Volume Desert Ahead

The current run higher from the lows near SPX 2347 has progressed nicely thus far. Despite ample doomsday clickbait being peddled all through the weekend the E-Mini futures have managed to hold newly gained ground over Sunday night. However we are now heading straight into a volume desert and one of us may have to head down to Tijuana in order to secure us the services of an experienced coyote.

As it so happens our resident curator of the lair (GoldGerb) lives nearby in Arizona, but last time we sent him down there on a mission he blew our entire budget in some place called The Titty Twister. So unfortunately we may be on our own on this one.

Now in all seriousness, this is really where the rubber is going to hit the road, or not. This stretch between ES 2525 and ES 2625 – almost exactly 100 handles – is what what separates the juiciest short trading opportunity of 2019 from a massive short squeeze.

Currently I am positioned for the latter scenario with about 1R in paper profits – my stop remains at break/even. I am not married to either scenario per se but given my open campaign a run higher into ES 2600 would afford me the opportunity to take profits and flip sides should I see signs of trouble on the horizon.

Now I took a glance at UVOL on the SPX which appears to have been completely bot driven last Friday.

The Zero indicator showed very strong buying pressure at the same time, so my current assessment of the situation is that institutional were accumulating here.

Which is a bit strange and an alternative explanation that comes to mind is that we are looking at distribution. However I for one do not remember seeing such distinct buying signals on the Zero in times of distribution, but I will remain open minded and keep an eye on the signal today.

SPX:VIX is also looking supportive and started to strongly diverge on Thursday. I had missed looking at that chart that day and I would be kicking myself had I not already been long. So perhaps I may not be completely useless after all 😉

We have entries today but I’ll have to spoil my subs a little. So if you have a secret decoder ring please join me in the lair:


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