Nothing so far this week has really been all that surprising other than maybe the glacial speed at which everything seems to be unfolding. I suspect many traders are getting ground up in the chop by overtrading. I have purposefully slowed down the amount of trades and am just patiently scaling in and positioning myself for the next large move. I grabbed some nice quick call trades throughout the week and now I’m basically waiting for the market to make a decision on how it wants to play it all out.
And to be fair it continues to be a tedious, conflicting affair which will either require a final NFP induced spasm higher or a Russia or NFP induced cataclysm lower. Either way the market is looking for a catalyst to do something to get it out of the range it has been in for months now.
The charts tell the story:
XLU, basically putting in a repeat performance of 2013, is it ready to drop like May/June last year? One can certainly make the case that it could:
$NASI, summation index has put in a sell signal after an ever so brief buy signal:
$XLF: Financials certainly have room for a spasm higher, but the chart continues to be bearish:
$XLY: Nothing in the consumer discretionary index is shouting bullish new highs for markets either:
$IWM: Ugh. Just one sell-off away from breaking the 200MA to the downside. If you were to show this chart in a TA trading school and say: “look markets are making record highs” you’d likely get laughed out of the room:
$NDX: Field of bear dreams on break of 3,400
$VXX: What makes all these charts above move the fear indices to record lows remains a mystery but so be it. The $VXX exhibits a potential January fractal play. I may get calls if we get an NFP rally and a push to new lows for the $VXX:
Finally the $ES: 1882 is double top resistance for now, but of course NFP could just gap it above it. The zone to 1896 represents my scale in short zone. A spasm can certainly push it above the trend line. It is my premise that such a push would set-up for a classic reversal scenario. It will feel horrible doing it as everyone would be so excited and fearful of missing out, but that would be a classic set-up. With $VIX already so low it would likely push it back into the 12s which, in my view, represents a prime buying opportunity:
So we shall see. I’m 19% committed at the moment. A move toward 1896 $ES would likely see me move to 40% commitment and a move above 1896 into say 1905-1910 $SPX would likely see me move toward 60%.