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This morning at about 6AM, my head was full of ideas. Articles, essays, witticisms. Now here I am 14 hours later, and all I can think about is a steak, a glass of warm red wine, a little reading, and a good night’s sleep. Unfortunately I’m still in the live to trade camp, vs. the trade to live one, and I get too tired from my profession to pursue my passion. It sucks.

However, we’re at that place, with the S&P above its February Highs and the NDX threatening. So I’ve got to at least throw out some thoughts.

UNO

Clearly scenario one from my 08 April post has not materialized. So that one’s a shift-Delete.

DOS

Now we’re staring scenario two in the eyeballs. Remember, a failure from this breakout will spell a swift and steep decline. Be prepared. This will call for a rapid reversal by longs, or rapid adds or just high-fives all around by shorts.

TRES

‘Course, there still lurks scenario three, where we all end up long. My short stop is at 148.50 on the SPYders. (The second baseman is “WHAT”, BTW). I won’t like getting long, with the dollar only one cent from a historical breakdown against the Euro, but if the chart raises its shirt and flashes an uptrend, well, how can we refuse?

Food For Thought: SPY, VIX, and Fibs

Here’s a chart of the SPYders, with the volume emphasized, including a 10-day moving average of the volume. Note the volume trend, even with today’s “breakout”:

Now here’s a chart of the VIX, with a 10-day SMA also. Chances are you weren’t with me back when I wrote about the VIX Fade Trade. It’s still a valid concept to keep in mind:

And for the veddy intevesting picture? Let’s look at the VIX overlayed on the volume of the SPY:

Like a hand in a glove, and both showing that the current short-term trend shouldn’t be trusted at this point. In other words, if we’re looking to go long, best to wait for scenario three above, where we get a thrust on higher volume and a nice “take me now baby” pullback.

Finally, one you Fibonacci Retracement fans should note, and one you Fibonacci critics should note even more notably:

The old Golden Ratio, with no other technical analysis, provided a perfect support point to go long after the selloff. Fibs aren’t magical- nothing is. But you’d be doing yourself a favor to keep them in your toolbox with your other technical studies.

Cheers. Let’s make some money.