Sell Off Thursday 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 ;-)

Today’s session was a brilliant example of how to read participation and divergences. Watch and weep – and perhaps learn how to play the spoos Zero style. Enjoy!

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.


Who’s The Sucker?

The ongoing advance in equities continues unabated and I would strongly caution you against taking out short positions until the tape delivers us evidence pointing toward a reversal. Statistics mean exactly jack during low participation short squeeze periods, which is a lesson the Zero has taught us many times over the past few years.


Just compare the participation on the way down to the tiny signal range we’ve seen over the past few sessions. It is quite normal to see larger signal swings once gravity sets in, but this lack of participation on the rebound is a bit suspect. And in my book ‘suspect’ is not a license for taking out contrarian trades – quite on the… well – contrary. Some of you old timers may remember Whispering Saul, a trading legend from a different time who’s among a handful of candidates credited for an old aphorism which should be heeded especially during earning season: “If you enter a poker game and you don’t see a sucker, get up and leave – you’re it.”


Following that advice I remain extremely skeptical about the equities side – in both directions. The daily panel is losing a bit of steam here and we have the S&P and Dow futures lagging the NQ. Still, until I see signs of real price weakness I won’t be touching this one with a ten foot pole.


And the best place to look for such signs would be the hourly panel. However thus far it’s trailing its 25-hour SMA like a boss. This could easily continue higher for quite a while courtesy of over eager retail suckers with grandiose allusions of an ‘overdue’ reversal. Not to pimp my own ware but I think the Zero will be instrumental in offering us early clues, so I’ll be monitoring it carefully.


Cable is looking like a decent long here although that diagonal I painted is falling. So I’ll only deploy 1/3R here and would be prepared to flip for a short position on stop out.

A few more goodies for the subs 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!

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Now have fun but keep it frosty.


Coal Mine Canary Update

Quick update post session. Judging by today’s tape it seems like we are going to see continuation higher as suggested earlier this morning. For starters we have all the signs of a low volatility/participation melt up.


The signal range on the Zero continues to be minimal which is typical for a systematic short squeeze – we’ve seen this script over and over again in the past few years. The Grexit scam was a convenient backdrop to once again lure any remaining hobby bears into a rope-a-dope near the lows.


Our coal mine canary (a.k.a. the NQ futures) continue to whistle Darth Vader’s theme song while shorts are systematically being slaughtered on the way up. I actually have some footage:

I think he needs a bit more practice. Anyway, as you can see the daily panel has us pushing outside the upper 100-day Bollinger which suggests that we should expect an obligatory correction soon, especially after eight consecutive white candles. The most plausible scenario in the coming days is a drop into 4550 followed by a run higher.

What About The Bearish Talk?

Don’t make the mistake of interpreting the current price action as evidence that the old bull market is back in full force. Yes we are pushing higher but this market is highly volatile and will remain to be so – and that can swing both ways at the slightest headline or rumor slip. We should continue to limit our exposure in equities to short term positions and play them with small position sizes. If you want to grab a few longs on a retest be my guest but I caution you from placing large bets in either direction at this point. Of course it’s business as usual on the Forex and futures front.

Favorite Quote Of The Day:

“Efforts to further increase transparency, no matter how well intentioned, must avoid unintended consequences that could undermine the Federal Reserve’s ability to make policy in the long-run best interest of American families and businesses”. — Federal Reserve Chairwoman Janet Yellen

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.


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    1. Thursday Road Map
    2. Volatility Wave Surfing
    3. Dangling By A Thread
    4. Paying Attention Pays Off
    5. Sell Off Thursday Wrap Up
    6. Pay Attention Now
    7. Setups Setups Setups!
    8. I’m Your Huckleberry
    9. Who’s The Sucker?
    10. Mind Hacking