How To Catch A Floor With The Zero

It’s been a while since I put together a Zero video, but as yesterday’s session was a textbook example of how to play prospective sell exhaustion I simply couldn’t resist. So grab a cup of coffee or your favorite tea, sharpen your pencil, and pay attention – you don’t want to miss this one:

Zero_4266

First let’s set the stage – this is the Zero right before the open of yesterday’s session. What stood out to me right away was a pretty pronounced divergence on the hourly panel (on the left). Price is painting new lows for the year but the daily Zero is starting to push toward its center (or 0) mark. What we DON’T do here is to blindly go long – no siree bub! This is exactly what market makers would expect retail traders to do – make haphazard bets that a low is in place. Stainless steel rats like us however understand that engaging in hasty predictions is hazardous to one’s account, so instead we’ll watch the Zero Lite for early clues:

Now if you watched the video then I think you understand how we operate down here at the lair. When playing the swings we always look for the Zero Lite to give us sufficient clues to warrant a contrarian position. Most importantly however we also wait for price to back us up a little. There’s no predicting when a low truly is in place, and it’s better to get in a little bit late than too soon.

I usually start with 1/4R or 1/2R and then put my stop a few ticks below the prior low. As price pushes in my favor I slowly add a few more contracts until I end up with 1R. Things got a bit worrisome there at the EOS but the E-Mini did hold the 2k mark overnight and is currently at 2012 as I’m typing this.

Will it hold and is this a permanent floor? I don’t know but I’m well positioned as I started to accumulate a few longs near 1990 – which now affords me the buffer I was hoping for yesterday in anticipation of today’s FOMC announcement. Compare that with someone who’s trying to chase the tape higher here or, even worse, is waiting for an opportunity to scale out of rapidly depleting short positions (ahead of a high volatility event).

Once the fat lady has sung this afternoon we’ll know if our evil plan will come to fruition.

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

Tuesday E-Mini Video Wrap Up

Enjoy a re-run of today’s E-Mini session exhibiting participation as measured by our Zero indicator. On the left side is the hourly panel and the Zero Lite runs on the right via the 5-min panel. Swing traders and scalpers are encouraged to watch the 5-min panel for early clues – in particular price/signal divergences and lack of participation as expressed by a flat signal. If you like what you see then may want to watch some earlier ones – you will find plenty of examples of what to look out for and how to avoid common traps when trading the E-Mini. Plus you may enjoy the tunes ;-)

It’s been a long day but I wanted to put one more wrap up video together for you guys as it has been a good scalping session. I think the signals were pretty valuable today.

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

 

Tuesday 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.

After a three week melt-up the bears are feeling pretty crappy right now – there’s very little desire to short this rally and in combination with yesterday’s doji we may be due for a small correction. Far from predicting one however I would look at the hourly panel for early clues. We have lost the 25-hour and that suggests at least some weakness as it has been leading the tape higher now for weeks. It is very much possible that we get a revisit of the 100-hour sometime today or tomorrow – this is where we either see a bounce or a drop toward a daily support level. For now I would stay out but I am watching with interest. If you are still long then simply advance your stop and hold – no reason to cut and run just yet.

On the setup side it’s pretty thin out there right now – the one chart I found I’ll have to keep for my subs. However if you’re in a GDP related pair then watch out around 10:00am EDT:

Please step into my 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!

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Finally enjoy a re-run of yesterday E-Mini session exhibiting participation as measured by our Zero indicator. On the left side is the hourly panel and the Zero Lite runs on the right via the 5-min panel. Swing traders and scalpers are encouraged to watch the 5-min panel for early clues – in particular price/signal divergences and lack of participation as expressed by a flat signal. If you like what you see then may want to watch some earlier ones – you will find plenty of examples of what to look out for and how to avoid common traps when trading the E-Mini. Plus you may enjoy the tunes ;-)

A few very valuable signals on the ZL yesterday – in particular the blue reversal signal at the top was golden. I am often skeptical when I see them in a strong trend but if you see the signal weaken then it’s time to follow any of your own short signals. Also note how the signal went completely flat toward the end which suggested buying exhaustion as supported by the doji on our daily chart. So I would pay close attention to the Zero Lite this morning at the open as it may provide clues as to whether paint a correction here or if we continue higher after a brief visit of the 100-hour SMA.

Cheers,




    Zero Indicator


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