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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Pre-Memorial Day Freebies

Let’s face it – most of you guys are pretty much outta here, and I myself am planning on taking Friday off. So for whoever is still left I’ll throw out a few juicy pre-Memorial Day freebies. Caveat – unless they start moving in the coming few hours I recommend you wrap them up or put your stop at break/even.

2015-05-21_spoos_briefing

Spoos – if you still find them near that stack of Net-ines then a long position may be in order. I’m long here 1/2R with a stop  below the daily NLBL at 2113.25.

2015-05-21_EURUSD_briefing

EUR/USD – ya’ll know I hate this trade but I’ll take it anyway. If that 25-day SMA gives way then we’ll probably retest the lows. Don’t think that’s happening just yet during the long weekend (yes, Forex will be trading Monday).

2015-05-21_wheat_briefing

Wheat long near 515 with a  stop below 510.

2015-05-21_soybeans_briefing

Soybeans – grabbing a long here with a stop below 936.5. It’s soft support really – 1/2R only.

2015-05-21_gold_briefing

Gold! Very speculative long position here – 1/4R only. On a drop below 1202 we’ll probably retest 1195.

That’s it – see you later this afternoon. Now keep it cool and frosty and don’t get too crazy playing the swings. Remember, we’re going to see increasingly diminishing participation starting today – not that we saw a lot of it yesterday, except for that fake out spike to the upside.

You are not paranoid – they ARE out to get ya – watch your six! ;-)

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Scaring The Children

I’ve said it many times before and I’ll say it again – I love using the Zero. To my knowledge no other indicator shows you true participation on the E-Mini futures like the Zero does it. Today’s a great example – you recall I was long near ES 2121.75 with a stop a few ticks below 2120. In retrospect a teeny bit too tight.

2015-05-20_spoos_update

Then this happened – my stop got snagged by just one tick. Bastages! Time to get short, according to plan, right? Well, not so fast…

2015-05-20_zero

Fortunately I looked at the Zero first. If there ever was a divergent signal this was one – non existent participation on the way down. I got back in – a bit late at 2122 but so far it seems to be working out just fine although I’m expecting a VWAP test shortly.

2015-05-20_NQ_update

Ditto on the NQ – except here I got in at 4498. My ISLs are now below each respective spike low.

This tune really has nothing to do with the topic except that it may scare your children. Which is exactly what we call dips like these accompanied by a complete lack of participation. My policy in these cases is to wait for a strong snapback but not too late to jump back in (e.g. above a major NLBL, SMA, Bollinger, etc.).

If you got swiped today then you may be interested in signing up for the Zero. I have people following it religiously for nearly eight years now for a reason. But don’t take my word for it – I welcome any Zero sub to chime in here in the comment section. Tell us how you fared today!

Update 4:33pm EDT:

2015-05-20_zero2

That was quite a reversal and after some short lived paper profits I got taken out at break/even (I was actually having dinner or I may have squeezed out a handle or two). Unfortunately things happened way too quickly near the highs although we did get a Mole reversal arrow. I did expect a VWAP test (see above) but things went back to flat.

Which goes to show that the Zero can help you traverse rough waters but it’s not the Holy Grail – sometimes the tape simply runs off and it would be unrealistic to assume that you manage to make the correct conclusion if things turn on a dime – which they clearly did here today. Moving forward I would strongly discourage you from playing the spoos with anything but negligible position sizes (i.e. lottery tickets) as we are now heading into the final two sessions preceding a Memorial Day weekend. Which means more bi-directional tape banging like this and it will be easy to have even your best placed stop run over.

In general equities keep traversing a very difficult market environment. Any directional progress (to either side) happens in sudden bursts after days or weeks of sideways churn. Only to be followed by more sideways churn or FU sessions like today. Not to sound like a broken record but I caution you guys to continue taking very small position sizes, if you should decide to play the swings (that means you Skynard!). Although the bulls continue to dominate this is transforming itself into a very different market than what you have become used to over the past six years. Stay on your toes…

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,




    Zero Indicator


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    1. The Bulls Are Back On Notice
    2. Tuesday Morning Briefing
    3. Equity Curve Filters And Compounding
    4. Pre-Memorial Day Freebies
    5. Scaring The Children
    6. Wednesday Morning Briefing
    7. Introducing LAMM Based Auto Trading Service
    8. Campaign Updates
    9. Monday Morning Briefing
    10. Curb Your Enthusiasm