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 our cheat sheet.

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Cheers,