be abandoned immediately.

You can play the swings – be my guest. But don’t think for a second you’ll be able to predict where we’re heading tomorrow. Too much emotion out there to be exploited. Which means the Mole steps back and lets this sort itself out a little. Unless I see a bonafide and super delicious entry opportunity you shouldn’t touch equities with a ten foot pole. The wonderful part about not working in a shop is that you don’t have to trade – nobody’s forcing you to take positions.

That said there’s an Retest Variation Long (RTV-L) unfolding on the spoos as well as the cash. The ES trigger starting tonight stands at 1691.75. I may be tempted to jump into a handful of longs should we breach that threshold tomorrow. I have little expectation it will happen but if this triggers – against all expectations – and this entry proves to swing the right way then I’ll add positions on the way up.

No further entries for today – too much chop chop out there and we need to see something pick a direction.

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Cheers,