Running Like A Hare

The tape that is – at least for the past few weeks. Gaps at the open galore followed by systematic squeezes to the down or upside – it’s a pretty nasty January we’ve had ourselves here. Which is kind of strange as on a daily basis things are looking a lot more tranquil. Once you zoom out a bit you get an idea what I’m talking about:

It’s been a nice 120 degrees hill climb since mid December. When I see intra-day noise coupled with long term tranquility I usually take notice. But what really puzzled me as of late was the small signal range on the hourly Zero and the Zero Lite. Which is reflected on the TOS version of my hourly Zero – see above.

Now, I started to think about what the implications could be here and whether or not things could continue to bubble higher alongside minimal participation like this. The answer to my question was delivered when parsing for prior occasions in the past. In particular take a look at the highlighted sections on the daily Zero chart ranging from May 2010 to September 2010. Back then we got a pretty thorough correction and then the signal went flat. I still remember a lot of bears getting very excited in August 2010 – which of course turned out to be the bear trap from hell. The daily Zero was spot on throughout I may add and kept us out of a boat load of trouble.

Now, as Mark Twain famously said – history does not repeat itself – but it rhymes. Very smart man and it’s a good lesson when it comes to trading as well. Look – a significant correction here is not impossible. Obviously bullish sentiment is through the roof and the ongoing correction is still a bit shallow and seems to attract intrepid dip buyers. On a very short term basis I would fade equity charts and stick with the currencies. But on a long term we continue to look very bullish here. The daily Zero is not painting any divergences and even more so – has gone flat.

A lot more charts for subscribers below – please step into my dusty lair:


More charts and cynical 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,

Clues – I Got Clues

Interesting thing happened today… we tried to go down, and reversed painting a hammer candle, which as we all know is bullish.

Now we are at major trendline resistance, the move is long in the tooth, and to my eye it looks like a simple short squeeze without attracting fresh buyers. That is the big question… did the short squeeze from the breakout of the triangle pattern bring in enough fresh longs to achieve escape velocity?

Everything changes from here if we go up and stay up. Its long all the way if we go a little higher.

Given that the high is unretested, and the hammer candle which by definition represents a failed attempt by the bears, the odds OVERWHELMINGLY (like 80% IMO) favor an ATTEMPT to drive the market up.

Here is where it gets interesting. This trend looks ready to stop right here right now. If we go up today, WITHOUT making fresh highs, that would paint a RETEST VARIATION SELL (look it up). That would be an OUTSTANDING short.

As an intraday play. I would look for a reason to get long early (a small gap down would be a good play) and hold it until we get a zero lite divergence.

If you want more clues, look at the way bonds turned before equities. Now take a look at the story each days price action is telling.

Scott

Nice Little Bear Squeeze

Well, that was a nice little bear squeeze we got ourselves today – almost textbook I may add, featuring the early morning wipeout followed by a systematic run higher. If you paid attention to the charts I posted last week then this morning’s support zone should have come to no surprise to you:

Those two Net-Line Sell Levels (NLSLs) at the psychologically important 1300 mark proved too much to overcome, which frankly was not a big surprise to me. There is simply no confidence in the tape – one way or the other! For the entire month of January I have maybe seen one or two quick spikes beyond the Zero’s +/- 1.0 signal range. A twenty handle drop at the open usually comes with a bit more juice to the downside and lack of participation/momentum simply means that the tape can turn at any moment – and that’s exactly what we got.

If you are wearing your bear hat then please don’t get your panties in a bunch until we see a breach below 1285 – or even better 1280. Now that could open the door for a more pronounced correction, but until I see that happen let seasonality, momentum, sentiment, etc. be damned! ;-)

But I really don’t care that much for equities right now – not until we get a strong move in one direction or the other. The FX side is a lot more juicy IMNSHO – very very nice setups today:

AUD/JPY – similar pattern as the spoos but there is a whole cluster of support sitting below plus we have a rising and fast encroaching 25-day SMA which should be good for some support. I would watch out for a breach of the 81 mark – if we get that plus a push above the 25-hour SMA then say hello to 81.80.

Alright the best ones below for my intrepid subs:

More charts and cynical 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.

There you go – tons of good setups on the FX side. Did I promise too much? Happy unbiased trading (to quote Volar).

Cheers,





    Zero Indicator
  1. recent misdeeds

    1. Escape Velocity
    2. Get Ready For The Whipsaw And Squeeze
    3. Equity Curve Trading With Crazy Ivan
    4. Looking A Bit Iffy There
    5. Kicking Off This Week
    6. Drop The Baseline
    7. Lazy Thursday Morning Briefing
    8. Back In The Thick Of It
    9. The Squeeze Is On!
    10. Return Of The Market Mole
  2. poll


  3. swag outlet!

    Evil Speculator SWAG Outlet!


    NinjaTrader
    Kinetick

    search warrant