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The "rally" is pretty feeble-looking. I wound up selling 35 NQ @ 1340 since, being a Friday, I think people are going to lack the gumption to hold. Also there's the matter of a certain election on Tuesday which will almost certainly usher in a government of higher taxes, much higher capital gains taxes, and other non-stock-friendly stuff.
I'm also buying puts on OIH. This is a clean trade with a contingent stop at $99.
The markets are struggling to form a base, but they just might be getting it together. If the NQ and ES break above the tinted areas I have shown below, the upside rally would be explosive.
I am nibbling at SSO and a long NQ position. Nothing big yet. Just inching in.
I abandoned my computer late last night quite nervous the markets might break out. The ES and NQ minute bar charts both looked like they could complete a fairly well-formed inverted H&S pattern and push up to the next Fibonacci level.
I was relieved this morning to see the Maginot line was still holding.
As this line holds, its import only increases. I'm sure there will be a day before long when we do burst higher from these levels, but for now, I remain a holder of my short futures positions and my long put positions on DIA, QQQQ, and IWM.
Could the triangle still live again? Perhaps. The pattern we're etching out is pretty intriguing. Here is a simplistic view of the ES's motion over the past three weeks. The final arrow is, of course, conjectural.
One obscure graph that keeps making me wonder if the market could take an unexpected tumble is the 13-week t-bill rate. In plunges past, this has fallen hard. Over the past three trading sessions (including the massive up day on Tuesday), this has been sinking.
Early on today, I mentioned the prospect of buying calls on FXP (which effectively makes you short China). I've got a small loss on this trade so far, but I'm pretty excited about its prospects.
I also acquired puts on three ETFs – DIA, IWM, and QQQQ. Notice how we're just beneath the Fib retracement line. Breaking above this, of course, would neuter all of these trades, but I have my doubts about how bullish a Friday could be in this environment.
In a similar vein, a look at the $SPX reveals that the close today precisely matched the major (and I mean major) Fibonacci level, shown in bold blue.
Just to add to the mix, the NASDAQ sported a hanging man doji. Take note also that the NASDAQ is relatively weak compared to the S&P.
My only position in my IRA now is SDP, which is the ultrashort for the Utilities. This has a small loss now (about $4,000), but this one is a keeper. Even if the $UTIL pushes up to ~415, I will simply add to this position.
I got out of my US dollar "short" position. The EUR/USD has absolutely, positively zero "base" from which to rally. None. Zero. It only looks ready to cut lower, and fast.
I have been watching commodities more than normal lately (I'm out of my DBA calls as well, by the way). There could be more life in commodities, but if they were going to reverse, it would be here. Not much of a recovery, to be sure, but it's possible they could soften at these levels.
Same here…..
So as you know, I am not "All Bull" or "All Bear" at this point. It's a mix. This week has been super so far; let's see how Friday wraps things up.
