Bearish Evidence

Although many of my medium charts continue to point upward I am starting to sense a growing disturbance in the force which concerns me. Now let me present my case with a caveat: By no means am I suggesting that we’re going to turn tomorrow. I think you all understand at this point that equities have acquired the potential to happily bubble higher on vapor. However, that said – if you are net long at this point then you may want to start tightening your stops a little.

Let’s start with our most bullish chart – the SPX point and figure. Once you remove all the noise it’s rather sobering to see a textbook squeeze off SPX 1650. Our current price objective is at 1940 (wow!) but as this is a long term chart don’t expect to get there in a b-line.

The bulls aren’t really in trouble until about 1705 – let’s make it 1700 to pick a nice round number, which would most likely trigger a high pole reversal warning.

Another long term chart and now it’s getting a bit more bearish. This is the daily Zero which is a proprietary indicator I’ve been using for five years now. Rarely have I seen such a clean bearish divergence and I’m surprised that price has as of yet refused to respond at all.

The short term version (Zero Lite) by the way shows diminishing momentum. That doesn’t always mean we’re going bearish but based on prior observation it opens the door to a surprise move.

My VIX/SPX ratio is also starting to go divergent – apparently market makers have been pricing in a bit more risk since Friday afternoon. May be nothing and I’ll keep an eye on this – if it persists through tomorrow then I’d tighten up a bit more. FYI – nothing interesting yet on my VXV:VIX and VIX:VXO ratio charts…

The UVOL/DVOL chart shows me DVOL slightly leading today despite us pushing to new highs. Not a reversal signal in itself but given the overall context it supports the idea that we may be looking at a short term reversal.

Finally, from a pure price perspective we are slowing down – today we’ll be painting an NR4 (narrowest range in 4 candles) and on the volume profile we’re in total limbo. Not exactly tape where I would want to hold significant long exposure.

Bottom Line: Unfortunately I do not see any bonafide sell signals yet on the equities side, so in terms of short setups we’ve got nothing to go by – just yet. But as soon as I do see price confirmation (e.g. an inside day, RTV-S, or other price pattern) I would most definitely be tempted to jump into some shorts. Remember – top calling is a sure recipe for financial ruin. So be patient but keep your eyes peeled – something doesn’t smell right up here.

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.

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.

After an overnight sell off equity futures are sitting at the brink this morning. This morning briefing will be a bit unusual as I’m posting daily charts – however I deem it important that you guys know where the inflection points are going into the session. As my buddy Scott pointed out the SPX and the ES are painting what we call a Retest Variation Sell setup – the wave wankers would call it a second wave that’s about to pick a direction. Based on the setup we ought to be short already as the spoos breached yesterday’s low, which is the trigger (depending on how you play it you can trigger it one tick below the low – but that’s a different story).

Based on my Net-Lines however we are just now right at the edge and the fact that the 25-day SMA sits there as well (near 1545) makes this an important inflection point. I would be short below it and long if the spoos magically (you know who you are) recover back above 1549.75.

The YM is lagging a bit behind, so if you wind up missing the setup on the spoos then you can play the same setup here. What I like in addition on both setups is the fact that we got an inside day yesterday – again based on the rules we already ought to be short but based on that short stack of NLSLs you can wait for a drop below 14400 if you’re conservative.

I’ll tack on more setups here as I find them but want to get this post out asap so you guys get to jump into the fray if things start accelerating.

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.

Cheers,

Can’t Run Stats On Records

I wish I could run my stat model on this stuff, but when you make new extremes- almost an impossible task.

Charts say a thousand words or so…

Market makers not buying this one bit.

And retail sure is buying this…

The move in bonds, which was my 2nd best trade of the year next to RBOB, has not helped this ratio one bit…

Cheers,

-Volar





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