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,

The End Of The Beginning

We are seeing tepid signs of buying interest but it’s not exactly convincing – at least not thus far. We need to see a lot more mojo down here as we have reached the last line of defense - a slip up here and it’ll be one long cold winter for the bulls.

2014-10-14_spoos_update

That drop below the lower 100-day Bollinger should have never happened – but it’s on the books now and there will be consequences. The only remaining level of support that’s keeping us from falling off the plate is the (very much untested) lower 25-week BB and thus far it seems to be holding. Let me be clear: A drop below 1850 will open the floodgates and we most likely find ourselves at 1750 or lower.

Bottom Line: The bulls have a vested interest in holding 1850 – for below it the abyss awaits. But whether or not we bounce here – this is BAD and most likely it’s not the end of the story. To quote good ole’ Winston:

“This is not the end, it is not even the beginning of the end, but it is perhaps the end of the beginning.”

2014-10-14_crude_update

Talking about falling off plate and all – here’s another recent turkey – crude. Wow – that’s a massive drop and it very much resembles what we’re seeing on the equites front. Just worse. We are now on death watch and I’m posting the LT chart for a reason. What we need here now (imagine Winston saying it) is last kiss goodbye maneuver, after which we will deploy our troops to deliver the final death knell. The Mole will be on the case here – that much you can bet on.

One measly setup waiting below for the subs – but it’s a good one ;-)


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.

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

Cheers,

Not Business As Usual

The dynamics have changed and clearly we are not in the same type of market as we’ve become accustomed to in the past five years. We have seen a few banana peel slips since those lows in early 2009 but every step on the way it has always paid to give the bulls the benefit of the doubt. Contrast that type of market sentiment with what we have been observing over the past two months – instead of bullish surprises it’s been the bears who have been serving them up.

2014-10-14_spoos_briefing

Last night the E-Mini was were trading near a very important inflection point above the psychologically important 1900 mark. A bounce here was almost baked in – well, almost. As I had pointed out – should the bulls drop the ball here we are going quite a bit lower. It doesn’t matter if we suddenly drive higher from here – I wouldn’t be surprised to see a bounce now, after everyone has been faked out by yet another drop to the downside. But it’s immaterial as technical damage continues to accumulate after a solid weekly sell signal.

Bottom Line: Volatility continues to climb and a bounce can happen here at any time. However, if you are short right now there is no reason for you to take profits yet – you cannot ride a big move lower if you try to accommodate every small correction to the upside. Remember we are in SKEW month – and I’ve been warning you all that anything can happen in October. On average markets rarely fall apart during this month but when they do they do it in a spectacular fashion.

2014-10-14_USDZAR_briefing

Setups – talking about SKEW and tail risk – here’s a speculative one: USD/ZAR. It’s in a pretty good spot right now to throw 1/2R at a long with a stop a few pips below the 100-hour. Which is still dropping a little and that’s why I’m not playing a full position.

More below the fold – please step into my lair:


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.

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

Cheers,





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    1. Mad Monday Morning Briefing
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    4. Falling Swords
    5. The End Of The Beginning
    6. Not Business As Usual
    7. Time For A Breather
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