The Greenback started the premarket with a retest of the benign pullback from the middle of last week. This is critical support which needs to hold. Why it might can be found several thousand miles east in Europe. The most important chart of the week is the FTSE which is hitting a key attractor/trend line of resistance at the top end of the range. If it’s going to fail, this is the place for it. Then we have the butterfly effect. If Europe stays in the range and pulls back it should affect the sneaky bull. While Europe still holds the highs from March which was a very good time window, we’ve had a couple of aborted pullbacks which never developed because they don’t make bears the way they used to. US markets will follow along and might I add that China will also follow along. The SSE is very vulnerable right here as the people who covered early again for the second time are in trouble again. This bounce couldn’t even make it to the gap down. As you know I’ve been skeptical of every Chinese bounce because of the great Gann symmetry at the high.
I think the market is at risk for another drop this week if for no other reason it’s so complacent. Longer term I think we are going much higher but in the here and now the VIX is once again at a place where the probability of a sustained move is very low. I know it’s tough to trade because no sooner do we get a distribution day do bears go back into hibernation. Then the sneaky bear creeps up on us and a promising VIX turns to jelly and we end up near highs again. Then the VIX gets so low that risk is too high to sustain a big move. This is the market we have now that we are coming to the slower summer months I think this pattern will finally be broken.