Welcome To Hell Week!

Ladies and leeches, welcome to the worst week for equities, at least statistically speaking based on historical precedence over the past quarter century. No, I am not kidding, the next five sessions have pain written all over them, thus I recommend you treat very cautiously. Of course while hapless retail is expected to suffer (as always) nimble steel rats like us always manage to eke out an edge. Let’s lay out what exactly we’re heading into:

Alright, we’ve reached the mid year point just before the onset of the summer vacation season and probably not so coincidentally that also marks the most bearish week of the year in equities with a whopping negative Sharpe ratio of -0.63. Yikes!

And just to make things a wee bit more interesting the ECB, the BOJ, and yes the Fed have scheduled neck on neck announcements over the next two days. Heck, if that doesn’t get the tape moving then I don’t know what will!

And gravity is already setting in with the E-Mini trading near last week’s spike low of ES 2765. A drop through that is increasingly likely and that puts us on the road toward ES 2750 or lower. I would not even think about a long entry until then.

Now freshly filed in the ‘Mole Saved Your Ass Once Again’ department is this gold/yen correlation chart I posted last Thursday after observing a stark discrepancy between the Yen and gold. Over the past few years both have been tightly correlated and any deviation by gold (a much smaller market) from the Yen (a much larger market) is usually quickly corrected in favor of the latter.

Well, I hope you heeded my warning as shortly after gold started to descend and then accelerated lower on Friday. Of course the raging Dollar isn’t helping matters right now. Nevertheless I’m sort of tempted to grab a small long position here after such a big wipe out but then had a much better idea, posted further below.

Campaign Updates

Crude suddenly did a gold and stopped me out at break/even. That’s neither very polite nor in line with seasonality but apparently crude is also feeling the Dollar pinch a bit lately.

Strangely however natgas is on fire right now and propelled itself to the 2R mark within two session. I’m now advancing my stop to the 1R mark hoping to weather out the obligatory profit taking courtesy of the upper 100-day Bollinger.

The ZB futures are coiling up and I am happy having grabbed an entry here last week. My trail now goes to the -0.6R mark, which admittedly is a bit early but given all those central banksters on camera over the next few days I’ve decided to err on the conservative side.

The USD/JPY campaign has been in the running for a while now and although it’s slowly getting out of the gate I’m yet unable to move my stop beyond break/even. All bad things take time, especially when it comes to the Yen it seems.

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