Chop Chop Til You Drop

I’ve had a mini epiphany today just browsing through my universe of charts across bonds, equities, the futures, and even forex. In plain simple words – we are in the midst of a high volatility sideways market period right now. And that means that directional campaigns simply won’t work. You may get away with grabbing a good entry but just as you’re ready to reap the benefits the tape turns on a dime and stops you out. This has happened across several campaigns over the past two weeks but the incident rate is increasing. Which means it’s time to adjust our trading to the tape. In this particular case it means keeping entries to a bare minimum – personally I get extremely picky and reduce position sizing to a minimum during these types of market periods.


So let’s look at some evidence supporting my outlandish claims. You guys have seen this chart on several occasions and I’m not going to explain it again. Clearly we are in a sideways range. A few days ago it looked like we may defy gravity and take off but it wasn’t to be. At this point the only context worth its salt is the 25-day SMA and even that one is way too precarious to afford us swing entries. I am staying the heck out of this one for now. If we push to the extremes I may take an inverse entry with a small position size. But I’m really not obsessed with having to trade equities frankly – happy to let this thing play out and revisit in a few weeks.


Cable – part of the story for sure – just look at the daily panel on the right. That’s one nasty trading range with a lot of long wicks. Meaning stop runs galore and only recently have we seen a bit more directional tape.


The EUR/USD has gone nowhere fast int he past month. Thus far it seems like the 1.05 mark may wind up a long term low but the fat lady hasn’t sung here just yet. This is starting to resemble a real low however – the next few days should be interesting, but for now I’m not taking entires in the middle of the ongoing trading range.


Gold – just peeking at the ST panel is making me dizzy. The daily ain’t much better – once again we seem to be stuck in a sideways range below the 100-day SMA. However, the 25-day is now on the rise and if I see decent ST context in the morning I may be convinced to take a long position here.


Bonds – just nasty – don’t even ask me when this thing is going to resolve. No interest in participating here.


Crude is the one exception which in the context of the ongoing LT campaign is extremely promising. We got really lucky here when taking our entry and I’m rather conservative with advancing my trailing stop.


Early morning setup update: GBP/JPY was one of the few charts that actually triggered and didn’t hit its stop shortly after. However I’m long inside a downside trend on the daily chart – my expectations here are extremely low and I’ve advanced my stop to the break/even point. It’s a small position anyway but alas.

No new entries for the day – time to hunker down and keep one’s powder dry.

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We’ve Got A Squeezer

Interesting bounce off those lows again and quite a few bears got shot out of the water here. We lowly steel rats however grabbed some early morning entries like bosses and if you participated your account should be flashing green at this point. Strangely enough some of the positions I was most excited about didn’t make much of a move and I have decided to close most of my short term forex and futures positions out. So let’s review the keepers:


EUR/JPY is one – in fact the JPY is looking good across the board. Definitely hanging on to this one. Yes, it’s at break/even but it’s not unusual for the daily NLBL (right panel) near 130.18 to be rested.


USD/JPY – nice entry there and I think it’s off to the races. Alright – I concede we haven’t moved much yet but this first spike higher is looking solid. I’m moving my stop to break/even here.


EUR/USD however was not a keeper and neither were any of the other EUR pairs I posted today. No damage whatsoever fortunately and I’m closed everything out at b/e. Plus I can’t really be too unhappy about the potential of this break out failing. Quite honestly however I don’t think the fat lady has sung here yet. The current formation is looking bullish on the daily and I’ll be sure to revisit this one tomorrow morning.


And I kept the big winner of the day for last – the NQ futures. GORGEOUS entry right before we took off. I sincerely hope some of you guys participated in this one. I’m going to take 50% profits here at 4360 and keep the rest with a stop at the 100-hour SMA. In case you’re wondering, I’m not convinced that the bulls are out of the woods here and it’s got nothing to do with penitent pennants – why I tell you below the fold:

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Good participation today – really glad to see how some of you new guys are embracing what Scott and I have been presenting here. Keep it up!


Monday 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.


Boy, we have a ton of excellent ST setups waiting in the bullpen this morning – so let’s dive right in. The context on the spoos is fairly juicy here – observe the bounce off the lower 100-hour BB on Sunday night and as of now the tape is busy drawing in participants before a big move.


However I wouldn’t trade the S&P futures this morning, instead I’m looking at being long the NQ above the NLBL near 4280 and short below the (already expired) NLSL at 4266.25.


Alternatively or in combination the YM also has good ST context – trigger and stop levels are 17560 and 17511.


The EUR/USD looks like it wants to pop higher and I’m planning a trip to the ATM right after finishing this post. Long here already with a stop below 1.0983. I hate this trade but have got to take it ;-)

Alright – we’re all warmed up now? Plenty more waiting below the fold:

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.

So did I promise too much? GREAT setups today? It’s good to be back, especially when the tape throws such juicy setups at us. See you guys later this afternoon.


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    1. Monday Morning Briefing
    2. Thar She Blows!
    3. Thursday Morning Briefing
    4. Told You
    5. Make That Money
    6. Sideways High Impulsive Tape
    7. Tuesday Morning Briefing
    8. Chop Chop Til You Drop
    9. Monday Morning Briefing
    10. Chasing The Market’s Tail