Waning Momentum

Today’s session could be used a good example for a textbook chapter on waning momentum. Early in the session I started to see strong signs of distribution and after a complimentary blow-off top things started to fall apart quickly.

I think the Zero Lite shows it best – despite the early morning ramp to above SPX 1500 it was painting a complete flatline. That doesn’t always mean we turn but it usually puts me on extra alert. It remained above the zero mark and thus there was nothing to do but to watch for signs of a top. Then as soon as VWAP fell and the Zero Lite went negative the cattle prods came out quickly. Nice Mole signal on the bottom near the lower standard deviation by the way – that’s how we like it.

Here’s my SPX:VIX ratio and that’s what I mean by distribution. The writing was on the wall when the ratio remained flat in contrast with a fast rising E-Mini.

In terms of support there’s not much on the daily right now – our next NLSL is at ES 1470.5. However the hourly term panel above shows us a possible ST support cluster between 1483 and 1487.

Since I deem myself a benevolent market megalomaniac I am going to throw this goodie out for free. It may be the most important setup on my wall right now, so leeches rejoice! ZN is testing the ole’ diagonal and has been holding up thus far. Meanwhile we have it tickle the 100-hour and maybe, just maybe, this is a quick shake out before a blast higher. I think it’s worth a few longs here with a stop below the hourly SMA. Pretty good setup with little risk if you don’t waste time.

More below for my intrepid subs:
[amprotect=nonmember] More charts and non-biased commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
[/amprotect] [amprotect=1,13,9,12,5]

Sorry for the screwed up candles – do me a favor and send a bitchy email to TOS. They keep ignoring mine at this point as I have been less than kind about their inability to fix their daily FX charts. Alas – USD/CHF – good short setup here (has been for days) as long as we remain below the 100-day SMA. Use the 100-hour (which coincidentally lines up) to structure your trades. A SMA breach would mean I switch to a long – not impossible, so don’t get married to your trade.

EUR/USD – this is a speculative one: Possible resistance line which keeps getting sold. I would be short until it breaches that sucker. Living in Europe and earning Dollars means that I hope that it won’t  – which of course means that it probably will 😉

CAD/JPY – nice bounce at the 25-hour, that’s how we like it. Also back above its daily NLBL. I’d be long here if she holds above the 100-hour.

AUD/JPY, similar setup but not as clean as the CAD/JPY. I’d still take it though as long as the 100-hour (and 25-hour) SMA hold up.

Sugar – nice daily channel we got now on this thing. Long on a breach of the daily NLBL and/or 100-hour SMA (same difference right now).

Gold! Testing support at the 25-hour. Looking a bit sad here and I want to see some buying interest. Keep an eye on this and if we see the 25-hour being defended then we may try a long. But if it gives this could slide lower quickly. Remember silver was near daily resistance yesterday and down she went!

And here’s the Dollar – still at its fork in the road and Yogi Bera recommends that it takes it. A lot of intra-day volatility here which supports my view that this thing is wound up all the way ready to blast off. Which direction? I dunno – I just work here and my crystal ball is still at the shop. But I’ll take either the SMA breach or the drop through the daily NLSL.

Cheers,