Whipsaw Galore

In the past two weeks the S&P has been riding the express elevator several time between the penthouse (i.e. the volume abyss above 1980) and the attic (i.e. the volume hole below 1940) and then back again. There is no telling how far this trading range is going to extend (see Scott’s weekend update) but what’s rather clear is that getting positioned anywhere in between is tantamount to committing ritual seppuku – it’s not going to be fun and you can be sure there will be blood left on the carpet.

Which means if you insist on playing the S&P futures then being short near 1980 reduces your risk significantly. Yes, one of those days it’ll break higher but it doesn’t make sense worrying about that – simply put your stop above the volume abyss and if she breaches you can always flip sides with little lost on the short side. Same applies if you feel an insatiable appetite for long positions here – choose a salad instead and then wait until at least 1945.

Meanwhile at the VIX cave all those gyrations have been lifting us off the record low IV readings we’ve been enjoying as of late. As you can see by the ATR(14) panel – volatility of volatility is rising. And per Mandelbrot that big spike higher last week suggests that we might be seeing more. VIN/VIF is also creeping higher which means some folks are getting nervous.

In case this means nothing to you: It is a little known fact that the CBOE actually maintains separate indices for the near-term month VIX (VIN) and the far-term month VIX (VIF). Just pop those tickers into your streaming quotes and you too can watch not just the VIX, but the two components used in the VIX constant maturity blend.

And frankly speaking a meaningful correction is way overdue at this point. After all we have have not seen one since 2011!! Since we tested SPX 1100 it’s been but one directional crawl higher. Get this – counting all monthly green candles since we marked that low gets me to 27 compared with mere 7 months lower. Quite mind boggling – had you simply bought on the first of each month you would have won 74% of the time! Heck, I’d kill for these odds and so would you.

Of course – until that green trendline is broken the bears will most likely have to endure more of the daily pain they have learned to live with in the past five years. Calling tops is for losers (apparently) and until important LT trend lines are broken the trend remains intact.

Now having said all that let me present a short setup on the equities side ;-)

Well actually it’s a bi-directional one. Obviously the Russell has been clearly lagging all other indices and as you can see has not been participating in the sideways churn we’ve been seeing on the equities side. And if I am going to short ANYTHING in that sector then it’s going to be the weakest bitch boy I can get my claws on. The long side doesn’t look shabby but quite frankly I would be more excited about a failed failed hammer short here – plus it’s also an inside day. Pick your poison.

Gold – very juicy RTV-L plus IP-S today and I wouldn’t be feeding this one to you leeches if I didn’t have a lot more waiting below the fold. So grab your secret decoder key and meet me in the lair (we have air-conditioning):


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You have been briefed – now have fun but keep it frosty. See you guys tomorrow.

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.

Nice short term setups across the board this morning except on equities. However here we do now have an RTV-L setup active courtesy of yesterday’s close lower. It’s also a hammer long in an uptrend – so that gives us two technical trigger. Entry and stop on the chart – as of this writing we’re getting close…

Gold weaving its way lower and I would be short on a breach of the current hourly Net-Line Sell Level. Stop will be above the 1300 mark – give it at least a handle or two as ST volatility has been very low and it wouldn’t be unusual to see a quick counter spike.

EUR/CHF – this one is a bit unusual compared with what I usually post here. Two entries – one right here on a breach of the already expired NLBL at 1.2155 – and two on a drop lower toward ~1.215. Not interested in the short side here.


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Today’s event schedule:
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.


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 – quite a bit of volatility risk on the CAD side:

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,

Friday 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.

On the equities side we’ve been accumulating more and more context and it has now become apparent that the 100-hour SMA on the E-Mini has been respected in the past three sessions and is now acting as a barrier to the upside. On the daily panel we are seeing lower highs and lower lows. Obviously there is little appetite out there for being short which is why I am keeping my current positions in place with a firm (bid) stop at ES 1968.5.

The SPX is a mixed picture – yes, it’s been able to recover the quick spike to the downside but it’s still being lead lower by its own 25-day SMA. And that one is about to meet up with the 100-day SMA sometime today – which means I expect to see resolution of this situation either today or Monday at the latest.

GBP/JPY still pointing lower but thus far equities continue to resist gravity. Obviously we all have seen this play out over and over again over the past few years. We should be keenly aware of the fact that we are trading against the overall trend and the only reason we wagered into short positions in the first place is due the grace of an early entry courtesy of an hourly configuration across three major futures contracts (i.e. ES, NQ, and YM). Despite the bearish tape of the past few days however no significant bearish inflection point has been breached. Which is why I now expect a 65% chance that my short positions will be stopped out. However, due to the thin participation we have seen (holiday tape) any downside could trigger a cascade thus this remains to be low probability / high return campaign.

We have quite a few juicy setups this morning, starting with silver – here we actually have two nice entry opportunities. I would prefer the long side and with a bit of mojo that NLBL at 21.545 may just be breached. Bear in mind that we may see a fake breach first – it wouldn’t be unusual. It may be best to put 1/2R into this first and add another after 21.6 or 21.4.

More goodies below the fold for my intrepid subs:


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:


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,





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    1. Last Chance For The Bears
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    3. Binary Proposition
    4. Time To Wield The Iron
    5. Zone of Fuckery
    6. Whipsaw Galore
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