We May Be Slipping Off The Plate

The several lackluster sessions, devoid of any real buying interest, the E-Mini has once again degraded overnight and is now in danger of slipping off the proverbial plate. I am seeing what I would call possible soft support at best courtesy of the lower 100-day Bollinger plus a cluster of spike lows > the ES 2700 mark (roll adjusted) going back to late June of this year.

As usual Mr. Sheep is spot on – this breach of the previous spike low is very BAD and if the 2700 mark gives then this effectively opens the floodgates. If you are short equities then I strongly suggest you do nothing and ignore any sudden rips higher. Keep your stops as wide as humanly tolerable as the volatility of medium term bearish corrections will always test your mettle.

My crude campaign was also stopped out which I had anticipated last week. But quite frankly given the same chart I would take this very same entry any day. Sometimes Ms. Market just decides to hand you a shit sandwich and then insists on watching you eat it.

I may as well have called this post ‘Stop Out Tuesday’ as gold was also taken to the woodshed. Per my plan however I re-entered long on a dip lower. This despite the fact that I don’t really see much more downside potential for the USD/JPY. However – if equities are about to walk off the plank then gold is most definitely going to get bid higher.

Not surprisingly investors and traders are increasingly pushing into safe harbor which of course includes bonds. Quite a spike higher there and as you can see on the daily it’s getting close to switching its momentum from LHs and LLs to having completed a possible floor pattern. I don’t see an entry here – just yet – but will be monitoring this chart closely.

Clearly all of this mid fall bearishness goes completely against the historical/seasonal stats, but I’m not about to start arguing with price, am I? No matter if you’re dispositioned long or short, let’s remind ourselves that market corrections aren’t easy to trade for the very same reason they look so attractive to the average trader: velocity/volatility.

As the old saying goes, price takes the stairs up and the express elevator down. The odds of the latter happening are increasing rapidly and thus we must adjust our trading accordingly. Which once again – and apologies for beating this dead horse one just more time – small position sizing and extra wide stops. You’ll thank me later when you still have a trading account to play with.

Alright I actually wasn’t about to post today as I am preparing for a webinar with Scott, but clearly I’m not going to leave you guys in the lurch when things are starting to get this hairy 😉