The Outer Limits

So where are back from whence we came and I hope you enjoyed the ride. I know – who am I kidding – it’s been a rough month and let’s hope that April will not only bring us better weather but also put us into a less devious market phase. So let’s see where we’re at on the equities side:

It’s getting interesting as we now have reached the outer limits of the current whipsaw zone. No, there is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical.

Literally that is – I’m not sure there is much left on the vertical but that was a nice jump in four days. If we push above 1880 then the momentum may again propel us higher in the stair step fashion we have have seen lately. Also don’t forget that SPX 1880 will switch our P&F back into bullish mode.

Also rather compelling right now is that the VIX is starting to drop below a pretty pronounced support line. And that may herald a new low volatility period that gets us back to the 12 mark or below. OR it may be that we are dropping from here. Unfortunately I don’t see a price pattern to get us into a position right now. At least on the equities side.

But that doesn’t mean we can’t have any fun, does it? Here’s crude which I very much liked this morning and happily pimped to my subscribers. I got filled short near 101 and it’s been one wild ride ever since. Have taken partial profits but will keep 50% in the running for a touch of daily support near 99.1. And if you weren’t a sub – well then you probably missed out ;-)

On a totally different note – you recall my write up on market phases the other day. Here’s a chart that should do two things for you – demonstrate two very distinct market periods for one. And then also drive home the point that mean reversion does not always happen, especially on the Forex and futures side. So if you trade expecting platykurtotic markets you will get burned, just a matter of time. Always know which market phase you are in and that also means looking at volatility. I and Scott have written about this rather exhaustively, go hunt it down – the search box is your friend.

We have a lot of setups tonight – here’s a freebie: Bond futures – the 10-year is at NLSL support but is also painting an RTV-S. I want to be short here with the trend if the NLSL triggers tomorrow.

Quite a bit more waiting below the fold – please join 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!

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Draghi Time!

So today it is Mario Draghi’s turn to shake up the markets a little – apparently this week will be our early spring cleaning for the year. We’ve already seen quite a bit of movement ahead of time as traders are locking in profits on various EUR and GBP crosses. Our Heisenberg beta testers already banked some fine coin this morning – more on that below.

Equities are seemingly relaxed until now. The spoos have slowly descended toward the 25-hour SMA, which thus far has been holding up through two big announcements. So let’s continue to stick with the charts, shall we?

The GBP/JPY is also holding up – it’s one of the popular carry trade pairs right now. On eventful days/weeks like this I always look toward the Forex side first as it’s the big dog wagging equity’s tail.

On the short term trading front I am sitting this morning out as I am already well exposed via our Heisenberg strategies. We’ve seen a lot of activity there since yesterday as Heisenberg is very good at catching outliers. As a matter of fact the entire concept driving Heisenberg is that of retail traders expecting mean reversion and instead being bitch slapped by leptokurtosis. Let’s see some of that in action:

First here’s one that got away yesterday. NinjaTrader was throwing me several curve balls on my production machine and I spent several hours fixing a corrupted database (don’t even get me started). Most of the symbols kept running fine but we weren’t able to load the spoos and missed out on a 3R winner. Very annoying to say the least. But fortunately this morning’s moves on the Forex side already made up for it.

CHFJPY running against the 60 minute chart. Took 25% profits at 1.2R and just actually closed out at 3R.

Same on the EURUSD.60, however this one is still in the running. Our stop is currently set to 25% MFE (maximum favorite excursion). If you guys are unfamiliar with the lingo then head over here for some of the basics.

GBPUSD.240 took partial profits at 1.2R – our stop here is still at break even and I expect this campaign to continue for a while unless we see a complete reversal today.

So this morning has been a lot of fun already, which is when you usually step away and don’t push your luck especially ahead of Mario’s big media moment. If you’re interested in automated trading then feel free to sign up for our free Heisenberg beta which is still ongoing. For more details please check out the intro¬†as well as the campaign management example.

Have fun but keep it frosty.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.


Freaky 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.

Folks, I have an inkling we’re going to see some movement today – everything is lining up for a big move. Equities first – the 25-hour has been carrying nicely and overnight we haven’t even touched. Pretty bullish – also given that it slipped across the 25-day we are now pushing into bullish territory. Yes, still possible that this is a LKGB but the bears would have to stomp on this post haste – the odds for that scenario are now diminishing rapidly with each tick higher.

The YM and the NQ are looking pretty much identical – the big laggard has been the TF but it’s now pushing above its two converging SMAs. That’s looking solid so far – now let’s see if the 25-hour can provide some traction higher.

The bonds – boy, I what a nice chart – it’s falling in a very orderly fashion and if you manage to grab a touch of that 25-hour then I suggest you be short with a stop a few ticks above it.

But we are just getting warmed up – I literally have a plethora of setups today. If you decide to follow me into this abyss then I suggest you cut your exposure to 1/2 or 1/3 R each as you otherwise may become over exposed. Correlation risk on the Forex side is a very real problem.

AUD/JPY is looking very very juicy here – I want to be long with a stop below 91.13’9.

CAD/CHF – it looks like it really wants to climb higher but that SMA is blocking the way. Well, if it gives way I’ll be long with a stop below that NLBL.

Many more goodies below – Forex is simply off the hook this morning – please join 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.

Event risk:

Jobs report at 8:30am in the morning – will produce gyrations.


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