The EOTWAWKI Sale

There’s something deeply satisfying about being short on a day when the buy and hold crowd is freaking out over the massive (their word, not mine) 5% drop in the S&P 500.  And, that’s what pebblewriter.com is all about — catching most of the moves most of the time, regardless of which way it’s going. 

It might be the end of the world as we know it; but, doesn’t it feel fine to greet each new trading day prepared for whatever the politicians, central bankers, algos or talking heads can throw at us?

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Today, we should see the rest of the move we anticipated last week — followed by an attempt to reverse course or, at least, stop the bleeding.

Note that EURGBP, having nailed our initial target on Friday, is almost to our secondary target.  Our forecast from last Wednesday [see: The Eve of Destruction]:And, the action since:Likewise, SPX nailed our initial downside target on Friday, and should reach the next this morning.

continued for members… Remember, this is not just a SMA200 moving average tag, but a backtest of the yellow channel they worked so hard to break out of.  It’s very important that it hold.Therefore, I see this morning as another Feb 11 — where CL and USDJPY will be instrumental in forcing a turnaround once the SMA200 and/or yellow channel top are reached.  The SMA200 is at 2020, but the yellow channel top is a little less precise.  I put it at 2014.9, but the yellow .618 at 2010.72 might have more pull.

When ES, which has already reached its SMA200, starts popping strongly, we should have our indication.  At that point, CL and USDJPY should be strong candidates for long positions.CL has almost reached a n .886 Fib at 46.44.And, USDJPY’s breakout or breakdown will be easy to spot.UPDATE:  9:34 AM

I think that’s probably close enough.  I’d close the short position here and revert to long with tight stops — just in case 2010.72 is the actual target.  No real reaction from CL or USDJPY yet.UPDATE:  9:37 AM

Leaking lower.  Back to short.UPDATE:  9:44 AM

Taking another stab at it at the .618.  Back to long with tight stops.  If it works any lower, the next support isn’t until the white .382 at 2001.96. UPDATE:  10:03 AM

SPX is still slipping lower, though CL is threatening to break out.  Back to short until it makes up its mind.  ES is coming up on a 1.272 — our secondary target for it.  Could this be the holdup? USDJPY is still going nowhere.UPDATE:  10:11 AM

ES just reached its 1.272, watching for a reaction from CL — which still hasn’t tagged its .886.  It would help provide a sense of capitulation, rather than this dripping lower.   Feels like we’re getting very close.  The .382 is looking better by the minute. UPDATE:

There’s the .382.  Will revert to long here.  Keep those stops tight, as CL still hasn’t reversed and USDJPY is clinging to a TL of support.  NKD still drifting lower. UPDATE:  10:25 AM

CL just tagged the .886, waiting to see if it rebounds.  Note that USDJPY also broke slightly below the rising white TL, and NKD slightly below its.  Do or die time…if the .382 doesn’t hold, the next support isn’t until the red channel midline around 1981 (see 60-min chart below.)  Back to short if it dips below 2000. UPDATE:  10:35 AM

USDJPY breaking out and NKD bouncing off white TL.  Should provide some support, will confirm when CL breaks out, too.  Back to long here. UPDATE:  10:46 AM

Slipping lower on failure of CL to break out.  looks like the red midline, it is.  Back to short with very tight stops.UPDATE:  10:56 AM

CL continues to be a drag.  There are probably a number of folks who, like me, wonder if this will be the start of another leg down — the other side of the rising purple channel and the longer term MAs. Note that VIX is making no move to reverse yet.  And, it’s bumping up against a pretty important channel midline.The red midline at 1981 is starting to come into focus.UPDATE:  11:05 AM

USDJPY starting to pick up some momentum here, and CL is getting a bounce   Back to long.Keep an eye on VIX, which is testing its trend.And, CL, which is in position, again, to break out.  If it doesn’t, 1981 here we come.UPDATE:  11:15 AM

CL didn‘t break out.  Back to short with tight stops. USDJPY is keeping it from getting any worse than it might, but is clinging to trend.UPDATE:  11:29 AM

Even though CL is slipping lower, VIX is breaking down.  So SPX is slipping higher.  Back to long here, though I don’t expect it to last.  But, who knows?  Maybe with Europe closed, the selling pressure will lighten up.  Getting back above the .382 would be a nice start, with the SMA200 as the grand prize. This is a good sign:CL looks likely to break out this time, but must get past the SMA5 20 to have a strong impact.UPDATE:  11:50 AM

SPX just got its 10/20 cross, so will probably backtest the SMA5 10 here.  Back to short for the 4-5 points, or ride it out.UPDATE:  11:56 AM

CL and NKD backtests complete.  Waiting for USDJPY… UPDATE:  12:06 PM

This might be all we get.  Back to long here on the SMA5 10 tag.  Tight stops, of course, as that red midline down at 1981 is still a possibility.EURGBP still has a little ways to go……and, CL is back below its SMA5 10. UPDATE:  12:20 PM

CL keeps slipping as EURGBP continues to melt higher.  But, VIX and USDJPY are keeping SPX from falling. Probably a good time to move to the sidelines unless USDJPY breaks out or CL finds its legs. UPDATE:  12:31 PM

USDJPY did break out a little, but is running into the red TL as ES reaches its SMA5 50.  No real resistance for SPX here, and VIX keeps slipping lower.  I’d move to the sidelines here and see what develops. I’m going to take a little break, will be back in 10-15.

UPDATE:  1:14PM

USDJPY is breaking out just enough to keep SPX above its SMA5 10.  Waiting for VIX to break down, which would help get SPX out of the little triangle it’s in, and up to the SMA200.  I’d go long here, but am worried about the approaching SMA5 50.  Could be tough resistance, and CL still isn’t rebounding. Bottom line, it’s USDJPY, NKD and VIX versus CL and EURGBP.  Could break either way, though a close below the yellow channel top — now resistance at 2014.90 — would be worrisome for the bulls.

UPDATE:  1:34 PM

SPX is testing the SMA5 10.  Any sustained drop through it would be cause to short.  CL is testing its Jun 16 lows. UPDATE:  1:41 PM

Back to short on CL, USDJPY weakness and and EURGBP strength.  Targeting 1981 again. UPDATE:  2:29 PM

CL breaking out.  Back to long.  I’d keep stops tight, as this will end up at short-term SMA resistance around 2000. UPDATE:  2:47 PM

Back to short on the breakdown below the SMA5 10.  S&P just stripped the UK of their AAA rating, which might just be too tough for the algos to overcome.UPDATE:  3:14 PM

I like the idea of a last minute meltdown into 1981, but CL sure looks like it’s going to spurt up to 47.05 and VIX down to 22.17.  Could be enough to get SPX to 2010 as the SMA5 100 arrives.  Bottom line, watch your stops.  If SPX breaks above the SMA5 50, now at 1999.93, I’d dump the short. UPDATE:  3:26 PM

CL is threatening to break out.  USDJPY is also rebounding.  Back to cash here if it pops through the MAs.UPDATE:  3:37 PM

NKD, USDJPY and CL are spiking higher.  I’d revert to long here, but would gladly revert to short on any move back down through the SMA5 20.  Upside targets include the .618 at 2010.72 and the yellow channel top at 2014.66. UPDATE:  3:55 PM

This might be as good as it gets.  NKD and CL are still rallying, but there’s bound to be some serious selling pressure at the close.  Back to cash here, though I’d short on any move below 2000, and go long on any move up through 2004.As we discussed earlier, it’s bearish to close below the yellow channel top.  But, only short overnight if you can handle the risk or watch/hedge it carefully.