Welcome To The Other Side!

I am happy to report that my site migration has been completed in accordance to DIN-A666 evil liar specifications. I poked around a little and much to my delight everything appears to be up and running again. This afternoon I ran into an image upload issue which is why you are getting this post a little late – but the support team was able to crack what turned out to be a very tricky issue in a very short amount of time.

Considering the complexity of this site the transition was as smooth as one could imagine. Heck, for the first time in weeks I was even able to send a test email to all current subscribers without incurring that dreaded 404 error page. The site still seems a wee bit sluggish but I already have requested a performance tuning which should increase the page load speed by quite a bit over the next few days. If you have any issues whatsoever then please report them in the comment section below.

This is a visual representation of my emotional state after having switched from the hosting company of doom to a place that actually cares. I think you just missed a pink unicorn that was frolicking in that lush meadow.

Anyway, the DNS change was initiated on Friday night and although I expect a few stragglers out of Kazakhstan here and there the majority of steel rats should be pointed toward the new IP by now. What can I say – this is a huge load off my mind – the situation in the past week had simply become intolerable. I would like to once more extend my sincere apologies to everyone for any downtime experienced in the past few days. After more than three years with my old hosting provider I tried to work things out with them but it quickly became clear that expecting any real technical support from those muppets was tantamount to expecting higher interest rates from the Bernank.

So, the only recourse I had was to find a new hosting company, which wasn’t as easy as I had hoped. That industry has changed quite a bit in the past few years and there now is a flood of fake webhosting review sites that pop up when you do a Google search on the topic. But thanks to a very good friend of the blog (you know who you are) I finally found a service provider that prides itself in providing professional customer support.

Alright! Let’s hope that I can now spend the majority of my time again on trading instead of battling technical support issues. Moving on – let’s look at some charts:

Despite all the MSM drama the tape for us traders isn’t really that complicated at this point. Quite simply the 1300 mark coalesces with the 25-day SMA – as you can see we are also clinging at the 100-day support level right now. So my base mantra remains the same: Should 1300 give way then we’ll probably plunge toward the 1200 mark.

Here’s my weekly – and it’s apparent that we are sitting on a similar support zone. The 1200 mark beckons should we fall through the 1300 cluster (with 1265 offering interim support).

But wait – more charts for my stainless steel rats:
[amprotect=nonmember] More 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.
[/amprotect] [amprotect=1,13,9,12,5]

Here’s the Net-Lines situation on the spoos. We are sitting on reasonable support and 1327 is our new official buy level. But that lower 25-day BB line needs to hold and as on the SPX we are barely clinging to the 100-day SMA. I took this screen grab a few hours ago and as I’m typing this we are at 1313, so no big overnight swings in either direction just yet.

There remains to be a volume hole slightly below the 1300 mark on the spoos – 1300 on the E-Mini is roughly 1297 on the SPX due to PREM. So that is where you would imagine the stops to sit to hedge for a plunge on the cash index. This chart appears to be favoring the upside – which is not a guarantee but it’s seemingly the path of least resistance. Which can of course always be overcome if some big players decide to drive the tape to the downside. I can never offer guarantees and the name of my game is that of simple probability. Plus it’s summer and making large directional bets in the churn season is not a wise endeavor.

My NYSE advancing/declining issues ratios chart is inconclusive right now. The reason I’m posting it today is that bullish momentum spikes have been dropping steadily on the A/D panel. Which means that we need to see a spike higher by Tuesday/Wednesday or the longs could be served a heaping plate of hurt. Also, if I was still counting EWT waves I would also suggest that we are either at the onset of a third wave up or in the process of either a C or 3rd wave down. So, it’s really make or break for the longs here – summer or not – the bulls are running out of rope.

And I don’t seem to alone in smelling a possible volatility spike – see my left chart of the VIX against the SPX. The little dots I painted are points in time when the SPX was closed near the 1316 mark. The risk assumption here appears to be slightly elevated, which stands in stark contrast with a little over a week ago when 1316 was accompanied by a much lower VIX reading. Of course the MMs don’t always get it right – back in late May risk assumption at near SPX 1316 was a lot lower but we nevertheless plunged lower. So, I never really see this as a predictive chart but more like a ‘what are they thinking’ chart.

You may recall this chart of the SPXA200R which I posted two weeks ago. We dropped to the 60 mark and the spiked higher to revisit 80. Now we are below that crucial 70% mark again and I highly recommend that the longs not overstay their welcome. The more time we spend down here the higher the odds that the dynamics may shift to the downside. Again, this is a long term chart and perhaps it’s all just lining up for a late summer/early fall slide. No reason for the bulls to panic (just yet).

Copper futures however seem to be leading higher. Recall that we usually see a divergence ahead of medium term trend changes in equities.

But what we really want to see is a close above this NLBL on the copper side. That symmetrical triangle is a bit speculative and I would suggest we stick with price. A close above 4.439 and we most likely see 4.5 on the copper side – which again would favor equities.

I know that silver looks like it’s about to break out – but this Gold chart looks very toppy to me. So, I just can’t with good confidence recommend being long either. However, commodities do not trade like stock and they can paint some mighty blow off tops – which means that we don’t want to be short either gold or silver right now. An inside candle tomorrow may sway me to take out a small lottery ticket.

Let’s sweeten this post with some sugar – commodity futures that is. We are currently holding at the NLSL (yes, it should be red – sorry) and a close below Monday would suggest a drop toward the 27 mark. Not huge odds but I looked across my little charting universe and don’t see too much else I currently like. Typical summer tape.

Bottom Line:

The equity longs are currently in a make or break situation – although we could still see a few days of sideways tape we are running out of rope and at some point one side will take charge. The odds are currently slightly favoring the longs but every day wasted would weaken their advantage. Look at breadth, momentum, and participation – the Zero will probably be useful as an additional and trusted measure.

Cheers,

Mole