Never Trust Your Gut

Yesterday I once again got reminded of a crucial lesson that I learned years ago as a fledgling trader and which bodes repeating. If you read that post then you recall that I was all hot and bothered about bonds – equities in comparison merely seemed to be the sideshow. Well, a few hours later reality kicked in and bonds all went upside down with equities steadily dropping toward our stops.


However earlier this morning our patience got hugely rewarded. Truth be told a few ticks lower and my stop would have gotten snagged. Better to be lucky than good as the saying goes. It’s now looking very positive however and we could be at the onset of a short squeeze.


I also got spared the grim stop reaper on the NQ. My stop is now at break/even – I’d prefer it a bit higher but as I am expecting a bit of a retest before this thing picks up steam it’s best to be conservative and not trail too aggressively.


Soybeans have not gone anywhere but things are very much coiling up here. Still in the running and nothing has changed since yesterday.


Soybean Oil – same story but it’s looking a bit weaker. My stop is still intact but this may be a goner.


GBP/CHF – I told my subs that nobody in their right mind would be long this thing after that strong push higher and fortunately I am not limited by rational thinking. My stop has now been advanced to below a recent stack of NLSLs. The turtles most definitely would be smiling at this one. Not sure what it is about trend trades but somehow they are manna for a trader’s soul.


CHF/JPY – per the plan I flipped after being stopped out of my long campaign. Thus far it’s been treating me well and I expect to hold this one as there’s nothing but air below.

Lesson of the day: Your gut feeling means absodiddly nothing – it doesn’t matter who you are or how long you have been at this game. Whereas in real life instinctive decisions in many cases turn out to be correct in the long run, in the trading arena the human mind is tragically ill equipped to guess its way to financial prosperity.

In the end setups are nothing but trading ideas near technical inflection points. So get over your precious ego and instead rely on your system rules. Trust your edge if you have one – it knows far better than you.

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Bonds Bonds Bonds!

Excellent bond setups are on the roster today and I’m posting this early so that you guys have a chance to get a seat on the bus. Equities are also in a pretty juicy formation so I guess it’s going to be a busy morning:


The spoos are looking tired as heck which is why I’m currently long with a stop below the recent spike low. IF we bust through that one then I think we’re going all the way to the lower daily BB. Also note that the hourly BBs are tightening and most likely we are going to see even more volatility here soon. Heck… hell of a summer!


The NQ painting the same pattern – also long here and I have split my 1R exposure between both. Same implications – below 4540 we are in bear territory. Gravity could kick in quickly here – be prepared.


Corn – awesome setup as those hourly BBs are squeezed to the max. BIG move coming. Which way I don’t know but I’m currently long until I’m not, which will be below 364.6.


Okay I promised bonds and El Topo delivers. Five year bond futures are challenging old daily resistance and I’m long here with a stop below a recent daily NLBL. Very few people are going to be long here after the recent push higher, which is why I like it even more.

However I’m keeping my favorite bond setup (and a LOT more) for my intrepid subs:

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A lot of juicy symbols today. One may even say that we have a plethora of setups!


Thursday Road Map

Finally this month’s Mad FOMC Wednesday is behind us and we can get back to what we do best – squeeze ill-gotten gains from this crazy market. We have a ton of juicy setups today and equities also offer us various ways to get (mildly) exposed, so let’s get to it.


Now, I’m going to make this extremely easy for you today:

  • While we’re between 2100.75 and 2095.5 – do NOTHING. This is hardcore churn territory.
  • Above 2100.75 the bulls are in possession.
  • Below 2095.5 you can be short with 1/2R or less.
  • At 2085 we evaluate – best to consult the Zero at touch down to see if there’s a potential fumble in the cards.
  • Below 2083 I will already be short if I see lackluster participation on the Zero. And yes, I misspelled SHORT – but at least I spelled misspelled correctly.


Similar thresholds on the YM – I think you get the general idea. The easiest configuration by the way happens to be on the NQ today but I’m keeping this for my intrepid subs.


Crude – I think the chart is pretty clear, n’est-ce-pas?


The Euro – well, as much as I want to see it crash and burn I have long learned that there’s a magic buyer down here and I probably won’t get my wish. Long here with a stop near 1.092 at which point I’ll flip for a small short.

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

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.

That’s probably a lot more leads than you cared for – being mid summer and all. Just crank up that A/C, grab a glass of iced coffee and get to work, you lazy bastards!

Oh sorry – coffee is for closers only.


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