Zero Divergence

Quite a fascinating sell off today – that bump against the daily NLBL was all the bulls were able to muster. Perhaps it would have been smarter to take profits there yesterday (on the NQ) but I personally prefer to ride the long cons – meaning I get in early if I can and ride those suckers out. Of course what happens quite often is that you give up previously coined paper profits. Part of the game really – I got out a bit above break/even so if nothing else it’s been educational ;-)

2015-05-05_spoos_update

Here’s the E-mini in all its ignominy – straight down near those hourly Net-Lines. The daily has us back at the 25-day SMA but don’t be so sure that a bounce is procedural now.

2015-05-05_zero

The Zero is rather fascinating which is why I didn’t want to miss this opportunity to post it. The hourly panel shows us a strong spike to the downside. That was quite a failure near the top and we have two possibilities now:

  1. This is the mother of all bear traps and we’ll be seeing a counter move here post haste.
  2. The jig is up for the bulls – we’re testing the 100-day SMA and most likely drop right through it.

See this is the problem with those sideways formations – you really never know when you are in a break out until you’re well in it (and it’s too late to get positioned). I think we can all agree that this is one ugly chart formation – whatever you want to call it. Fear ranks high right now and very few people are going to try to be long here.

Which brings me to the Zero Lite on the right. Pretty distinct divergence here, which not always means that we’ll see a bounce back. We may just have run out of selling pressure and if we drop through key support near the well tested 25-day SMA we may get more of the same. But yes, there is a small statistical chance that we reverse here which is why I just grabbed a few E-Mini contracts. Just a small position as I don’t see anything clearly bullish on this chart.

Let’s be clear about this. We are in the late stages of a LT bull market and market conditions have evolved significantly over the past year. What we are seeing are fast surges followed by drawn out sideways corrections. The bulls are living on borrowed time and I think sometime this year there will be a price to pay for six years of bullish exuberance.

So why am I long here? Because it’s a short term opportunity and I’m not in the business of predicting LT tops or bottoms. Not my game – at least not anymore – when I did I was actually doing quite well but it’s not something you can base a trading career on. And taking it one day at a time with eye on the ongoing trend has been the proper recipe over the past few years.

Some very juicy goodies below the fold for my intrepid subs – please step into my lair:


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Things are about to get a lot more exciting – let’s put on our game faces.

Cheers,

Running Like A Hare

The tape across the board has been running like a hare and today’s session again did not offer us any reprieve from the relentless battering we’ve been through over the past few weeks. Up and down she goes although on the equities side it’s been more down than up and the fat lady hasn’t sung just yet.

2015-04-30_spoos_update

Clearly I’m going to be limping behind here as things are unfolding quite rapidly. When I took that snapshot it was looking like equities may have found some ground but I simply didn’t trust it and posted in the comment section that it’s probably best to let things play out. That seems to have been good advice as the spoos are heading even lower as I’m typing this. To your collective benefit Mole’s instincts have been honed by decades of hairy tape ;-)

2015-04-30_zero

The Zero is still showing us very little participation, once again indicative of a stop run by institutional traders. A lot of greedy retail rats are being burned here folks – consider yourself lucky you’re not one of them (I hope!).

2015-04-30_NQ_update

The NQ printing lower highs and lower lows – this is not looking good. The 25-day SMA only offering soft support and this thing could easily resolve toward the 100-day SMA near 4317 before it’s all over.

2015-04-30_VIX-VXO

On days like these it always pays to check breadth and momo charts. The VIX:VXO is showing me no divergence which is concerning.

2015-04-30_VXV-VIX

More long term the VXV:VIX is also pointing down. That’s bad medicine…

Alright, updated across the board in no particular order:

2015-04-30_EURUSD_update

The EUR/USD is now in earshot of my target and I’m taking everything but 25% of my position off the table. This campaign has done a great job of softening the impact of the shitty exchange rate I’ll probably be facing in the months ahead. Notice the weekly NLBL that has been sliced today.

2015-04-30_EURJPY_update

EUR/JPY – same idea here – I’m taking almost everything off the table, only keeping 25% of my original position. Again my target is near the 100-day SMA where I would normally expect some obligatory resistance. But given the velocity of this short squeeze things could easily overshoot.

2015-04-30_crude_update

Crude – I’m quite stunned by how well this one has kept up given all the drama in the remaining futures pits. As you may remember I snagged a rather early seat near the 50 mark and remain determined to ride this puppy higher. Over the past week or so there was a lot of talk about crude having hit a high and I’m glad I didn’t listen – as always! ;-)

2015-04-30_ZF_update

ZF is not a setup yet but I like the daily and weekly panels here. As soon as it gives me an excuse to be long I’ll let you know.

2015-04-30_ZN_update

Ditto on the 10-year futures but it’s a bit early to snag a position just yet. Let’s see how things play out Sunday night or on Monday.

Alright before I grab dinner a few juicy setups for my intrepid subs:


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!

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Cheers,

Sons Of The Lair

So I’m officially a biker now. That’s right – the Mole has been issued a Californian M1 license and driving in SoCal will never be the same. Well until the 21st that is – that’s when I’m heading to sunny Mexico.  I can assure you that this was no easy feat given the time restrictions as I’m only spending a bit over nine days here in Los Angeles. As you know I’ve been riding a scooter back in Spain for the past few years and quite frankly it’s getting old. Unlike over here in the U.S. the Spaniards permit you to legally ride everything up to 125cc with a regular driver’s license.

But if you want to hop on the real stuff then you’re out of luck as passing a motorcycle license anywhere in Europe is a royal pain in the neck. We are talking red tape galore, weeks of driving lessons, and thousands of Euros in expense. I think in Germany they make you take 20 hours of driving instructions minimum, there’s a full day First Aid course, and that’s only to get you started. Which may make sense for the average 20 old hoodlum trying to impress his lady friends but a bit much to ask for someone who has been riding two wheels for years and has carried a driver’s license for over 25 years. Heck, I drive stick shift like a mini Schumacher – my accent is way better though.

SOA-logo

Of course over here in California things are a lot easier and more fun, so I didn’t want to miss this opportunity to finally get my proper M1 license and start riding in style. Which I then could easily convert into an international permit courtesy of the AAA. So I studied up via some iPad app until I knew all 250 possible questions by heart. Off to the DMV waiting in line for four hours (couldn’t get an appointment early enough), fortunately there’s plenty of eye candy up here at the Hollywood branch. Finally get to take the test and it turns out that there’s a new test now which has nothing to do with any the 250 questions I memorized. Plus those bastards make me do the written test for the car as well – and I didn’t study for that one! Oooops!

Well, I passed them both anyway. So yesterday I’m heading down to San Diego to take a three hour course with Brian at SoCal Super Moto. Awesome instructor - he apparently even taught some of the guys from the show Sons Of Anarchy (I was a big fan). Turns out he broke two of his ribs the day before while skateboarding – yeah, he’s a bit of a speed nut. But he showed up anyway and just sucked it up – big props to this guy and if any of you are considering to pass the M1 then head down to SD and learn from the best.

2015-03-17_bike

Anyway, this morning I get up at the ungodly hour of 6:30am PDT and head over to the San Diego Clairemont DMV. Brian apparently has an arrangement with those guys and he’s able to pass a whole group one by one in the morning. I’m there with five other guys and all of them are already accomplished riders. The Mole’s the only one who just learned to shift a motorcycle a day ago. Well, to make a long story short – I nailed it like a boss and I’m as happy as punch. Mission accomplished. I already have my eyes on some of those sweet custom Bünderbikes they make in Switzerland.

2015-03-17_zero

So let’s talk markets. Seems I didn’t really miss much there – sideways session suggesting indecision. Note the complete lack of participation after the little ramp higher. Follow up matters but given that we just held a critical inflection point at ES 2040 chalk me up as being a bit suspicious.

2015-03-17_spoos_update

But okay, I bite as we have a nice inside day offering a binary entry. The long side seems to be the easy one right now – once again the 100-day SMA has held and we have four touches which is going to bolster support down there. But no, it’s not impossible that this resolves to the downside – I’d give it a 20% chance. Which means I’ll take it if it breaches lower but only with 1/2R – adding the other 1/2 at 2040. On the long side we need a breach above today’s highs and our ISL will be the low or wherever you feel it’s clever.

2015-03-17_VXV_VIX

By the way – I wouldn’t even consider the short side if it wasn’t for this. The subs will remember this chart – it’s the VXV:VIX ratio which shows us premium deltas between 1-month and quarterly CME options. That little divergence is holding up, leaving the door a crack wide open. But not by much – again, I give the downside little credence as of right now.

2015-03-17_GBPJPY_setup

Otherwise it’s pretty slow on the setup side today – the only ones I like are GBP crosses. Here’s GBP/JPY which I like short with a stop above 179.75. A long above 180 (i.e. the 100-hour SMA) is an option but I think the downside has the momentum here right now.

2015-03-17_cable_setup

You can also play cable instead – triggers on the chart. Or if you like ‘em in pairs split your exposure between them and Bob’s your uncle.

That’s it – I’m going to relax a little now. Perhaps head out for some L.A. style shopping – the list is long and I only have a few more days to go until I head out to Mexico. See you guys tomorrow.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,




    Zero Indicator


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