The Day After

See there are two types of traders – the ones on the inside who make things happen and the ones on the outside who ask you what the heck just happened. Unfortunately most of us have to eek out a living on the outside and as such we best ignore the news as it just represents a feeble human need to attempt to rationalize events that have already happened. Yesterday morning everyone on  the outside got the legs cut from underneath them and by the time the smoke settled the big question on everyone’s mind was ‘what the hell just happened?’ Which was the cue for a multitude of explanations and rationalizations from pundits across the land (European elections, Berlusconi, etc.) which IMNSHO present absolutely zero benefit to the common field mouse, i.e. traders like you living off the breadcrumbs that the system permits them to collect.

Fast forward to the ‘day after’ which is an important concept and you should pay attention now. This morning Scott kindly dropped by to leave a comment I hope all of you saw. It’s something both he and yours truly have addressed on numerous occasions and it bodes repeating as I still saw a lot of confusion in the comment section today:

One thing that everybody needs to keep in mind for today: Yesterday was a type III trend day. The overwhelming probability for today is the opposite, smaller range. Anyone trading the emini today should keep in mind that unlike yesterday (where sell and swing for the fences was the order of the day) today will be a scalp long at lower bollingers and sell at upper bollingers type of affair. Also a gap fill is a higher than usual probability.

I hope this sinks in and as such today’s tape should be of no surprise to you. Of course a surprise drop is always on the menu but what I’m seeing thus far fits the textbook game plan for post banana peel slip days. As I pointed out this morning myself – that 25-hour SMA appears to be important and has thus far put up resistance. As I am typing this we are trading above it however and that now leaves the NLBL at 1495.75 as the final hurdle separating a stab higher from more consolidation.

At this point we are most likely going to get an inside day on the spoos – and you know what that means. The current upside trigger is 1497 which is just a handle and change above that NLBL.

Gold – I told my subs that I had flipped my shorts for a long position yesterday and I’m damn glad that I did. Today’s stab higher more than made up for the little loss off the lows and I’m now ready to call it a trade as it’s heading into daily resistance. At least for now – let’s see what happens here.

EUR/NZD – that diagonal trend line was just too juicy to pass up last Friday. It’s been tumultuous ever since – had to jump in and out yesterday and then tried a short near the 100-hour today which however went bust. All in all I managed to eek out a few pips of profit. I would not want to be long here as that upper diagonal on the daily is looming near and large.

Now let’s do some setups – please step into my lair:

More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) or Zero Pimp-A-Thon to view this content.

Cheers,

And That Is Why We Follow The Charts

Last evening I proposed that the ongoing shake out was merely an attempt to scare the children. Seems like my bold claims weren’t that far off the mark as our support lines held up just famously. And that, my dear ladies and leeches, is why we follow the charts.

And further earning my keep here I also proposed a nice long opportunity on the E-Mini this morning. I hope you took it as it’s now time to take partial profits. Actually since I took this snapshot it’s been pushing higher and is almost at target – time to cash out. You are welcome! Evil is as evil does :-)

Strangely enough – the recent gyrations on the VIX have us now two steps into a, believe it or not, bonafide VIX Buy Signal. That’s relative to equities by the way – meaning if we get one more lower close tomorrow odds suggest that equities will be heading higher in the course of the coming week. A bit of a head scratcher, this – but the rules are the rules. My condolences to all you hobby bears.

Also worth noting - as I’m writing this we are technically painting an inside day on the E-Mini.

Dollar update – once again our chart was treating us well. You subs may recall the ‘last kiss goodbye’ I was proposing on the DX and thus far that’s exactly what’s playing out. However there is a NLBL right above and if we would breach it in the coming three days then we do have a technical buy signal. Again, mind the two daily SMAs above which would most likely provide additional resistance.

Another example of why we fade the news and follow our charts. Gold has been painting this interesting little diagonal with the 25-day at its center over the past few weeks. Although there really isn’t much edge in playing this configuration on a daily basis I suggested to you (i.e. my subs) that playing the swings was definitely worth it. I hope you paid attention and banked some coin today.

Sugar triggered its lower inside day trigger. Good entry and you ought to be short now.

Let’s sling some stock symbols today – in my never ending quest for market domination I managed to run into a few keepers:

More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) or Zero Pimp-A-Thon to view this content.

Cheers,

Pre-FOMC Announcement Drift

Seems the bots are running some Christmas shopping algo today as the tape is drifting around without much participation. In case you haven’t heard – the Federal Open Market Committee (FOMC) meets for the last time this year on Tuesday and Wednesday. Timing is the main reason why this meeting is receiving special attention. Just so happens that Operation Twist comes to an end on December 31st and and Bernanke is expected to announce fresh measures to keep the party going. Whatever happens pre- and post-announcement, it should stir up quite a bit of volatility, So I suggest you keep your exposure small and your stops at arm’s length.

The E-Mini is running up a steep support line and is now right below a daily NLBL at 1424. There’s nowhere left to run and one of them is going to  be breached this week. Suffice to say that we are going to take whatever direction it takes. Long would be my preference as it’s a much easier trade. On the short side we would have to drop below the 100-day SMA to justify meaningful exposure to the downside.

Our speculative BIDU entry is in pretty good shape. After hopping over the 25-hour SMA it jumped higher and is now approaching its next short term hurdle. If it can overcome the 100-hour SMA then we ought to be good until that daily NLBL near 95.81.

If you enjoy inside day candle setups then this is your lucky day as I’m seeing them pop up all over the place:

More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) to view this content.

Cheers,





    Zero Indicator
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