The best thing that happened to me today was that I successfully renewed my driver’s license. Yes, the bar was set that low. After all, when one’s profit peaks a few minutes after the opening bell, and by the closing bell one is looking at a small loss, well, that pretty much sucks the wind right out of you. So knowing I won’t have to visit the horrible DMV office for another six years is the thin reed on which I am hanging today’s happiness.
The thing that tatters my tulips (OK, I just made that up…….) is how equities have completely ignored the slumping Euro which should have, in a just world, dragged stocks right down during the past two months. This is the kind of gloriously melting graph that makes me beam:
Originally published on TheTechTrader.com.
If there was a way to strangle a monitor, I’d be surrounded by dead monitors right now. It’s all because of one chart, comparing the EUR/USD for the past 120 trading days with the @ES:
As you can see, for about the first half of the chart, the @ES cheerfully followed the EUR/USD higher.
But somewhere around the time I’ve tinted in magenta, they disconnected. The EUR/USD has been in a bear market for two solid months. Equities, however, have merrily pushed higher, utterly oblivious.
What scares the hell out of me is that the EUR/USD looks like it may be ready to bounce. If equities can’t fall in the face of a collapsing Euro, what are they doing to do if the Euro strengthens?!?!?
There needs to be a stronger word for a combination of “frustration” and “disappointment” than I can conjure up right now. The decoupling above is a heartbreaker.
Yesterday I shorted Best Buy (symbol BBY) at 22.68, and I’ve got a stop at 22.74. I think this bounce is out of gas.
I wish I could find my first mention of CLF being a great short from last year, but I just don’t have the time. I did find this “follow-up” post (meaning I had suggested it as a short earlier, probably when it broken its neckline at around $44):
Even after this bragadocious follow-up post, CLF was still in the mid-30s. It’s in the teens now.
If the SPX rising channel had broken down on this recent retracement I would have little doubt that we were looking at topping action here, with a steep channel being replaced with a shallower channel prior to a significant breakdown. The rising channel on SPX has not yet broken down however, so this may just be consolidation.
On the current ES channel an RSI 15min sell signal triggered overnight, but unlike the previous seven signals this was at the test of the last high rather than at channel resistance. This should mean that we are going to see this channel break soon. If we see a break downwards then there are decent looking candidate double-tops on ES and SPX. Here’s that reversal on the ES 15min chart: