The Bulls Are Back On Notice

Just this morning I was hoping for some movement, but this may be a bit more than we bargained for. Right after the open the red candles started to stack up and at 10:15am EDT our trend day alert suggested the moderate possibility of a downtrend day. Yeah, no kiddin’!

2015-05-26_zero

The Zero shows us several strong signal swings to the downside. This is real selling pressure folks and all dip buying attempts (quick spikes up above the zero mark) thus far have failed. This could easily continue into the close.

2015-05-26_spoos_update

Boy, this is one ugly chart – several bearish signals triggered today: First up the NLBL at 2134 was never even touched, then the NLSL at 2113.25 was sliced through like a hot knife through butter. We also are failing a weekly NLBL that we have been testing since last week. We are now back to accumulating bearish evidence – yes, again.

I told you guys LT market tops are tedious – no way to predict when it finally turns and until it happens you have to remain nimble. I’m sure you’re glad now that you listened! You’re most welcome – the Mole’s got you covered as always. In any case, today’s plunge certainly goes on the books as significant technical damage.

2015-05-26_SPX_PnF

The point and figure chart brilliantly visualizes the ongoing market conditions – noting but sideways congestion since late last year. Every sudden drop to the downside has been mechanically bought again thus far – but there will come the time when this game will finally find its maker. In any case – take note that we are triggering a high pole reversal warning today. And that means the bulls are officially on notice. If we drop through 2090 there will be hell to pay.

2015-05-26_AUDJPY_setup

It’s always difficult to find entries when things are moving fast but I was able to dig up a few victims. On the Forex side we have the AUD/JPY which is painting a shooting star today. However it’s happening right on top of the 25-day SMA and if we can hold it then we may just trigger a failed shooting star long (I wrote hammer on the chart – sorry). I’m actually taking an early long position here – 1/2R – with a stop below 94.903. If it breaches the daily NLBL at 95.755 then I’ll add another 1/2R.


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The One That Got Away

You may think that I’m referring to my short positions in the spoos but you would be horribly wrong. Saw that one coming a few miles out and exited at break/even as previously planned.

2015-05-14_spoos_update

And also as previously planned – I am long since 2112 with a stop below 2105. Let’s see if we finally get some directional tape, but who knows. I’ve managed to traverse this sideways mess this far without getting my ass kicked but something tells me to better not test my luck. There are limits to Ms. Market’s patience – even for the mighty trading Mole.

2015-05-13_gold_briefing

Now what I was referring to in my title is … gold. You may remember this one from two days ago. I saw a potential break out chart and was waiting for a teeny weeny dip to the downside to grab some longs. Only problem is – it never happened and I didn’t get my fill.

2015-05-14_gold_update

If there is one thing that absolutely truly annoys me is when I read the market right and for some reason don’t get a seat on the bus. I know – I should listen to my own advice – better wishing to be in a trade than wishing to be out of one. Rub it in! Instead I choose to console myself with the campaigns that are running as planned.

2015-05-14_natgas_update

Natgas – very sweet entry that same day actually and it’s off to the races. We’re now touching the 25-week SMA and as you can see the 100-day BB is narrow as hell. I say we have ourselves a runner here and I suggest you let this sucker run all the way.

2015-05-14_CHFJPY_update

CHF/JPY – equally perfect entry and it already bounced against a NLBL – thus far it’s unable to muster enough mojo for continuation higher. I’m moving stop near 129.80 – let’s see if she can bounce from the daily lows.

2015-05-14_AUDUSD_update

AUD/USD – excellent progress so far although the past day or so is looking mixed. Again I’m trailing here – this time I’m using a daily NLBL, expecting support nearby.

2015-05-14_EURGBP_update

EUR/GBP – it’s been ‘meh’ but it’s holding thus far. My stop is now at break/even – only giving this one 30% chance to resolve successfully.

Speaking of the Euro – I have put together some long term EUR/USD perspectives for the subs. Please meet me in the lair:


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Breaking The Big Bad Bull’s Back

Every once in a while it’s a good idea to detach yourself from your daily trading activities and take stock of the big picture. Although I do not trade weekly or monthly charts they do however serve one very important purpose – which is as a measure of strength given the prevailing trend. So let’s forget about playing the daily bounces for a moment and let’s simply revisit at the tape of the past six months:

2015-05-07_equities_weekly

I don’t know about you but to me this looks pretty ugly. Since late December of last year we have suffered through two massive high volatility sideways periods, only interrupted once by a nice straight run higher during February. The rest hasn’t been fun, to say the least, and I’m sure it has blown up retail accounts left and right. However hitherto the bears remain unable to break the big bad bull’s back. Nevertheless the price action clearly tells us that the ongoing trend is weakening. This is not the same bull market we have come to enjoy (or to hate at particular trading blog which shall remain unnamed) and the implication for us, as traders, is that we need to respond in kind and adjust our trading activities.

Now what I am not suggesting is that we immediately start to look to the downside. Long term tops take quite a long time to form (clearly) and shorting the market without confirmation is a pretty bad idea. Bear in mind that we have yet to break any long term bearish inflection points – be this the 25-week SMA, the 100-week SMA, the 100-month SMA for that matter. So boy – do we have a lot of time to change our minds about this market – more time than most of us would care for. Going forward however what we do need to adjust are our expectations. The long straight runs to the upside are most likely over.

2015-05-07_VIX

Although we are stuck in sideways mode we are seeing the VIX bounce around between 13 and 16. Which I consider a very casual risk pricing model at best – and most likely rabid complacency after six years of effervescent bull market exuberance. What happens from this low base will most likely not been six months of the same – I really don’t think we are going to see the VIX drop to 10 or lower and paint a range there. If that happens after all I won’t be caught with my pants down however as I’m not shorting the market here. What I am however doing is to adjust my trading to accommodate the possibility of:

  • Fake out breaches – like the one we recently saw near the top.
  • A sudden rise in volatility if one of the major support levels give way.
  • In general more and prolonged sideways corrections going forward.

I think these three points really summarize some very realistic assumptions going forward. Perhaps we’ll be positively surprised  as I wouldn’t mind another extended run higher. But until I see a major breach to the upside, and even then probably, I’ll be extra picky with my setups, take profits a bit earlier, especially on the equities side, take smaller position sizes and wider stops. The overall goal for the coming quarter is survival and to keep one’s powder dry.

Campaign updates and new setups below – secret decoder ring required:


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Cheers,




    Zero Indicator


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