The Day After

Since the onset of QEx I have seen this script play out countless times. We get a downside correction which pushes toward the edge of daily or weekly resistance (Mo – Wed). Then some news or rumor induced headlines start injecting a healthy dose of volatility into the tape (yesterday). What follows is a complete flatline – a.k.a. the day after.

The tape basically freezes and there is little participation – all the sellers (or buyers) have suddenly gone MIA. This serves to reel in anyone with a strong opinion – especially the retail crowd which enjoys playing options.

Here’s a snapshot of today’s session as seen on our Zero indicator. As you can see the signal shows almost no participation. And based on prior occurrences over the past few years both sides usually get screwed the day that follows as vega squeeze serves to devalue winning long option premiums and of course eviscerate anyone holding short. Of course that is assuming we punch higher ¬†from here – which has been the case nine out of ten times. Should recent history be our guide? What if it’s different this time? What to do?

My answer – as always – stick with the charts. Despite the recent gyrations we now have excellent context to plot our way forward. Let’s get started – shall we? Here’s the SPX which now sports a beautiful inside day right on top of the 25-day SMA. Not only that but we also have an NR4 (narrowest range in four days) and an LV4 day (guess what that one means). So excellent context here.

The Dow cash in a similar configuration. Here we’re sitting right on top of the SMA, thus allowing both sides a fair shot at the big price.

And the RUT – exactly the same idea but the bears also enjoy a Retail Variation Short starting tonight. So no guesswork required – we have excellent setups across equities and you won’t need a crystal ball to get positioned. Simply follow price.

Now on to Forex and the futures – we’ve got some goodies tonight!


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Cheers,

Long Term Update

Tomorrow is Thanksgiving and I’m pretty sure most of you have better things to do than to go hunting for setups today. So I decided to post a long term update on some our key markets instead. Let’s start with the S&P 500 and then I’ll cover gold, bonds, crude, and the Euro.

I sometimes wonder what all the bitching is about. Have you seen a more bullish chart then this one? If you simply fade out all the noise – the chatter, the dire predictions, the rumors, the Fed stories, etc. then this chart is all you really need to know about equities. The Fed keeps printing and equities keep bubbling higher. Will it end next year? The hell I know – that question has been floated since 2009 and until I see a bearish monthly I’ll do like old Turkey (a.k.a. Mr. Partridge): Well, it’s a bull market you know!

Nothing much to add on our long term chart. Nevertheless retail keeps waiting for Godot. Any day now – yes…. Sad thing is that one day (perhaps tomorrow, perhaps in a few years) they’ll end up being right – finally. And then they’ll celebrate and proclaim ‘hey, we TOLD you so!’ not considering that they’ve missed out on one of the best bull markets of their lifetime. And if anything is baked in already – it is that of lost opportunities. Fortunately we stainless steel rats saw the light in early 2010 and never looked back.

More below for my intrepid subs:


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Alright – this should give you guys enough to work with over the holidays. This will be my last post until Monday morning as the Mole has more than pulled his weight and deserves a few days off for a change. Well – who am I kidding – there’s no Thanksgiving in Spain and I’ll most likely spend the time bug fixing, hacking up some new tools, or catching up on some reading. But who’s complaining – I love what I do.

See you all next week – travel safely and don’t overdose on the¬†tryptophan!

Cheers,

Wednesday Morning Briefing

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

The hammer long setup on the SPX appears to be in the process of triggering on the spoos (equivalent trigger shown at 1764 – it’s 1767.03 on the cash). It’ll run into two NLBLs almost immediately so I don’t feel so hot about it – but a setup is a setup. I’ll jump in with 1/2R and see if it can get past 1776 on the cash. My stop is below ES 1751.

The greenback is approaching short term support after pushing sideways for a few sessions. No setup here yet – let’s see how it behaves once it starts touching that 100-hour SMA.

However there is a plethora of EUR setups today as things seem to be coming into sync on that front. Please step into my lair:


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Cheers,





    Zero Indicator
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