Inflection Points

Equities are now beginning to accumulate sufficient context, allowing us to consider various inflection points where the odds either support continuation lower or a reversal toward the recent highs. Let’s review the daily context first:

In order to simplify it for you guys I’m hereby resurrecting an old tradition of mine – the Soylent line up. The volume profile chart show a pretty shallow volume hole near yesterday’s highs, just below ES 1940. The bounce didn’t have much meat in it but it may just have been a first foray into lost territory, perhaps leading to continuation either today or tomorrow.

Below us we of course have a bit of bearish wiggle room until about 1917, after which you can see a gradual drop off in the volume profile terminating in a textbook volume hole around 1900. That’s obviously a psychological line in the sand the bulls will want to hold. If it fails we’re going toward 1850ish – our current point and figure price objective on the P&F.

  • Soylent Green: At this point being long above 1940 is a pretty decent play if the GBP/JPY correlation shown below holds up. If breached a ride toward 1960 is in the cards and based on velocity/momentum/participation we’ll have to evaluate once/if we get there.
  • Soylent Orange: The highest odds right now are continuation lower toward 1900 unless we breach 1940. It does not have to be a black & white approach – watch the Zero indicator after the open for signs of increasing buying interest (or lack thereof). I think today is an excellent day to follow the Zero Lite for clues.
  • Soylent Red: Only applicable if we drop straight through 1900 without much of a bounce. If panic selling ensues a drop through that mark leads us toward 1850. The odds for that to happen are very slim right now. Recall what I showed you on the LT VIX chart on Friday.

The spoos to GBP/JPY correlation is pointing upward right now. That’s positive for the bulls and why I wouldn’t count the bulls out just yet. But equities need to follow higher now – the onus is once again on the bulls to draw the line here before major damage is incurred which may threaten the medium term and perhaps even the long term trend.

On the price side here’s a bit more detail. You can of course trade the E-Mini or the Spiders, or your favorite ETF, what have you. The 100-hour SMA is near our 1940 inflection point, so I think we have a pretty solid ST guide here.

I would however play the short side via the Russell futures – at least 50% of my exposure. After all it does make sense to short the weakest index and buy the strongest.

Which brings me to the NQ which still looks weak but should we see a reversal today then here are your long triggers and the stop. This may change as the day unfolds – so watch this chart as it may paint a nice diagonal higher under which you can place a stop.

Once again I found a ton of juicy ST setups this morning. Here’s gold which I want to buy on a push above that diagonal I painted on the chart. A short position is definitely possible here until that happens – in that case put your stop above 1295.

Quite a few more goodies are looming below – 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.

Anyone? Damn it, I don’t get no respect… (you have to be a sub to get the reference)

 

Scott’s Weekend Setups

As far as the stock market goes, we are in bounce territory, but whether we bounce from here or a little further down is unknown. We have a long setup, a gap open buy, but to my eyes this does not have enough risk/reward to be a compelling proposition. If we hit the trigger point I do advise banking profit on your shorts though.

In any case there are a few other setups I’m taking myself. Make sure you wait for the triggers though, no jumping in early ;-)

Here’s copper – shooting star short in down trend.


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.

Enjoy,

Scott Phillips

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.

Equities continue to look weak and yesterday’s session in addition to the overnight action has opened a small door for the bears. Whether or not they are capable of ceasing the opportunity remains doubtful but we shouldn’t dismiss it outright.

The E-Mini remains our main guide in general for the equities side and it’s useful to know how activity is distributed on our volume profile chart. As you can see there is a volume hole at around 1965 that separates the previous churn zone from the new 4/7 holiday range we are bouncing around in right now. If we hold here today and tomorrow then we’ll probably continue our course higher. A drop below 1965 however increases the odds for another medium term correction.

Always worthwhile monitoring is the S&P 500 cash index which is currently back at its 25-day SMA. Suffice it to say that this line needs to hold – just like last time it was touched. Now if you think we are due for a correction then you may want to look for opportunities to play along. Please step into my lair for a few suggestions on that front and plenty more…


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.

Here’s today’s event calendar (now dynamic and clickable!) – seems like we’re having a quiet day:


And the spike controller for you Forex traders:

Since we’re on the topic of Forex – here’s a bonus chart:

That’s the ZeroFX (part of the Zero service) which has been making very nice calls on the EUR/USD and USD/JPY side (former on first row and latter on second row). Those star patterns you see happen usually near buying/selling exhaustion. Not many of you are following it but it’s a great tool which provides quite a bit insight on participation patterns.

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

Cheers,





    Zero Indicator


    Darth Mole Alerts

  1. poll

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



      view results

      Loading ... Loading ...


  2. search warrant


  3. recent misdeeds

    1. Irrational Escalation
    2. Squeeze-A-Licious
    3. Tuesday Morning Briefing
    4. Welcome To The Wood Chipper (Again)
    5. Hold The Line
    6. Mole’s Cunning Plan
    7. Cruise Control Market Update
    8. Darth Mole’s Evil Deeds
    9. Zoning Laws
    10. Week of Boredom Market Update




  4. yes we can!



    NinjaTrader
    Kinetick