Watch Out Below

Many of you guys are bearish and haven’t lost an opportunity to rub it in after Scott was hazing the bears a bit in Monday’s video update. If you put your own emotions aside for a moment and actually paid attention to what was discussed you realized that I actually was a bit more open regarding the bearish scenario and even mentioned it as a valid entry in yesterday’s post.

And I quote: “Quite frankly speaking a short campaign at this stage probably has similar odds weren’t it for the fact that the bears continue to fumble near important inflection points every single time.”

So yes, perhaps this is it and the bears finally have awaken from their nine year slumber. To get a better feel of the situation I spent a few hours pouring over my momo charts today. And truth be told, there is as much bullish as bearish evidence staring back at me.

Let’s start with the bonds which keep being mentioned in the comment section. The entire sector has been in a strong downtrend over the past two years but what’s more alarming right now is that monthly support near ZB 142 is now giving way.

Which of course will mean a continued increase in yields, so I wanted to know what’s happening on the junk bond as well as the corporate high yield bond side.

On the former via FAGIX I do see reduced appetite but quite frankly speaking it’s nothing earth shifting. I have overlayed the SPX for comparison to show that the FAGIX is usually leading the SPX when it comes to significant swings.

On the corporate HY bond side via HYG I am seeing exactly the same, albeit this chart is a wee more bullish actually. Once again I have overlayed the SPX for comparison.

SKEW vs. the VIX is dipping lower but is not even near bearish territory. Admittedly the recent wipeout has expanded the BB quite a bit and thus this reading may not properly reflect risk sentiment.

The IV term structure however is possibly flagging short term bearish and I use the adverb because I usually do not consider a pop > the SMA in that fashion. But once again the BB has widened significantly here and also the signal continues to climb higher, which is of course bearish.

More momo charts and pertinent market analysis below the fold for my intrepid subs. So if you’re not a sub then now would be a perfect time to sign up.

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Campaign Updates

Not surprisingly given the continued Dollar advance (yesssss!!!) a few of my campaigns have come home to roost:

My DX campaign miraculously survived a pretty deep stop run and has since recovered and then some. Nothing to do here and I am keeping my trail as is for now with the anticipation of more to come.

AUD/USD unfortunately is a goner. That’s what I get for taking out a long lottery ticket during a down trend. A more convincing and retested spike low on the ST chart would have been better. Obviously.

The USD/JPY unfortunately is a stop out but I shouldn’t complain as I got out at the 4R mark. There is a good chance this one mercilessly rips higher, so if you’re still in it trail at a distance.

EUR/USD is a stop out which I am pretty happy about actually 😉

As a side note: medium term the EUR bulls may be in for a bit of heat IF and only if the 25-week SMA is taken out before Friday.

Bitcoin is also a stop out but I got out at the 3R mark, so once again I should not complain as my campaign management squeezed almost max profits out of this one.