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Although there may be a bit of wishful thinking on my part here (since a bit of a push for next week would suit me very well), I genuinely think the next movements in the market will resemble this:
We've nicely achieved the push into "green tint", and a relief rally to 1100 followed by a subsequent drop, retrace, and then hard drop, would be a thing of beauty.
There are only three days left this quarter, and having had four profitable days so far this week, I was deeply pondering this morning what to do. There were basically two very different roads I could take:
SAFE – The safe road is one that takes risk down to zero and guarantee I can close out this quarter profitably. It calls for the elimination of positions at the expense of possible profits to be had by a drop in the market (since I am bearishly positioned).
OPPORTUNISTIC – This road demands that I simply "stay the course" and do what I always do, which is keep stops updated and take new opportunities as they appear. It exposes me to the prospect – – albeit slim – – of turning a profitable quarter into a losing one, but it also keeps me open to the possibility of more profits.
I am, by nature, a risk taker, but after thinking long and hard about this, I have taken the Safe road. There are a few reasons for this….
(1) I want to bag a good quarter.
(2) I think the market is more prone to a push higher now (albeit briefly) than a push lower. I saw last night that interzone was asking me if I felt EWI's projected push higher was represented by yesterday's action. The answer is an emphatic no. I think that push higher is going to take place next week.
(3) Being "out of the office" next week severely hampers my ability to trade large numbers of positions effectively. I need the screens, the computing power, and the uninterrupted concentration to do this well. I am going to basically take the week off.
Of course, by doing this, I am exposing myself to the prospect of the market tumbling hard next week and missing out on the profits I have worked very, very hard to capture. I think the possibility of such a tumble is slim, however, and as I said, I'd rather be assured an "up" quarter more than anything else.
So what does this mean to you, as a Sloper? It means I'll be talking a heck of a lot less about individual selections, since my trading will be limited to just a handful of ETFs, and probably just on a day-trade basis. Instead, I'll probably be sharing more anecdotes (like my milk-shake-winning arrow shot through the apple last year, pictured below) than trading war stories. It also means, if we do push higher, that I won't be yelping about it, because it won't be hurting me.
As I type this, I have gone from 160 positions to 3…….yep, 3! They are all long – FXE, GLD, and IWM – and they are currently all profitable. Having just a handful of ETFs is going to be par for the course until July 6th, at which time I will go balls-out trading once again.
Thank you.
I think that the last conviction bull on gas died in poverty early this year, but I looked at the chart again after reading a prediction that gas would rally to over 7 in the summer.
That isn't what I see on the gas (Aug futures) chart in the near future, but you never know:
My sons are out at an annual Teddy Bear's Picnic at their school today,
and I think that might well also be the theme for the market today, as
overnight ES broke range support at 1070.5, and that has opened up the
next range support target below at 1048.40:
I posted a chart in the afternoon yesterday showing the importance of
these ranges in recent trading. So far in this decline we have not seen
ES break down through a range support trendline and then break back up
again. Here's yesterday's chart which makes interesting viewing:
We will get a snapback rally at some point, and it could be today. If we
break back up through 1070.5, then the next target is the top
trendline of the declining channel at 1075. If that breaks then I would
expect a snapback rally with a target in the 1090 area today.
Until that declining channel breaks though, the bears remain in control
here.
After yesterday it isn't that easy to be upbeat on the bull side here.
Vix broke up through declining resistance and another key resistance
level. It didn't get much further, but that was very definitely bearish.
The mystery behind the strange sight yesterday of a rising channel on
EURUSD while ES was in a declining channel looks resolved today, as all
the recent EURUSD moves seem to be part of a larger declining channel.
Again, that looks bearish for equities:
GBPUSD made a new rally high yesterday and is declining back towards the
lower trendline of that rising channel. Less important but bullish for
USD today and therefore bearish for equities:
There is one ray of bullish light that I found, and that was on the
Nasdaq, which has formed a very nice looking falling wedge. Not enough
to go long here yet, but if that strong declining resistance line
breaks, the pattern target would be for a full retracement of this
week's decline:
Definitely a day to be cautious. Key trigger levels for a snapback rally
are:
In the absence of such a break up, we may see 1052.5 today. S2 Pivot
support is just under 1052 and range support is at 1048.5.
