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,

Tuesday Morning Briefing

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.

2015-05-05_crude_briefing

Pretty slow on the setup front this morning. Crude update – I posted this one yesterday and if you took it then you’re in pretty good shape as it just jumped higher. Move your stop to break/even. As you all know I’m still long since near 50 ;-)

2015-05-05_gold_briefing

Gold – worth a long if it drops back down near 1187.5. We’re building some sideways expanding triangle, so perhaps we’ll get another trip higher to test the 100-day SMA.


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2015-05-05_events

A bit of event risk today right after the NYSE open – non manufacturing PMI numbers for April are due. Also watch out later this evening if you’re holding NZD related pairs.

Cheers,

Monday Night Quicky

I just got off a long phone call with someone in the U.S. and now I’m running a bit late over here in Valencia. So I hope you can forgive me if I’m running us through the charts quickly – Mrs. Evil is not known to be very forgiving if I let her dinner get cold. And yes, she actually cooks – a rare skill to be found these days.

2015-05-04_spoos_update

The E-Mini managed to tickle the daily NLBL at 2114.75 but then promptly reversed. That’s not unusual really and we could easily see another retest of the 2100 mark. I think the bulls are golden above 2112.25 – in between that and 2100 we are a bit in limbo as we have not seen a real break out yet. Below 2100 we may just make a another trip toward the 100-day SMA. Frankly I have no idea what scenario will transpire – best I was able to do was to grab a good seat on the NQ and the rest is in the hands of Mrs. Market.

2015-05-04_cable_setup

Cable – heck, I’m going long here as we’ve dropped like a rock and are now on top of the 100-day SMA and a NLSL. The path below is plastered with more NetLines and I think the easy part of the journey down is over. Does not mean this is a guaranteed entry – but it’s a justifiable 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.

2015-05-04_events_tuesday

Alright – that’s all for today – see you guys tomorrow. Remember we have a bit of event risk on the roster – AUD, NZD, and of course the non manufacturing PMI numbers for April right after the close.

Cheers,




    Zero Indicator


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