You Can Run…

Thus far the SPX managed to yet again bounce off that diagonal that’s been providing support for the past two months now. But as the old saying goes: You can run but you can’t hide!

At each step on the way the tape  offers us three scenarios with – up, down, sideways – simple. Evaluating the odds and inflection points of those three scenarios is key in staying on the right side of the trade. And although the tape looks like a veritable clusterfuck and is bound to confuse or scare the retail schmucks it’s the kind of setup I revel in. Why? Because this gives me plenty of ammunition to define my setups and to evaluate risk and odds of continuation, whatever direction the tape may choose.

IF we push higher from here chances are we’ll most likely see another push toward the 1330 mark – which if breached would accelerate equities higher. IF we drop from from there then 1295.92 must not be breached or we’ll say hello to 1280 again – or worse. Now, IF we go sideways from here, e.g. slide down that diagonal for the next few days, then what? Simple – the 1295.92 and that diagonal meet on August 3rd – that’s when it’s time to either crap or get off the pot.

But wait, there’s more – so much more 😉
[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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The spoos are telling a similar story – we bounced at the 1300.25 NLSL and the next one down (expiring today, granted) is 1291.25, which roughly equals the sand in the line on the SPX given premium. So a breach of ES 1300.25 is code orange and a close below ES 1291.25 is code red.

There’s a volume hole on the spoos around 1288 – that should be another support level. Which tells me that it’s quite possible that IF we go lower we may see a drop through 1291.25 that to scare out the longs and then perhaps bounce at 1288. In fact, that is probably where I would try a few long positions – assuming the tape looks like it’s going to bounce higher. All situation based and if it happens I’ll talk about it.

Copper is still looking pretty bullish to me – all the MSM drama notwithstanding. We are near our first target at 4.52.

Of course as long copper remains above this support line it’s reasonable to expect that longs may stage one last Fed sponsored push higher. Heck, maybe this is it – but if it is I am pretty certain copper will be first in line and breach support ahead of equities.

And then there’s the matter of Mr. VIX currently painting step 2 in a VIX buy signal setup. Now, I’m not going to jump the gun before we’re closing below that upper Bollinger line – but this is potentially short term bullish. Not necessarily so, but keep an eye on this. Disclaimer: We yet need to see step 3 – one more close below today’s – in order to get a bonafide VIX buy signal.

EUR/USD – looking less bullish as it’s currently at its NLSL – plus there are two moving averages right here that need to hold, otherwise bad things may happen to the Euro.

Crude – also currently at its NLSL – already below its 100-day SMA. It needs to hold the 25-day SMA or similarly bad days for the longs may be in store.

Gold still holding above its NLBL so far – as I said we could easily see a push outside that 25-day upper Bollinger. The problem here however is that the short term uptrend is strong, so it would take quite a fast candle to accomplish this. Thus, I don’t see a setup here just yet – some of you may interpret this as a reason to hold your long positions. I however do not feel comfortable being long once the 25-day BB pushes outside the 100-day – trend traders may strongly disagree of course.

Cotton appears to be finding a floor but it’s crucial that it remains above its current NLBL. I expect some push back at 108, so not too much upside potential here just yet.

Cocoa – almost at my first target, probably smart to start closing out some of your shorts. It could slide lower of course – your mileage may vary.

Coffee appears to be continuing downward both lower Bollinger lines as it completely ignored its NLBL. If you’re in a short trade still or if you went short at the recent push up then it’s worthwhile holding out.

Last, but not least, bonds – the 30-year is on the move and is tickling its NLBL. A push above would most likely get us to 127’00.

I think that should keep you guys busy for a while. Apologies for my absence in the past two days – I had some important business to attend to and couldn’t spare a minute.

Cheers,

Mole