Let me be on record that every fiber of my being is resisting my very uttering of these words, but I have no choice but to consider the clear and present bullish entry opportunity right on front of us this morning.
Which kind of stinks as I was really looking forward to a good ole’ fashioned wipe out, but per Evil Speculator rule #1: Trade the tape in front of you, not the one you want to be trading.
The bullish case has a few things going for itself right now. One: it seems that the loser bears remain incapable of breaching the ES 2550 mark. Second: momo divergences are popping up all over the place (see below). Third: A most beautiful spike low is now in place.
Our Zero indicator (you are a sub aren’t you?) continues to point up but swung downward a few times during yesterday’s sideways session. For now I’m sticking with the hourly perspective (left panel) which doesn’t show me anything worrisome.
Let’s do a quick momo update because we need to. The VIX:SVXY is a new addition to my IV roster and it continues to point down after a bearish signal a few days ago.
SKEW vs. the VIX is pushing back > its lower BB which in this direction is a buy signal. I have been a bit cautious with this one over the past few weeks as the BB needed to normalize a little after those wild swings. I’m now cautiously pinning a buy signal here.
One more IV chart – the VXV:VIX – one of our favorites. Once again we’re plotting it inversely in order to more easily trace BTFD opportunities. Here as well I would cautiously pin a buy signal based on the push > the lower BB and the divergence between the ratio and the SPX.
All that means I have to be long here with as stop below 2598. I hate it, especially on a Friday, but I have no choice until Ms. Market tells me otherwise.
The bears are not out of the game by any measure. A failure here and a drop < 2550 unleashes the flood gates. This is the entry I should be taking but I cannot yet as of today.
We had a few stop outs since my last campaign update. One is copper which exited at break/even after producing an exhaustion spike above my 1R mark.
By the way a re-entry is possible in the near future assuming we get a nice spike low and a push above the 100-hour SMA. Let’s just call it the 3.05 mark on the May front month contract.
The other one is Litecoin which looked like a perfect break/out candidate but then suddenly fell back into depression and stopped me out at break/even.
In case you are unaware my golden rule most recently has been to advance my stop to break/even after my campaigns reach an MFE of 1R or higher. Has kept me out of a ton of unnecessary losses over the past few weeks.
In the past I used to wait until the 2R mark but that rule does not work in highly volatile markets. When the market environment change we and our systems must change with it.
It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.
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