This was definitely one of those mornings when I needed the tonic of some red on the screen when I woke up. Mercifully, I got it, and modest as it is, I’ll gladly take it.
In particular, my short on IWM is looking decent, based on the behavior I’ve been seeing with the /RTY. In recent days, we had: (1) the “yet another white flag above the White House” gap in prices that took place after the close on Monday, marked with a red arrow, (2) the slight overshoot of the Fibonacci at the end of that day, circled in green, (3) the GOOGL-optimism pop yesterday after the close, circled in red, perfectly touching the Fib, (4) the gradual sell-off all through the night.
The reason the quotes are all red as opposed to all green this morning is because, for the 395th time this month, the White House has contradicted itself, this time saying in a Time interview that they would consider it a “total victory” if big tariffs were in place with China a year from now. We can await Bessent rushing to a microphone in a few hours to indicate that not only are tariffs eliminated, but he has become personally involved in reconciliation by marrying a Chinese man.
Over the course of the past few weeks, the VIX has been obliterated, allowing a lot of smoke to clear and introducing the prospects of entering new shorts without feeling insane.
Simultaneously, gold has continued to get sold off, as the need for some kind of safe haven has disappeared. The front month on gold is off over $60 as I’m typing this, and my NEM short, entered yesterday, is looking good.
The longer-term horizon doesn’t suggest anything like the brave new bull market that shills like Zerohedge and The Market Ear would want you to believe. The /RTY, shown below, has been executing a steady stairstep lower, from Fib to Fib (particularly interactions emphasized by the rounded blue rectangles), the most recent of which was the perfect touch of the Fib mentioned earlier.
I’m not aggressively positioned right now, but I’ve definitely got some exposure, and I’ll take a hard look at the unexploited members of my Bear Pen to see if anyone else deserves a trade.
