Dangling By A Thread

Once again we are trading near bearish territory but I don’t mean to attach any directional bias via this post’s title. We all have seen major support come and go many times over the past few years. In most cases they served as great opportunities for the bulls to BTFD. Now clearly market conditions are shifting and the bearish case has been gaining a lot of credence over the past few months. However short of having a crystal ball the best we can do is to position ourselves appropriately near important inflection points and monitor the tape carefully for early clues. But have no fear - the Mole is on the case, as usual.


We are actually enjoying quite a bit of context right now and I plan to take full advantage of that. The spoos are now testing a weekly NLSL near 2063 and thus far it’s holding. Should we close the week below it then the trend will most likely switch to the downside. So this will be a key week and that’s exciting!

I’ve moved my trailing stop covering my remaining shorts near the 100-hour SMA. May be a bit tight but unfortunately there’s no NLBL or old NLSL to bolster resistance. Sometimes you just have to make due with what you got.


The NQ thus far the strongest of the bunch and here our inflection point is 4550 – above it we are pretty much in bullish territory. Below it we may be testing the 100-day SMA but there’s a LOT of support to still be taken out – so call me skeptical.


The YM clearly is the most bearish index here and after scaring the children a little we bounced higher here overnight. Which however does establish 17319 as our bearish inflection point. If the YM goes then the ES and NQ may follow suit.

In general seeing such discrepancy between the three horsemen are not the hallmarks of a healthy equities market. Which is why I am considering the bearish case at this point – but I’m most definitely respecting all that support that still lays below us.


Bonds – the 30 year now in shake out mode and I think it’s a plausible buy near 154 – if we get that low.


EUR/CAD – also correcting and that would be expected after that first stab higher. Nice entry opportunity IMNSHO near the 100-hour SMA which is strongly rising now.

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That ought to keep you guys busy for a while. Have fun but keep it frosty – don’t get over exposed, which means split your exposure between correlated symbols.


Paying Attention Pays Off

Early Thursday morning I announced the following: “We are about to see a large move on the forex and futures front. Equities are simply the tail being wagged by a big (and currently snarling) dog. Time to pay attention – summer or not – these are conditions in which to bank some coin.”


I don’t think many heeded my advice – at least judging by what I’m seeing in the comment section. Only problem is that big moves happen when we least expect it and the current drive lower one could turn into something bigger. Given that we are approaching weekly support I am going to take half off the table and leave the remainder in the run for a potential low vol summer dip lower.


The 30-year bonds are another recent example. That thing had long squeeze written all over it and I grabbed a small position because I was already holding ZN since near the floor. It’s paying off already and I’m taking partial profits as it’s approaching an old NLBL. The rest I’m holding for a continued run higher with a trail a respectable distance away.


And here’s the ZN – I doubt anyone followed me into that one near the lows. It’s summer after all – and the moon cycle wasn’t perfectly aligned – plus you know – Putin. Still, it has paid off very handsomely since and I just took partial profits here as well. I’m sure it’ll retest the 100-day SMA in the coming days but to me this has the potential of turning into a runner.


Speaking of runners – EUR/CAD was a trend trade candidate a week ago. I mused to my subs that nobody in their right mind would want to take it long near the upper BB and that’s exactly why I converted an initial short term campaign into a daily one. It’s been one sweet run already and it has decent odds to make it all the way.

Moral of the story: We can discuss the academic ins and outs of trading until the cows come home but the one and only thing that matters in the end is your ability to pull the trigger when a promising campaign is staring you in the face. Of course not all of my entries pan out – but the ones which do (my ratio is about 50/50) usually make up for the losers and then some. And that’s all there is to it, folks. Cut your losers short and let your winners run.

Happy Monday by the way – let’s see if we’ll see a bit of participation while Skynard is taking a well deserved week off.

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.


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.


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    1. Fixing The Flaws In Fixed Fractional Position Sizing
    2. Thursday Road Map
    3. Volatility Wave Surfing
    4. Dangling By A Thread
    5. Paying Attention Pays Off
    6. Sell Off Thursday Wrap Up
    7. Pay Attention Now
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    9. I’m Your Huckleberry
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