Weekend Musings

In our perennial pursuit to bank coin there are times when new information affects our game and then there are times when there’s simply not much to say and you just trade what’s in front of you. Which incidentally happen to be the moments when you find yourself ‘in the zone’ and trading is the easiest. You just kick back and let the tape do all the work for you – yeah right…

Bad times for financial blogging however – IMNSHO both activities are almost orthogonally aligned to each other. I do have a few charts on my screen worth sharing however – so let’s get to it.
[amprotect=nonmember] Charts and 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 subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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I slapped a volume profile on the spoos and immediately some of the support/resistance zones make a lot of sense and it was no surprise that we pushed higher after establishing support at 1300 where you’ll find a pretty deep volume hole.

Also recall that we are a mere bagel throw away from our ES buy level at 1320.5 – once we push above that I expect a dash to 1325 near the old net lines sell level. If the tape can push above that I see very little resistance until 1339, thus it makes a good target.

Silver has been rather piggish in the past few months and although there have been a few good setups I rarely try to short this sucker. Not with Banana Ben running the printing presses and in general it’s never a good idea to call tops an any commodity.

Having said that however let’s remember that we are stainless steel rats and that we live off the crumbs the market throws at us. And there are often setups that can’t be ignored – even if they’re a bit scary. Silver has yet again pushed outside its 25-d Bollinger – which also happens to be outside the 100-d Bollinger. The yellow arrows mark prior occurrences and although I cannot guarantee that we turn on a dime come Monday the odds are pretty high that we’ll see at least one long red candle. And that’s the way I would play it – if Silver opens higher and makes new highs I will go short hoping to exit a day or two later.

Similar setup over in gold – and remember, it’s the weaker of the two. Scott prefers to stomp on the weaklings in a group of victims – I personally prefer to take on the big bully loud mouths. Two schools of thought and maybe the right thing is to split both in half – preferably with a chainsaw.

I usually don’t really dabble much in bonds but TBT and TLT have each reached inflection points after which we could see quite an acceleration. However, it seems to me that TLT is about to run into pretty stern resistance (and TBT into support) – at least judging by the volume profile.

The support line on the TNX is less defined but what I find interesting is how it resembles the current pattern on the spoos. Now where have I seen this unfolding formation again…. 😉

Alright, that’s it for the subs. Scott just put together a few setups for all the leeches – so let me hand you over to to our resident Australian convict:

We have a mixed picture right now. Price wise, look at exhibit A, the monthly chart of $SPX

On a pure price basis this presents as a long running, big picture slow motion short squeeze, which is *exactly* what has happened.

Forget your stupid wave-wanking, which has been demonstrably useless over the last 2 years, price tells the story we need to know here.

The last year can be summarized as a victory for SIMPLE technical analysis over COMPLICATED technical analysis. Gann, Elliot, fix extensions, fib retracements, cycles, seasonality, spiral calendar….

None of it has worked as well as simple trendlines, and moving average pullbacks. Depressing, I know 😉

Lets move on to the weekly chart. We have a potential retest variation buy setup triggered on break of the high.

Now for the daily. Of course I am long from the break of the hammer high on Friday. Wheeling out Mole’s old soylent concept the highest probability options are

1) A continuation of the rally squeezing to at least 1325 (61% retracement)
2) A retest of the 1300 lows followed by a more substantial rally
3) A rally which takes us to new highs

Now whats bearish on the horizon? Well copper is not confirming for a start. And $vix *could* be setting up for an equities sell signal. The VIX is out of whack for a major buy signal here IMO.

Now as for the fx world. There is one setup I *really* like this week, weekly retest variation buy in USD/JPY. A break of that high should set off capitulation to the upside.

Cheers,

Scott