Busy Tuesday 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.

Watch the GBP/JPY correlation this morning. We had a spike higher courtesy of a series of positive news while you were still catching up on your much needed beauty sleep:

What I want to see now is what happens afterward and how it affects U.S. equities ahead of the opening bell.

Bonds are looking interesting this morning – I have two setups for you guys, one I’ll share with you leeches. ZB is making its way sideways after having been unable to push beyond a slightly falling diagonal which is now near 137’10. I was tempted to go short here with a stop above but I think it’s best to wait for one more retest of the diagonal. Short while it respects it and long if it makes it above.

The ZN however is a good entry right now – please meet me in the lair:


More charts and 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 subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Today’s event schedule – seems like it’s going to be a pretty busy day with retail sales numbers in a few minutes followed by Yellen at 10:00am EDT. So watch your six!

And here’s the spike controller for you Forex traders:

You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,

Watch Your Six

It’ll be a short week as many vacation deprived worker bees over in the U.S. are busy preparing for an extended 4th of July weekend. So expect low participation on the market front starting Wednesday and turning into a flatline on Thursday. Which unfortunately works against us this week as this is probably just the quiet before the storm. Since I was gone Friday I’ll start this off with a wrap up of where we are followed by a few pointers on how to get positioned and of course some short term setups:

Here’s the E-Mini volume profile. Apparently we are not only heading into a holiday weekend but we’re also in the mid of a nasty chop suey zone. There is no saying how long it’ll draw out but I concur with Scott when he advices that it’s best not to be caught in between the swings.

On the short term side the spoos are looking pretty ugly. The recurring theme appears to be a test of the 100-hour SMA – so if you must/need to play then you should use that one to your advantage.

Also on a short term basis – the GBP/JPY correlation we have been watching over the past few weeks. It’s pointing down on a general basis. Watch this one during the session – if this divergence continues gravity may set in on the equities side.

Which brings me to the big whopper. I updated the daily Zero this morning and was rather stunned by the extended divergence that has developed over the past week. As it runs on the daily chart we use it mainly to assess the overall trend and in particular to spot situations where the long side may become hazardous. I have highlighted prior occurrences and as you can see we usually get some kind of correction although its magnitude cannot be predicted. IF you are trading on a long term basis (i.e. daily or weekly charts) then I suggest you make sure that your stops are set where you need them to be. There is yet no reason to panic but I would follow price very carefully – I will be posting two equity setups below which should guide you through this week just fine.

On the SPX cash side we are still in good shape and unless 1948 gives way any sudden drops to the downside are most likely going to find some dip buyers. However if that line is crossed things could accelerate quickly – an impending long weekend be damned.

More goodies below the fold – please step into my lair:


More charts and 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 subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Cheers,

Once The Last Bear Has Left The Bus

Just yesterday morning as we were scraping all time highs I suggested the following: After a three week melt-up the bears are feeling pretty crappy right now – there’s very little desire to short this rally and in combination with yesterday’s doji we may be due for a small correction. Apparently the last bear had finally left the building and after some consideration I believe we may be getting more than just a little dip lower – let’s review:

Let’s start with the obvious – as you recall the GBP/JPY was pointing down strongly and gravity has finally set in on the equities side. Some prefer to follow the EUR/JPY which actually is looking even more bearish.

This is the ratio between the SPXA50 and the SPXA200 – this refers to NYSE stocks above their 50 and 200 day SMA. The ratio shows us inflection points when we should expect normalization – i.e. medium term corrections. Since about early 2013 the 1.0 mark (i.e. par) appears to be where we should expect a shake out and we have pushed a bit beyond it last Monday.

On the volume profile side we never had much to work with since about 1890 – remember how long it took to overcome this? I see us either holding right now and right here in which any of the below becomes moot. Or we drop to 1925 for a bounce. There again we either hold or slide quite a bit lower.

Here’s the hourly SPX – I always like to look at the cash which guides my activities on the futures. As you can see we finally gave up the 25-hour SMA and now it seems the 25-hour Bollinger is being breaches as well. Again, unless we see a recovery here late today we are probably due to visit 1925ish (which lines up with what we see on the volume profile chart – nice!).

The Dollar meanwhile is pushing against its 100-day SMA and I fear that the buck literally stops here. A continuation higher would be very positive as it not only would get us above both SMAs but also interrupt a sequence of lower highs and lower lows. I would very much welcome such a move but call me skeptical.

But we’re just getting warmed up – I have a few more goodies up my sleeves plus I’ll tell you how to best get positioned here. Please step into my lair:


More charts and 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 subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Bonus Chart:

If you ever called me an idiot you may be on to something. I don’t know why I bother trading complicated setups. I should just go long on three consecutive green candles and short after three consecutive short ones. I mean is this the easiest futures contract ever? Literally a trend trader’s wet dream. We should consider trading with the trend here on a regular basis. I think I actually pointed this out in the past – this is a very well behaved contract. However it’s thin and you probably get a bad fill so it’s not something to jump in/out in – be in it for weeks at minimum.

Cheers,





    Zero Indicator

  1. poll

    • What is your average spread on the EUR/USD?



      view results

      Loading ... Loading ...


  2. search warrant


  3. recent misdeeds

    1. No Crying Over Spilled Milk (Or Beer)
    2. Entries Do Not Matter
    3. Last Chance For The Bears
    4. Three Strikes You’re Out
    5. Binary Proposition
    6. Time To Wield The Iron
    7. Zone of Fuckery
    8. Whipsaw Galore
    9. Fridays Stunning Reversal and What it Means
    10. Eenie Meenie Miney Moe




  4. yes we can!



    NinjaTrader
    Kinetick