Long Term Support

Something rather interesting happened yesterday during the E-Mini session. Granted it was a bit subtle but perhaps some of you veteran subs picked it up as well:

2015-08-20_zero

More specifically it’s something I saw on the Zero Lite after I marked a pretty significant bullish signal divergence, meaning price was meandering down while selling pressure was abating. Our modus operandi when confronted with such a divergence is to start looking for price confirmation in order to take out a contrarian entry – in this case a long position. Only problem was – price never budget. Participation continued to contract and then completely flatlined with the tape dropping lower all the way into the close.

As you can see VWAP was never threatened and not even touched beyond the first third of the session. That ladies and leeches we call a consolidated sell off session and that’s been pretty damn rare over the past few years. Just yesterday I mentioned that the bears have been unable to inflict any significant damage all year and this is perhaps the first session where I saw significant selling pressure and even a bit of panic selling toward the end.

2015-08-21_spoos_LT

Which brings me to the big picture, because for the first time in a long while I see long term support levels being threatened. As you can see the weekly on the left shows us only a few handles away from the 100-week SMA. But much more significantly – the monthly panel on the right is currently in breach of a monthly NLSL at 2023. Now it’s only August 21st and a lot can happen in the next 11 days. My inkling here would be that we’ll revere this at some point and stab back higher. However, what happens afterward in the coming month or two will show us whether or not the bears are ready to put themselves into the driver’s seat.

2015-08-21_NQ_LT

This is actually quite exciting as we are seeing acceleration plus we have finally abandoned the dreaded range we have been gyrating in over most of the year. On the NQ we are actually accumulating quite a bit more context across the board and this is where I see the most salient entry opportunities going forward. Note how we are touching the lower 100-day, a weekly Net-Line Sell Level, and a monthly NLSL at the very same time. Clearly the 4330 – 4340 range has significance and what happens here today and next week will be crucial.

2015-08-21_NQ_briefing

When it comes to taking entries however I suggest that you keep an eye on the hourly panel. If you are a Zero sub then that’s clearly going to be helpful as well. Yesterday was a prime example how you always always want to wait for price confirmation, especially during strong sell sessions. If you do not see any divergences and if the signal accompanies price then simply go with the flow. Don’t over think this – especially during price corrections. Many of you may be a bit rusty trading trending tape like this after a year of sideways churn. So let this serve you as a reminder that price is always king – do not every attempt to step under a falling sword.

More specifically this means you want to see the following in place:

  • A bullish or bearish signal divergence on the Zero Lite. Make sure the large spikes of the signal ranges above the 1.0 mark – it’s easy to be deceived by pseudo-divergences when the signal range has been tiny for days.
  • Price confirmation. Wait for price to start moving in your direction – do not try to guess when the tide will turn. The more forceful the sell off (or ramp) the more conservative you want to be here.
  • Look for additional context. You can use whatever your heart desired – I personally rely on VWAP on the E-Mini (as shown on the Zero panel). You can use Bollingers, MAs, stochastics, it doesn’t matter. On VWAP for instance I look for attempts to breach it – if there hasn’t been a touch for a long time and we’re far away (like yesterday) then that means selling pressure is strong. So in that context you want to wait for price to give you a clear indication – spike lows or spike highs for instance are something to look out for.

Speaking of spike highs/lows – there is one in place on the NQ right now but it’s still a bit premature for me to jump in here willy nilly. So I’ll wait a bit more and perhaps take out a small long position if I see the lows being respected. If we breach the NLBL at 4364 then I may add 1/2R and build my way up. Yes we are sitting on LT support here but that doesn’t mean we won’t see another stab lower which may be bought back Monday. This should give you a general idea of how I approach things and how I (and some of the senior subs here) are playing the swings.

Finally, do not attempt to use LT charts for grabbing long positions here – you will be smashed to pieces. I hope I don’t have to explain this in further detail but let’s just say that too many retail rats utilize LT charts for ST trading decisions. It’s like taking the bicycle to the toilet – a bit overkill and you bound to bump into walls.

Quite a few setups today – please step into my lair:


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Cheers,

Bonds Reloaded

Looks like we may get another opportunity to dip into some bond action. If at first you don’t succeed try try again. In general I’m seeing very nice price action on the futures side today, so let’s get to it:

2015-08-06_ZF_briefing

The five year continues to coil up and as it’s near a rough rising diagonal I’m playing an hourly Net-Line Buy Level to the upside. Stop below 119 – 1/2R only as the tape is highly volatile.

2015-08-06_ZN_briefing

The other half goes to the ten year bond futures – that keeps gyrating its way higher and seems due for the next leg higher. I am open to the downside here as well but do not like the context below, which tells me that any drop lower will most likely be fast and short lived.

2015-08-06_gold_briefing

Gold still continuing lower and I’m currently long 1/2R but am expecting to flip on a stop out.

More below the fold for my intrepid subs:


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!

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You have been briefed – now have fun but keep it frosty.

Cheers,

bond_reloaded

Dangling By A Thread

Once again we are trading near bearish territory but I don’t mean to attach any directional bias via this post’s title. We all have seen major support come and go many times over the past few years. In most cases they served as great opportunities for the bulls to BTFD. Now clearly market conditions are shifting and the bearish case has been gaining a lot of credence over the past few months. However short of having a crystal ball the best we can do is to position ourselves appropriately near important inflection points and monitor the tape carefully for early clues. But have no fear – the Mole is on the case, as usual.

2015-07-28_spoos_briefing

We are actually enjoying quite a bit of context right now and I plan to take full advantage of that. The spoos are now testing a weekly NLSL near 2063 and thus far it’s holding. Should we close the week below it then the trend will most likely switch to the downside. So this will be a key week and that’s exciting!

I’ve moved my trailing stop covering my remaining shorts near the 100-hour SMA. May be a bit tight but unfortunately there’s no NLBL or old NLSL to bolster resistance. Sometimes you just have to make due with what you got.

2015-07-28_NQ_briefing

The NQ thus far the strongest of the bunch and here our inflection point is 4550 – above it we are pretty much in bullish territory. Below it we may be testing the 100-day SMA but there’s a LOT of support to still be taken out – so call me skeptical.

2015-07-28_YM_briefing

The YM clearly is the most bearish index here and after scaring the children a little we bounced higher here overnight. Which however does establish 17319 as our bearish inflection point. If the YM goes then the ES and NQ may follow suit.

In general seeing such discrepancy between the three horsemen are not the hallmarks of a healthy equities market. Which is why I am considering the bearish case at this point – but I’m most definitely respecting all that support that still lays below us.

2015-07-28_ZB_briefing

Bonds – the 30 year now in shake out mode and I think it’s a plausible buy near 154 – if we get that low.

2015-07-28_EURCAD_briefing

EUR/CAD – also correcting and that would be expected after that first stab higher. Nice entry opportunity IMNSHO near the 100-hour SMA which is strongly rising now.

You want more? Then pay up and join the club – freebie mongers only get to see the tip of the iceberg.


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Please login or subscribe here to see the remainder of this post.

That ought to keep you guys busy for a while. Have fun but keep it frosty – don’t get over exposed, which means split your exposure between correlated symbols.

Cheers,




    Zero Indicator


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