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.


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.


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.


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:

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The Bus Is Empty

Remember the old adage I have been drilling into your rodent skulls on numerous occasions: The bus moves fastest when it’s empty. And judging by the complete lack of participation in the comment section (at this crucial stage) I must conclude that the bus must be running pretty empty as we’re quickly descending lower. And that means things could easily accelerate as a ton of retail rats are waiting for a bounce that may not materialize.


Now for the past few weeks I have not missed one opportunity to emphasize the fact that we may be in the late throws of the current bull market and that I was expecting quite some fireworks for 2015. Didn’t expect them so quickly to be honest but here we are. Is this where equities finally fall off the plate for the first time in years? Nobody can now for sure, but as long as our crystal ball is still in the shop the best we can do is to get positioned at crucial inflection points. Which means showing up for work when things look boring – not after the fact when the big moves are well behind us.

Alright, enough bitching. See above the E-Mini volume profile chart. We are again seeing lower lows and lower highs and as long as that situation continues the odds support continuation toward about 1920. Things get extremely serious after 1965ish, which would be the final death knell for the bulls this winter.


As you can see the 100-day SMA and the NLSL at 1995.75 is currently behind us. Should we close the session below it then we’ve got a daily sell signal in the bag and obviously that’s very bad medicine for the bulls. Actually it would be great news for my NQ short position courtesy of Thor but let’s not count our chicken until they’re hatched.


Silver is the only new setup I would touch today. It’s currently bumping against the 100-day SMA and there’s also a weekly NLBL at 17.08 (with the 25-week SMA right above it). I think a breach of today’s highs would be golden, if you forgive me the pun. Due to today’s long candle range I would put my stop near 16.75.

That’s all for today – I hope to see a bit more participation here otherwise I’m afraid you guys are destined to miss out on some mighty coin this winter. Which would be a shame, n’est-ce-pas?

UPDATE Closing Bell: 


The rather forceful bounce near the lows has the words ‘possible bear trap’ written all over it. That move looked rather engineered and must have drawn in a hell of a lot of eager bears. I think the bearish case now slides to a 50% possibility (earlier today closer to 80%) and it’ll be a mere 30% if ES 2020 is retaken.


Here’s the Zero – some of you apparently played that divergence on the Zero Lite today – well done. As you can see that spike higher came literally out of nowhere which is why I attribute it to the usual suspects (i.e. institutional prop desks having a bit too much fun here). Could turn into a double bottom type of situation – again the bears need to hold 2020 and a drop before 2010 would be best.

Quickly shifting dynamics here – not for the faint of heart. Be nimble and don’t get drawn into emotional decisions. Unfortunately the NQ campaign is not at 1.2R yet which means that the ISL is still in place. Let’s see what the overnight tape brings.

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.



One Chart Says It All

This is ridiculous – has everyone left already? Yes, I know – it’s Thanksgiving week, but I expected at least a reasonable amount of participation until the EOS today. However what I’m seeing on the UVOL/DVOL panel makes me want to pull down the blinds here at the lair and call it a week:


I really think this chart says it all – this level of participation is minuscule even at holiday week standards. I occasionally bitch at you for not showing up for work while the getting is good, but this is clearly the type of tape you want to ride out without giving it too much attention. So go and stuff your turkey – but be careful about pulling pertinent jokes as some people apparently were tragically born without a sense of humor.


Silver is actually playing ball right now – the subs hopefully caught this morning’s entry. But of course we can’t trust it just yet – plenty of opportunity for monkey business here, especially during this week. But let’s play along and see where she may lead. Odds are still high we get stopped out by an obligatory shake off. However, IF she actually takes off it’ll probably turn into a mad runner as the bus is very very empty down here. In that sense the benefit to risk ratio was high enough to justify an entry. In the end it’s all about context and of course timing.

Two more goodies below the fold – please join 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.


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