Falling Swords

The best advice I can offer you guys right now is to not resort to guesswork when it comes to when we’ll see a low. We are sailing in dangerous waters and if you’re not already short then simply wait it out – get used to the idea that you missed the boat. Anything can happen down here and it will!

2014-10-15_1412

Most importantly don’t fall prey to mental masturbation such as this. So it’s Ebola that’s bringing down the market now? Is that a fact? It couldn’t possibly have anything to do with the fact that the Fed’s money pump is slowly drying up? Or that we’ve been in a raging bull market for five years and counting which is begging for a correction?

It’s strange how the financial media continues to draw correlations between events and market cycles, even if they are disproven over and over again. And even IF those events were the actual cause – it’s useless to follow them as there is no chance of exploiting the information. How many people went long crude thinking that Russian supply disruptions in Europe would swing prices higher? And how exactly has that been working out for you?

Forget about the news – just follow the charts – they tell us all we need to know.

2014-10-15_sppos_briefing

Or NOT. If you recall my write up on market periods – we are in the midst of a rocket right now and there’s no telling when it’ll end. The wave wankers have tried over and over to employ all kinds of measures to project when a ‘third wave’ may end. The last time I tried that was in early 2009 when everyone was looking far below 666 based on their careful counts.

2014-10-15_spoos_volume_profile

The simple truth is that you’ll never know until after the fact – so stop trying to guess. Don’t think you are smarter than the millions of participants who are looking at the very same chart right now. We may bounce here today and hold the 25-week BB, or we could drop like a rock here and not stop until near 1700. I don’t know – but one think I do know for sure:

Never ever attempt to step underneath a falling sword.

2014-10-15_VIX_VXO

The one chart that’s been a thorn in my eye is this one – the VIX:VXO. It keeps pointing up and I really don’t know why. But we are in rough waters as I said and perhaps whoever is pricing those ATM options is tripping over their own hubris. Or they know something I don’t. Whatever it is – when things don’t make sense then you simply wait it out. We’ve done well this year – no sense in getting caught up in all the excitement (i.e. panic) and resort to forcing the issue. That rarely results in profitable trades.

2014-10-15_gold_briefing

Gold is looking pretty interesting right now as it’s fighting to overcome triple resistance. My current entry is betting that it’s going to fail but a few ticks higher above 1230 I’ll be long. Dynamics can shift quickly here and this is an important inflection point – which makes for good entries.

A few more ST charts below the fold:


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

Cheers,

Inflection Point

Alright, things are getting a wee bit out of control here, especially on the equities side. I’m all for letting winning positions run but the odds for a temporary pullback now seem nearly insurmountable. Given the lack of context on our daily or long term charts the hourly panel speaks the loudest right now.

2014-09-03_spoos_hourly_briefing

What we have here is a very ordered advance which climbed the 25-hour for a few weeks, with rare and only obligatory touches of the 100-hour. In the past week velocity decreased and volatility increased a bit. Note that each ‘poke’ outside the 100-hour BB lead to at least a touch of the 25-hour. We are now at a make-or-break point – meaning the BBs/SMAs are pointing almost sideways – which again means that a breach outside this range will require a violation of the recently established ‘play book’ if you will.

In plain English I’m saying that we either pull back here – most likely touching 2000 or perhaps even 19990 – or we bust higher and leave any top callers in the dust. Which scenario will transpire I do not know but that does not keep me from properly managing my positions, given the new evidence:

2014-09-03_NQ_update

As you may recall I have been enjoying a fine ride here and until now have let my stop trail at a wide berth. But after 5R in the bag it was time to take partial profits earlier this morning. I am leaving the remainder (50%) in play with a top at the 5R mark. If we drop below that then I’m certain we’ll find new entry opportunities next week.

2014-09-03_DX_update

Quite frankly the DX trade has gone out of control – nearly 8R at this point and the chart above shows you some of the steps along the way. Again it was time to take partial profits but I’m leaving a few lottery tickets in play for a possible pop  into 83.5 – wouldn’t that be nice…

2014-09-03_spoos_briefing

Most likely this chart isn’t valid anymore by the time you read this but if you manage to catch the spoos near 2010 then it’s time to tell Hal to grab a short position.

2014-09-03_hal

Damnit Hal – I told you SELL SELL SELL!!! &@^!%!

Alright, we’ve got some very juicy short term setups to attend to – please meet me in the lair:

2014-09-03_soybeans_briefing

Soybeans have been whipsawing around lately but I do like the current configuration as it’s facing triple resistance above. Worth 1/2R with a stop right above the resistance cluster (~ 1028.4).

2014-09-03_EURCAD_briefing

EUR/CAD – we can’t be sure but this thing may just break through that upper 100-hour BB. Very nice BB compression and if it manages to defy gravity I think we may have a short term runner. Watch that daily NLBL near 1.444 however.

2014-09-03_GBPJPY_briefing

GBP/JPY – there’s a lot to like about this setup, on the daily and hourly front. I’m long here with a stop below 172.7 – sometimes you simply see a setup and realize that it’s a go. Stop below the recent ST lows – and you’re good to go.

Have fun!


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,

Zoning Laws

After an exhausting topping pattern equities finally resolved to the downside last week. And as always it is magnitude and vehemence of the follow up bounce that determines what happens next. But it’s not as easy as waiting a session or two and then declaring a winner. Sometimes those bad boys are trying to fake us out. So when caught inside a sideways guessing week without the proximity of any significant technical context I often resort to zoning in order to structure my approach.

Clearly the volume hole near 1935 is the gateway for the bulls and it also demarks bearish from bullish potential. Anything beyond 1940 is still part of the obligatory bounce we have been expecting – remember the 25-day SMA sits right there to block the way (shown below). If the bulls advance above it then we are in the high bounce area, which does not completely kill the bearish case but puts it into serious peril. And obviously anything above 1965 shifts the odds back to the bulls.

On the downside we have the guessing zone in which we’re currently stuck. Being short here is actually not a bad spot to be in IF you grabbed your shorts near 1940 (i.e. yesterday). Otherwise there is nothing of interest down here until we drop below 1910 – if the bears manage to drop the tape this low we could easily see acceleration lower. However IF we do it’s still possible that the bulls stage a late f-u rally higher.

What to do? 1) you are already short since 1940ish – don’t do anything and put your stop to break even. 2) You can get short right now but only with 1/2R – then build your position as it drops lower each 1/2R increment – your stop would be above yesterday’s highs. 3) Going long near the lows is possible if we approach 1910 – if you are short already then I would simply hold them and monitor the situation. 4) Be long above 1940 with a stop below – this is not expected to be a long term campaign unless the bulls start ripping this higher.

I know – complicated but as Scott mentioned – this is going to be a shitty week on the equities front.

Here’s a wee bit more context – the SMA/NL  chart shows us a support trifecta sitting below. There’s a NLBL at 1923.5 – the 100-day SMA at 1911 and finally a NLSl below 1900. A breach below that one puts us solidly into bear territory.

Now on the long side I would not play the spoos – I would go with the NQ instead. Technically we are painting an RTV-L today and if we get that bounce (yellow and green in the zoning laws above) then this would be my instrument of choice.

On the short side however… well, more about that below the fold and a few more goodies 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.

Honorable mention:

Gold – courtesy of Darth Mole. If you saw this one last night you may have played that break out higher. And that wasn’t the only one today: EUR/GBP, crude, soybeans, bonds – significant jump in volatility. If you haven’t signed up for Darth Mole yet – it’s FREE all through August. Have fun!

Cheers,





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