War Of Attrition

The war of attrition near the bullish inflection point of SPX 2800 continues. Last Friday the bears got their best chance in weeks to break the current medium trend higher but then blew it again on Monday. As predicted quite a few participant have been taken to the woodshed after acting on instinct, personal beliefs, frustration, or just plain old desperation.

If you took yesterday’s perspective as callous or cold-hearted then let me once again re-iterate an old axiom I have been repeating right here in this digital den of market domination for years’ on end:

The financial market collectively is a zero-sum game. For any of us to win big an opposing participant needs to lose big, or alternatively a large number of opposing participants need to lose a little.

Period. End of discussion. Sorry snowflakes – in the financial markets nobody gives a rat’s rectum about your safe space, and there are no 2nd or 3rd prices.

I actually snapped the above photo myself last year at my gym here in Valencia. They were hosting some type of swimming competition for the kids and as you can see in the end every single one of the little brats got rewarded with a gold metal.

For participating.

Call me old fashioned (and you may because that’s what I call myself) but I believe that we do our children a terrible disservice by rewarding them for losing. I could elaborate but sense that most of you guys are on the same page, otherwise you’d probably ventured on by now 😉

Anyway, let me climb off my soap box and let’s get back to the markets.

Truth be told I got incredibly lucky (AGAIN) with my ISL as two ticks lower would have robbed me of a promising campaign. My stop now goes to break/even and the rest is up to Ms. Market.

Stepping back for a moment for a quick glance at our E-Mini volume profile chart. As you can see the ole’ volume hole is slowly filling up – which of course is the modus operandi in a LV advance (otherwise it would have just biased through it).

The UVOL:DVOL ratio was pretty flat yesterday and I’d call the session a tie. The dip buyers have streamed in but I sense the fat lady hasn’t sung just yet, mostly due to a lack of momo yesterday.

The VIX panel shows us back outside the upper BB. May get us a bonafide VIX buy signal – so let’s keep our fingers and toes crossed.

Yes I know hope isn’t a strategy  😉

Here’s a bit of Zero analysis for my intrepid subs. Sometimes separation of distinct medium term market phases helps to establish a proper paradigm for evaluating future probabilities.

Hourly: per my post yesterday the bulls are duking it out with the bulls, with the latter currently still running the game but having been unable to drive the ball into the end zone. I think we need to re-animate Lombardi and send him in there pronto! (yes I’m a Packers fan – one of my dirty little secrets)

5-min: yesterday’s session deserves an A for effort as the signal was mostly green. But not much there in terms of price advances. Futures traders are attempting to trigger a short squeeze overnight which may just work. We’ll know after the 2nd hour today.

1-min: More details on the 5-min panel. As you can see buying pressure outranks bearish participation, but not by that much.

Campaign Updates

Crude took a while to get out of the gate but it’s rocking and rolling now! My trail has been raised to the 2R mark with the prospect of plenty of more ill-gotten gains as my preliminary target is around 63.

I really really hope some of you guys grabbed that one…

Gold on the other hand has been wearing out its welcome. My ISL remains and I’m very tempted to just close it out and call it a campaign.

Which would be a horrible thing to do as you can bet your a$$ that it would punch higher just hours later. Yes Ms. Market is a cruel mistress – but how could we ever resist her temptations? 😉