Drop The Baseline

Having been on the road until Tuesday I just realized that we’re heading into a long weekend. I suspect most of you are already on the way out or won’t catch this before Sunday night. So let’s dive right in:

The VIX Buy signal we triggered on Tuesday seems to be proceeding nicely. Worth noting is the fact that we have rapidly descended back toward a baseline near VIX 13.5 which only recently was breached. That’s quite a volatility squeeze and if you were caught with puts (and even calls) near the bottom and didn’t get out then your premiums aren’t worth jack at this point.

On the spoos we are heading toward a NLBL which represents our first technical hurdle. Nothing else to see here…

Our GBP/JPY correlation seems to be supportive – it’s served us well again this week.

My YM entry this morning has paid off very handsomely and I’m taking it off the table now as we’re touching a NLBL on the daily panel. Good chance for a little shake out here.

I know it’s a long weekend and all but I actually ran into some very nice setups. Please join me in the lair:


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Per today’s theme I’m kicking off your Easter weekend in style by dropping a real bassline:

And another one – as it’s a three day weekend – wohoo!

Make sure no pets or younglings are nearby then grab a cold one and crank these suckers up. Wishing you all a fabulous weekend – see you guys next Monday!

Cheers,

End Of This Campaign

Well it’s been a profitable campaign but today my position was closed at the 2R mark to which our stop had been advanced last Friday. That doesn’t mean equities won’t ride any higher from here but the rules are the rules:

That early morning dip lower did us in – it was a bit of a pain as the Zero Lite suggested that it was nothing but a quick Monday morning shake out. Thus the odds for a bounce back were high.

However, as you can see we’ve gone pretty flat here since and participation is dying out (right panel).

The SPX:VIX ratio is also pointing to some possible monkey business. In case this chart confuses you – the drop of the line means that VIX has been pushing higher wile the SPX painted a new all time high. The SPX managed to climb above 1800 while the spoos missed it by one tick. It’s possible this divergence is due to tomorrow’s VIX option expiration but I still don’t like it. So perhaps today’s stop out will be for the better.

Since we’re talking VIX – last Friday we closed one tick above the lower 2.0 BB. Had we closed one tick below it we would be two steps into a bonafide VIX sell signal today (relative to equities). You lucky bastards!

Congrats to everyone who participated in this campaign :-)

Nice early morning entry on the ZN futures. I think it’s worth holding this campaign as we are pretty close to getting above that monthly NLBL which was failed earlier this month.

Copper is painting a juicy inside day candle. Both of those triggers are interesting as copper just failed its 100-month (not day) SMA – thus a failure or a bounce here will probably have long term implications.

Soybeans is presenting us with an RTV-S setup – entries will be valid after the session close tonight. I also love the context here as the 25-day is meeting the 100-day with prices right on top. This is a good one and although it’s not a popular contract it’s worth considering a small position.

 

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Cheers,

Channel Surfing

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.

The spoos are in the process of forming a falling flag and depending who you ask this may actually turn out to be bullish as well. Either way I’m more interested in the inflection points which are now 1763 (hourly NLBL and diagonal) on the upside and 1755 on the downside. As pointed out yesterday I remain pleasantly surprised but at the same time highly skeptical that our short entry near 1770 will resolve lower. But the rules are the rules and I continue holding with a stop above that daily NLBL – recall that it’s good until Friday.

By the way the VIX is now sporting a rapidly contracting Bollinger bubble – it has shrunk to a window of only two handles and either way we’re going to get a breach on one side soon. Which would start the count on an inverse VIX signal – i.e. a VIX sell on a drop below 12.35 and a VIX buy on a push above 14.23.

I know, it’s a bit confusing – a VIX sell means you would want to be short equities and a VIX buy means you want to be long equities. This one has served to confound retail traders since the dawn of humanity (i.e. we presented it here several years ago). So if you’re the inquisitive type – the rules are explained on ourĀ cheat sheet.


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Please login or subscribe here to see the remainder of this post.

Cheers,





    Zero Indicator
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