Inflection Point

Since yesterday’s update the dynamics have shifted considerably – and I must say the timing of this could not have been more impeccable. Let’s start with a peek at the after hours AUD/JPY chart as shown on the ZeroFX:

I hate to break it to you but if you hold overnight these days you have to watch the currencies or at least the S&P futures. Since I live in LaLa Land I was of course soundly asleep. We got a Net-Lines buy at 78.16 – followed by a half-ass retest – from there it took the express elevator up to the penthouse. If you caught this entry and the ensuing spike: You lucky bastard! ;-)

The spoos show us that the picture has now changed completely after a quick slice through those three stacked NLBLs I pointed out yesterday. If you are wearing your favorite tinfoil hat then I hate to disappoint as I am not going to belabor the cause of this move or complain about the Fed’s latest liquidity swap line expansion into Europe. These are forces way way out of our control and as such we simply have to adjust our trading to accommodate overnight surprise moves. Why do you think I keep harping on the futures and currencies all the time? You either learn my way of the hard way ;-)

Now, I expect a little retest here and that pretty soon – more on that below. However if we push above that hourly NLBL at 1239.5 then we may just accelerate higher. Short squeeze is as short squeeze does.

The good stuff however is on the long term charts – please step into my dusty lair:

More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) to view this content.
Cheers,

Humpty Dumpty

As the tape is not giving us much to hang our hats on let me tell you a little story which in my not so humble opinion rather ominously describes the situation at hand.

I maintain that the bulls are not simply getting out of the gate. For months all we’ve seen are two steps forward followed by three strides back. That may have been permissible during the Aug/Sep/Oct churn but just like German humor it’s no laughing matter when it continues during what is seasonally a traditionally bullish period.

Just look at this chart – or even better, if you have a six year old show it to him/her and then ask the spoiled little bloodsucker where that bouncing ball is going next. I tell you what I’m seeing – the bulls seem to be able to resist gravity within high volume regions but when presented with real hurdles (i.e. volume starved regions) they fail every single time. The only exception was that October spike through our ‘Gobi desert of volume’ which I recall being a bit more pronounced back then. But 1300 turned out that brick wall that Humpty Dumpty wound up falling from.

What’s next? I’m not entirely sure – seasonally the bulls maintain an advantage. But do you remember those times a year or two back when it was the bears’ turn and they simply couldn’t get out of the gate? Just to get clobbered with the pain stick as soon as the bulls saw an opportunity? Do you remember all the bad news back then? Didn’t matter at that time, did it? Well, it feels like that right now again – but this time it’s the bulls who continue to drop the ball.

The tape is weak and continues to act corrective. Yesterday’s super spike on the Zero may actually be supporting evidence to that effect in that a seven day consecutive sell off ahead of a holiday weekend is expected to produce a volatility swing. Except that it didn’t – we went from 34.47 to 32.13 – big deal.

This is how I see it: Unless we push above 1240 by early January I think we are going to close January on a pretty ugly candle. This is the time for Santa to bang the tape higher in preparation for some mid January shake out. The fact that it’s not happening is bad news for the bulls and adds insult to injury on top of the technical damage already endured.

Here is our short term perspective on the spoos. We almost touched our second NLBL today and then dropped back to below 1199. That 100-day SMA is expected to produce resistance and if we somehow can climb above that one plus the 25-day SMA then we may just make it above my magic 1240 mark.

Let’s also take a peek at AUD/JPY short term chart again – plus we are going to visit the evil lair’s futures pit:

More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) to view this content.

Cheers,

Ramp & Camp Monday

I hope you all had an enjoyable and relaxing Thanksgiving. Those long holiday weekends are always a stark reminder that I am in dire need of a vacation – after about the third or fourth day I am just starting to mentally relax! I am definitely looking forward to our Christmas break and another opportunity to recharge those old batteries. It’s been a tumultuous year – not a bad one for us I can proudly say – but definitely an exhausting one. But heck – let’s be honest for a moment – once all this drama has played itself out, maybe a few years from now – aren’t we all going to bored as hell trading ‘normal’ tape again? That’s right – always be careful what you wish for!

As expected the Sunday night AUD/JPY was a clear reflection of what awaited equity traders in the morning. Nice stair step pattern up and we never even as much as touched any of the hourly NLSLs. What I find fascinating and at the same time rewarding from a technical perspective is that the AUD/JPY reached all the way up to our first NLBL and reversed from there. The hourly is now in a battle with several NLSLs slightly above the 77 mark. Which is also where we have the upper 100-hour BB line. If that support cluster gives way expect the AUD/JPY (and probably equities) to follow lower.

I have one juicy FX setup and more equity specific musing below for the subs. Please step into my lair:

More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) to view this content.
Cheers,




    Zero Indicator


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