Trap Nation

I’m a bit under the gun with various deliverables today, so this is going to be a quick update. Nothing really new to be said anyway regarding the overall market and the current tug-o-war between the bulls and bears. As you know I was still positioned long but then got stopped out during a quick stab lower. The ensuing run higher once again confirmed to me that this market is determined to trap as many participants as possible. My kind of tape!!

So a decision had to be made. Call it quits or re-enter after a pronounced spike low? After consulting the Zero indicator (you are a sub aren’t you?) I didn’t see anything truly bearish on the participation front.

So I decided to jump back in near 2679 with my ISL a bit below my previous trail – it now sits < ES 2652. Right now things are looking bullish again but we all know this can change quickly given almost random daily reversals.

Bull Versus Bear

Some of you guys have pointed out that I have been almost annoyingly bullish over the past few weeks, continuously stepping in to buy the dips. Well, for one I have been getting away with it, and probably couldn’t have done better shorting the rips.

On the other hand I have yet to see compelling bearish evidence on the price end. I’m not talking about momo, breadth, or volatility measures. All I’m talking about is price and the long spike lows on the daily chart still show significant buying pressure which materializes mostly when it counts the most, i.e. > 2650 and more recently 2600.

Call me old fashioned but until I see significant long term support clusters taken to the woodshed I’m not exactly prepared to back up the truck on short positions. A lot of bearish moment has been wasted in the past month on sideways churn.

Now that said, right now – below the 100-day SMA to be more specific – would be a great time to really stick it to the bulls. So I’ll be monitoring the Zero for the remainder of the week and if I see signs of distribution again then I’ll be first to pull the trigger on some short exposure. Until that I happens I remain long.