The Day After

See there are two types of traders – the ones on the inside who make things happen and the ones on the outside who ask you what the heck just happened. Unfortunately most of us have to eek out a living on the outside and as such we best ignore the news as it just represents a feeble human need to attempt to rationalize events that have already happened. Yesterday morning everyone on  the outside got the legs cut from underneath them and by the time the smoke settled the big question on everyone’s mind was ‘what the hell just happened?’ Which was the cue for a multitude of explanations and rationalizations from pundits across the land (European elections, Berlusconi, etc.) which IMNSHO present absolutely zero benefit to the common field mouse, i.e. traders like you living off the breadcrumbs that the system permits them to collect.

Fast forward to the ‘day after’ which is an important concept and you should pay attention now. This morning Scott kindly dropped by to leave a comment I hope all of you saw. It’s something both he and yours truly have addressed on numerous occasions and it bodes repeating as I still saw a lot of confusion in the comment section today:

One thing that everybody needs to keep in mind for today: Yesterday was a type III trend day. The overwhelming probability for today is the opposite, smaller range. Anyone trading the emini today should keep in mind that unlike yesterday (where sell and swing for the fences was the order of the day) today will be a scalp long at lower bollingers and sell at upper bollingers type of affair. Also a gap fill is a higher than usual probability.

I hope this sinks in and as such today’s tape should be of no surprise to you. Of course a surprise drop is always on the menu but what I’m seeing thus far fits the textbook game plan for post banana peel slip days. As I pointed out this morning myself – that 25-hour SMA appears to be important and has thus far put up resistance. As I am typing this we are trading above it however and that now leaves the NLBL at 1495.75 as the final hurdle separating a stab higher from more consolidation.

At this point we are most likely going to get an inside day on the spoos – and you know what that means. The current upside trigger is 1497 which is just a handle and change above that NLBL.

Gold – I told my subs that I had flipped my shorts for a long position yesterday and I’m damn glad that I did. Today’s stab higher more than made up for the little loss off the lows and I’m now ready to call it a trade as it’s heading into daily resistance. At least for now – let’s see what happens here.

EUR/NZD – that diagonal trend line was just too juicy to pass up last Friday. It’s been tumultuous ever since – had to jump in and out yesterday and then tried a short near the 100-hour today which however went bust. All in all I managed to eek out a few pips of profit. I would not want to be long here as that upper diagonal on the daily is looming near and large.

Now let’s do some setups – please step into my lair:
More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

GBP/NZD – seemingly at an inflection point (i.e. hourly and daily) and that NLBL on the daily ought to be good for some resistance.

EUR/CHF – daily and weekly panels shown here. Clearly the daily is fighting to hold the 100-day. On the weekly we ahve the 25-week crossing the 100-week and we are right on it.

Inside day on the EUR/AUD – I like the context as it’s near the lower 25-day BB. So either breach ought to be good for acceleration. It’s always about the context, folks… think about it. Running around in Manhattan in your underwear will probably get you arrested in a hurry – doing the same at the beach appears to be perfectly acceptable.

AUD/CAD – some hourly support here and that may be a good in/out trade near the 100-hour.

And my favorite of today: platinum!! The shiny stuff is correlating hourly and daily inflection points and that are the kind of odds we’d like to see. Gravity appears to be taking hold here and I’m slightly more interested in the short side but would participate in a breach on either side of the Maginot Line.



And That Is Why We Follow The Charts

Last evening I proposed that the ongoing shake out was merely an attempt to scare the children. Seems like my bold claims weren’t that far off the mark as our support lines held up just famously. And that, my dear ladies and leeches, is why we follow the charts.

And further earning my keep here I also proposed a nice long opportunity on the E-Mini this morning. I hope you took it as it’s now time to take partial profits. Actually since I took this snapshot it’s been pushing higher and is almost at target – time to cash out. You are welcome! Evil is as evil does :-)

Strangely enough – the recent gyrations on the VIX have us now two steps into a, believe it or not, bonafide VIX Buy Signal. That’s relative to equities by the way – meaning if we get one more lower close tomorrow odds suggest that equities will be heading higher in the course of the coming week. A bit of a head scratcher, this – but the rules are the rules. My condolences to all you hobby bears.

Also worth noting – as I’m writing this we are technically painting an inside day on the E-Mini.

Dollar update – once again our chart was treating us well. You subs may recall the ‘last kiss goodbye’ I was proposing on the DX and thus far that’s exactly what’s playing out. However there is a NLBL right above and if we would breach it in the coming three days then we do have a technical buy signal. Again, mind the two daily SMAs above which would most likely provide additional resistance.

Another example of why we fade the news and follow our charts. Gold has been painting this interesting little diagonal with the 25-day at its center over the past few weeks. Although there really isn’t much edge in playing this configuration on a daily basis I suggested to you (i.e. my subs) that playing the swings was definitely worth it. I hope you paid attention and banked some coin today.

Sugar triggered its lower inside day trigger. Good entry and you ought to be short now.

Let’s sling some stock symbols today – in my never ending quest for market domination I managed to run into a few keepers:
More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

One commodities and one FX setup before we get to the stock symbols. Soybeans, so well behaved and it’s slowly creeping over its 100-day SMA. Also painting an inside day today – how perfect is that? Use those triggers tomorrow.

USD/CHF – inside day after some interesting candles which may suggest a big move is coming. Use the ID triggers tomorrow, as usual. I do like the context here as we could get a squeeze either way.

AZO – inside day near the 100-day SMA – awesome!

CCJ – technically that’s a repeat but it’s been holding the line and if you snoozed the entry thus far you may want to jump in now. I would be out if we drop through yesterday’s low.

Double inside day on CME – loving the context here as well as this has been one massive short squeeze.

GOOG – almost the same setup but today we technically already breached one way and then pulled back. I still the current triggers are still good until tomorrow. Sometimes you need to know when to break the rules (a little).

MCD – another inside day – again great context. Would love to see a short trigger here.

POT at 25-day SMA and daily NLSL – I will use that as my inflection point.

Very speculative setup on WMT. But is it me or is this thing in love with symmetry in the past two months? I’ll be short here with a stop above. VERY small position – it’s more for s*its and giggles – let’s see what happens tomorrow. BTW, if I get away with it I’ll probably be out tomorrow.



Pre-FOMC Announcement Drift

Seems the bots are running some Christmas shopping algo today as the tape is drifting around without much participation. In case you haven’t heard – the Federal Open Market Committee (FOMC) meets for the last time this year on Tuesday and Wednesday. Timing is the main reason why this meeting is receiving special attention. Just so happens that Operation Twist comes to an end on December 31st and and Bernanke is expected to announce fresh measures to keep the party going. Whatever happens pre- and post-announcement, it should stir up quite a bit of volatility, So I suggest you keep your exposure small and your stops at arm’s length.

The E-Mini is running up a steep support line and is now right below a daily NLBL at 1424. There’s nowhere left to run and one of them is going to  be breached this week. Suffice to say that we are going to take whatever direction it takes. Long would be my preference as it’s a much easier trade. On the short side we would have to drop below the 100-day SMA to justify meaningful exposure to the downside.

Our speculative BIDU entry is in pretty good shape. After hopping over the 25-hour SMA it jumped higher and is now approaching its next short term hurdle. If it can overcome the 100-hour SMA then we ought to be good until that daily NLBL near 95.81.

If you enjoy inside day candle setups then this is your lucky day as I’m seeing them pop up all over the place:
More charts and non-biased 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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Let’s start with currencies today – the USD/CHF is painting an interesting ID candle near the 25-day SMA. So this is the plan – do nothing on a short breach but be long on a long breach tomorrow. Obviously today’s candle is bearish and the odds for the long scenario are low right now. However, this could be a pre-breach shakeout and if it pops higher tomorrow then we could see acceleration. It’s so evil, it just could work.

EUR/USD – another inside candle and this time it’s sitting right on top of its 25-day SMA. The long trigger here is the ID’s high of course, on the downside I would not take a position unless it drops below the SMA. Hope that makes sense.

CAD/JPY – also gracing us with an inside day candle. You know what to do as this is a traditional setup with no ifs or buts.

The greenback – guess what – inside day candle. That’s a rather interesting inverted hammer preceding today’s ID setup – in over 60% of the cases this means bearish continuation. Is the Dollar ever going to find a bid again? Not on Bernanke’s watch I guess!

Now on to bonds – what an exquisit setup!! I’m seeing a ton of support here and my preference would be a breach of today’s long trigger tomorrow. But if it drops through all that support then I’d be definitely short below the 100-day SMA.

And last but not least – here’s crude with a double inside day candle! This ought to be interesting 😉

If you’re a noob and don’t know how to trade ID setups then please look no further than our trusted cheat sheet. Keep it frosty and keep it small – I expect this to turn into a wild week once we make it past the dreaded FOMC announcement.



    Zero Indicator

    Darth Mole Alerts

  1. poll

    • How many discretionary trades to you place per month?

      view results

      Loading ... Loading ...

  2. NinjaTrader

    search warrant

  3. recent misdeeds

    1. Happy Thanksgiving
    2. Great Call Flawed Execution
    3. Time For A Little Hedge
    4. Soylent Green And Orange
    5. Misses Mean Reversion 2015 Runner Ups
    6. The Mad Momo Ratio
    7. Europe Will Never Be The Same Again
    8. E-Mini Session Wrap Up Video
    9. Support Zones
    10. Short Term Inflection Point