Setup Tuesday!

We’ve been through some nasty tape over the past week but I have an inkling that’s about to change. Things are slowly coming into focus and it’s probably not accidental that we’ve got setups crawling out of the woodwork this morning. So it’s going to be a busy morning – grab a cup of coffee or your favorite tea, roll up your sleeves, and be ready to pull that trigger!

2015-01-27_spoos_briefing

Quick update on the spoos – up/down/up/down – I think I’m getting sea sick. Whether or not this is yet another berar trap is beyond me but what I do know is that 2062 remains unchallenged thus far. I know I’ve been sounding like a broken record over the past week or two but this market is NOT healthy. Be on your guard!

I’m going to be short here below 2040 – long above the NLBL at 2047.75 – in between it’s a coin toss.

2015-01-27_GBPJPY_briefing

Okay, setups setups – we got aplenty. GBP/JPY – long here with a stop below 177.8.

2015-01-27_AUDCAD_briefing

AUD/CAD – long here with a stop below 0.9882.

2015-01-27_cotton_briefing

Let’s not skimp on the futures either – I’m long cotton with a stop below 58.

But we’re just getting warmed up – please join me in the lair:


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

Cheers,

Friday 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.

2015-01-16_spoos_briefing

It’s rather quiet this morning with equities still gyrating around yesterday’s lows. I think we’re probably going to see a little bounce here today or on Monday as it’s been a long time since we’ve seen more than five consecutive lower lows in equities. Of course a breach below 1960 would trigger a ton of stops and if it happens all bets are off.

Charlie_Lucy

However as of right now the onus remains on the bears to finally take this thing lower. Several times they’ve come very close to inflict some serious damage in the past few years, but in the end wound up being short squeezed into oblivion every single time. And all that’s needed right now are two or three sideways days near this inflection point and buying interest will most likely represent itself. That said – even if we see another squeeze higher things have fundamentally changed. On several occasions now I made a point about the increase in intra-day volatility – clearly this is not a healthy market and a meaningful correction is way overdue.

However – long term tops take their merry time to form and usually resolve beyond the trading horizon of (bearish retail) market participants. A good indication of this phenomenon is the recent lack of participation I’ve observed in the comment section. You guys should be all over this quite frankly, but I’m afraid many may have irreparably damaged their accounts shorting the various rallies of the past few years; or more recently may have attempted to pick a low over in crude or the Euro. It is the eternal purgatory of the retail trader to think contrarian when it’s so much simpler to simply follow the tape. But thing are changing and right now the tape is telling me that 2015 is probably going to be a rough year for equity holders.

2015-01-16_NG_briefing

On the short term front natgas is looking pretty interesting – it spiked higher and then reversed back to its 100-hour SMA. I’m long here 1/4 R with a stop below 3. You may remember that I was long near 2.8 a few days ago and got stopped out by just a few ticks (my stop was below 2.7). Which means I missed out on a juicy rally and that’s been tough to watch. But that’s what happens and you can’t get those things get to you.

Fortunately gold has been more than making up for it and silver is following suite now – please meet me in the 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.

Cheers,

Tape Phase Transitions

No short term setup on the equities front but there’s plenty on our plate across the futures and of course the forex side, so it’s going to be a busy Monday. However the hourly E-Mini today is a great example of how the tape repeatedly transitions through different phases with dynamics (and thus odds) constantly shifting. This year’s first sell off started after a very tightly squeezed Bollinger (both the 25 and the 100 – I’m always using a 2.0 for std dev). It immediately trended down without a single close above the 25-hour SMA.

2015-01-12_spoos_thresholds

Thanks to the Zero we actually got in at 1990 but frankly speaking we were very lucky as technically there was very little to suggest a low was in place. However when looking at the situation it’s clear that a squeeze to the 100-hour SMA was almost guaranteed – the blue squares demonstrate how the corrective zone was growing constantly as price was falling away from the 100-hour (you could easily use a 50 or a 75 or a 150 – it’s just a personal lens I use).

The very first hurdle to was the 25-hour SMA and once it was overcome a run higher to the 100-hour had very good odds. That is the very reason why I often look for inflection points near the 25-hour (or again you could easily use a 21 or a 30 – whatever works for you). The area in between is rather easy pickings and once price touches the next major hurdle, the 100-hour SMA, you have the choice to either close out or convert it into a daily campaign by moving your stop near break/even in anticipation of continuation higher.

If the 100-hour is overcome the bulls usually have a pretty good chance to make it to the upper 100-hour BB, however that is most likely where we encounter new selling pressure, the strength of which will decide whether or not we just produce a little correction or we go back to retest the lows. And that is the situation we are in right now – we are in that no-man’s zone which delineates bullish territory from the big bad snarling bear. The 100-hour often makes for great retest dip-buys – there are never any guarantees and you should look for correlated measures (i.e. momentum, velocity, participation, volume, etc.) to pick an entry.

Of course it is exactly here where great entries can be found – to both the down and upside. I usually try to identify as much context as I can find (i.e. Net-Lines, moving averages, price patterns, support clusters, what have you…) and then decide where I want to be long and where I want to be short.

2015-01-12_GBPUSD_briefing

Now given my general approach it’s easy to see why I want to be long cable right now – it’s got very low odds to succeed down here BUT we are enjoying a very tightly squeezed BB pair plus the SMAs are starting to inverse; there’s a NLSL right below and that’s where I’ll place my stop.

2015-01-12_NG_briefing

Natgas is a bit of a lottery ticket – I always call it the widow-maker for a reason. We may see another bounce higher here and I’m currently long near those lows with a stop below 2.8.

Quite a bit more below the fold – please meet me in the 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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