There Is No Spoon

The essence of the Matrix was the idea that everything we see, hear, feel, believe, etc. is nothing but an illusion of our own mind. What really then is reality? Yes, that’s right today I’ll go all philosophical on your ass.

Quite fankly, on that one I am out of my depth – whenever I think I get a better grasp at what defines reality it again slips away. But I can tell you that the number 1300 in the end is completely meaningless. Whether or not we close at 1300 or 1298 only is important to us if it means that 1300 is unattainable and if many other traders take appropriate action. Otherwise it’s just a number – it’s a mental anchor that has no meaning. This is particularly clear is you happen to be a gearhead and ever dabbled in hex or octal notation. For instance in octal notation (base eight) 1300 (base ten) is actually 2424 and in hexadecimal (base fifteen) it’s 514.

Alright, now – why do we care about 1300? Well, we don’t really. Because it’s nothing but a hurdle on the way to 1350 or 1400. What we care about is the bigger context and that is often being ignored when everyone just focuses on a number. Of course the bigger context also is only produced by trader sentiment and action – but now I’m afraid I may be losing you.

Bottom line is that we should not worry about whether or not the dog wags the tail or the other way around.  What we should worry about is that there is wagging in the first place. And that is the important part. Is this really a battle for 1300? Well, after seeing the end of today’s session I beg to differ!

Just look at today’s session. The Zero and the Zero Lite (ZL) really nailed it right from the get go. We gapped down but the ZL was not impressed to say the least. After painting a nice little divergence we took the express elevator up and tickled the bottom of the SPX 1300 mark (briefly pushing above for a few minutes). I bet almost everyone (me included) was expecting a short squeeze ramp in the final hour – but it mysteriously just fizzled away. For some this may be confusing – but not to me. Look at the ZL in the last hour – complete lack of participation!

Now I propose that the longs simply stopped buying. I don’t see bears selling here – where are the sudden spikes lower on the Zero Lite? The longs took it to 1300 and then the panzer divisions suddenly stopped at the Maginot line. Why would you do such a thing? Well, to attract a few more short sellers for one – to burn theta of put holders maybe – who knows? We don’t care – what we do care about is that the bears are looking at the gates of hell and are not even attempting to fight back.

Maybe there are no bears. Remember, there is no spoon.

Aaah – now we’re getting somewhere. See, I often refer to the bears and bulls myself but deep inside I know that the game is not as simple as red and blue states, ying and yang, right and wrong, or black and white. Except for us lowly retail traders institutionals really don’t care in the end – they are whores and they will take the tape in the direction that equals maximum profits for them.

So, instead of bending the spoon – let’s bend our minds. Let’s forget about 1300 for a moment and just analyze what has happened in the past week or so. Look at the hourly Zero: Firmly bullish. Look at your own indicators – I am sure they don’t scream out to you that the edge of the abyss is right around the corner.

1300 or not – whoever held short last week is currently losing the battle and there will be a price to be paid. It’s not yet too late – even if we push above 1300, mind you. If it happens gradually then the shorts may be able to turn the tide. But bending spoons or not – there are tons of stops a few handles above 1300 and if those get taken out – pop goes the weasel.

Geronimo had a good session today – two winners in a row.

However, yesterday it had a pretty lousy day – two losers in a row.

If you ask me – I think Geronimo is doing quite well in this nasty tape. As you know it’s a long only scalping strategy which exploits market manipulation attempts. We have not had many of those in the past month or so as we completed what at this moment looks like an a-b-c in Elliott Wave speak. I am definitely looking forward to more directional tape again. This in between hem & haw tape is starting to get on my nerves. But we need to be patient and trade the tape given to us. But let’s not focus too much on round numbers 😉

Cheers,

Mole