While We Wait

While we wait for this market to show us its cards I have a little announcement to make. 2sweeties over a retracementlevels.com has a struck a little partnership with Evil Speculator – we are the only ones privileged to gain access to his brand spanking new daily DXY retracement levels calculator. Thus, going forward I will regularly post the daily DXY RLs for the enjoyment of all you freeloaders. Now, bear in mind that you will not be able to purchase this subscription over at retracementlevels.com – it’s exclusive only to Evil Speculator. That should not keep you from purchasing any of the other fine products over there however – I personally live by the hourly ES, the SPX, and a various other subscriptions which more than once have helped me evaluate the odds on my own wave counts (a practice I’m sure 2sweeties will despise – he’s not a ‘waver’).

Let’s get right to it. As you can see early this morning we dropped to 76.7 and bounced right back. Now, would have made for a nice scalp either on the DXY or on the EUR/USD or other currency pairs – assuming you would have known to go long right there.

Well, maybe you could have known – the highest probability long RL with a frequency of nearly 17% was given right at 76.7119. Spot on I’d say – and if you were around that early (not me fortunately) your odds right there were pretty sweet.

Of course that’s all ancient history – tell us where the next reversal will happen, Mole! Well, I’m happy to oblige – the daily short RLs appears to be quite clear. Quite notable is the 77.29 level which towers among all other short RLs with a whopping 22.05% frequency. If we push up that high I might want to take profits and even better, take short positions, just as 2sweeties would.

In terms of the wave count we are below the danger zone Berk established for us on Friday. I have taken the liberty to translate the ES cluster for the SPX. We should not push beyond 1041.72, otherwise more upside is most likely in the works. Until then a nice reload opportunity is highlighted on the chart and coincides with the 25% mark of that old channel which was breached for only a moment and we find ourselves back in again.

11:04am EDT: NYSE A/D ratio is 3.73 – not looking so good for the bears right now. If we push through 1042 I’m going into cash.

The Euro FX futures seem to be leading the ES again – it’s not an exact science but if you want to know the direction of the day look no further.

11:42am EDT: I just updated my BAA-TYX spread chart and (kind of) like what I’m seeing:

Now granted – this is only a small sliver to the upside – but at least it’s not dropping anymore. BTW – the BAA has remained flat, it’s the TYX that’s slightly dropping and is now scraping the 4% mark.

For you noobs: A widening BAA-TYX spread reading usually indicates a flight from high yield bonds and thus is bearish for equities. We have in the past seen this spread widen before major down moves in equities. I of course would prefer to see the BAA starting to tick upwards but thus far it’s not budging. No idea why not – but that’s what we got.