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:


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

Cheers,

Better Not Fighting This…

Massive jump off the lows. I expected a little courtesy shake out this morning but the bots had other plans and immediately boarded the express elevator to the upside. Loving this tape although my damn lottery tickets got shaken out right near the lows. Hey you can’t win ‘em all – but you can try.

north_korean_hackers

So word has it North Korea hacked their way into Sony Pictures in response to a planned release of the tongue-in-cheek comedy ‘The Interview’. Guess shit just got real for James Franco.

So let me be the first to extend my sincere thanks to Kim Jong-un for sparing us yet another James Franco movie. Also, the whole situation gave me a great idea. Why waste your time hacking movie studios – that’s so 20th century. Instead turn those hackers into stone cold stone stock traders and sell the hell out of Sony stock! Much more effective long term – oh, and legal. (Kim Jong-un – call me!!)

2014-12-18_ES_update

Alright so here’s where we’re at. The spoos sliced through that first NLBL like hot butter. The next one at 2049.5 is where the rubber really meets the road. As you can see we’re right at the 25-day SMA and if we closed above it then I think 2050 is most likely in the cards. I really hope nobody is still short equities – jumps like these may find post corrections but usually (i.e. 80% of the time +) resolve higher in the weeks that follow.

See, Boosie’s got you covered.

2014-12-18_corn_setup

Now on to the setups – we have good stuff here tonight. Corn is looking good and I tweeted about it earlier today – did I really just say tweeted – we are all doomed. Anyway, nice price action suggesting that we either fail right here or there’ll be a jump and massive stop run higher. I’m short right now but am hoping for an opportunity to hop on the long bus.

My favorite setup today however is the CAD/CHF – super dreamy:


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Cheers,

Post Holiday Blues Monday

You know what my grandfather used to say after long holiday weekend? ‘Get back to work you lazy buggers!’ That’s right, your leisure time goofing off and chewing on left over turkey legs has finally come to an end. But there’s no reason to be depressed! This is it folks – we are officially heading into the Santa Rally Season. So put your game faces on and try to look busy! It’s time to bank some coin. Again.

2014-12-01_spoos_briefing

Equities – a little dip lower while nobody was monitoring the tape. That’s cute but the grown ups are back in town, now kids – so move over and catch a broom. If you must know – my trailing stop has now been advanced to the prior spike low at 2035.25, which is slightly above the 11R mark.

2014-12-01_EURCAD_briefing

EUR/CAD – possible long opportunity here given it manages to push above that NLBL. My stop would be placed below the current candle scraping the 25-hour Bollinger.


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

Cheers,




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