Markets – Macro – Technicals

Enigma

EnigmaNothing usual about this pullback. With almost 80% long on the #DAX there’s just no fear. At all. Yes we finally see some elevation in the $VIX but it’s a gradual rise not a spike. Likewise stocks dripped lower, not spike lower. So on the one hand we are getting lower prices, which is great as it allowed to lock in some nice gains. On the other hand we keep missing the elements of a solid bottom while indicators are getting more oversold by the day. Where’s the buy signal?

The whole thing is an enigma. Let me walk you through the charts:

$NYMO getting very close to a solid buy zone:

NYMO

Stocks above their 50MA: Getting to buy zone.

50AR

Stocks above their 200MA, same message:

200 AR

Yet I’m getting positive high/lows and absolutely no selling at all:

HL

Nada. Zip. Positive on the day. Cray.

$BPSPX? Positive on the day:

BPSPX

Frankly that’s annoying. I want to buy a solid low but we haven’t had one since October.

So I’m still waiting for a flush, but given the increasingly oversold readings I’m starting to wonder whether I’m waiting for an enigma, a ghost that will never come.

So the next flush may be it frankly at least for a buy into OPEX. Yet the Greece situation is a complete mess and people should just admit that Greece is broke and let it go. But it’s a negotiation so it will drag on and on.

On the monthly $SPY we have tagged the 5EMA with the 8MA just below:

SPX M

The potential for a fast move down is still there and the daily chart gives us support levels, yet these oversold readings make it very difficult to remain short from a process perspective.

I covered my index shorts this morning for nice profits and am now dabbling in longs for a trade. The idea is to see 5EMA reconnects on the dailies. The #DAX is extremely weak and I got stopped a few times. We are getting very close to my 10,800/900 zone I outlined last week so I keep dabbling on the long side, but it obviously won’t be easy. Too many are long the #DAX and their stops keep being taken out.

It’s a tight dance and difficult to execute. Given the gains this week already i’m pretty relaxed about it knowing I will get some stops. It’s just a matter of keeping at it with discipline.

On the daily the 150MA is the next key level of support. Given the oversold readings and how far we are now becoming below the lower Bollinger band I’m now a buyer:

SPX D

Note that 5EMA and 50MA are near 2100. That’s my target zone for longs on a rally, then I want to give the short side perhaps another shot once oversold conditions have relieved themselves.

The #DAX has hit the 38.2% Fib target overnight and I’m trying to swing trade this now:

#DAX

Let’s see if it sticks.

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