Valencia!

After ten days of being tortured by street musicians offering a very limited repertoire of Vivaldi we left Madrid behind this morning and took the high speed train (AVE) to the magnficient city of Valencia. What can I say – it’s absolutely gorgeous over here – although Madrid as the capital stands on its own I think I may just like it better here.

We rented a very charming apartment in the center for a whole month, which henceforth will serve as the official evil lair. The first thing I did was to to do an Internet speed test and I am happy to report that connectivity kicks some serious butt over here. The area we’re in is literally paved with little coffee shops, restaurants, bakeries, you name it. All in all I’m a very happy Mole right now and I’m not missing Los Angeles one little bit.

I have been ignoring equities for the past few days as there really was not much to add to the support clusters I have pointed out on various charts. I would like to revisit some of my charts today however as the dynamics are slowly shifting. Basically the bears are wasting a lot of time right here and momentum may just swing the other way. I’m not fully convinced just yet however and I will show you why.

As you can see the spoos have been dancing the polka on my 100-day SMA for the past few days. A decisive breach here really was necessary to hand momentum over to the bears and once again they seem to be blowing it.

My volume profile chart shows me a deep volume hole at 1330. What does that mean? Well, even if we drop from here then odds are that we’ll see momentum fizzle out quickly near that cluster. What may be necessary is some weekend screw the longs gap that pushes us below that. Otherwise I’d say good look to the grizzlies. But there is more.

I have not shown you my medium term RSI_EMI chart for a while because there was nothing to see. We are now however back in bounce territory – at least judging by previous fractals. It’s of course possible we see a repeat of an August 2011 wipeout but those seem to happen very rarely.

Also suggesting a loss of bearish momentum is my Market Maker Mind Reader 1 – a proprietary volatility ratio indicator I concocted a few months back.

The MMMR2 seems to agree. Now that does not mean a continuation down here is absolutely unthinkable but at least market makers seem to be pricing in a little bit less risk here.

I would be amiss to not show you the one bearish chart that may eventually trump them all. The weekly spoos chart looks like as if we’re going to get a close below that NLSL and that is medium term bearish. A bounce may happen on Monday or Tuesday but if we drop below again by the end of next Friday then I think we’re going to see some fireworks.

And before we move on to commodities and forex I really wanted to point out that picture perfect bearish divergence on the Zero Lite today. Granted, we didn’t have a super strong signal but that divergence was very pronounced. Unfortunately the Mole was unable to trade it as he was sitting on a high speed train. Truth be told – I had 4G the entire time – I just didn’t want to risk losing the connection in the middle of a swing trade. Anyway, if you weren’t a sub then you really missed out – a situation that can however be easily remedied.

Silver – that was one sweet entry and we’ve enjoyed the ride. But if you’re still in this then it’s time to say goodbye and call it a trade.

Gold jumped into the fray a bit later – but who’s complaining – we nailed that entry and it’s officially at target. Now we are going to watch for signs of a bottom but I’m not ready to get positioned just yet.

Not all setups go our way however and I will never claim that. I got stopped out of a low probability but low risk setup today but wanted to show you this chart for another reason. As I have developed a pretty good feel for commodities over the years I told everyone to only take out a very tiny position here – first up it was a low probability setup and second commodities do not move like stocks. They often overshoot and when they do it happens in a big way. This is a good example and it’s exactly why I only took out a handful of contracts with a tight stop nearby.

Alright – before I let you enjoy your well deserved weekend I do have a few more juicy setups for you. That’s right, the Mole is always on the prowl – please step into my Semi-Medieval Ersatz Lair:

And as usual the good stuff is over on the commodities and forex side. Coffee is sitting right at resistance in the form of that 25-day SMA. But what really caught my attention was this:

What is this – the 20th inside day we’ve been trading in the past month? Sorry if I sound like a broken record but if something’s working – don’t change it! You know what to do.

How do you like them apples? Inside day on the AUD/JPY – but if I am not mistaken we als may have ourselves a retail variation buy setup here. That one would kick in on a breach of today’s highs (also the long entry for the ID).

And if you have a Yen craving then I have the very same setup for you over on the EUR/JPY. Same rules – same play.

That’s all for this week – see you Sunday! Assuming of course I can scrape a few charts together – what are the odds of that? 😉
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Cheers,