Short Term Musings

Not looking good for the bulls right now. Take a quick peek at my short term EUR/JPY chart.

Some folks (i.e. ZH) are saying that the AUD/JPY correlation is more spot on but I don’t see it – at least not yet. When it does I will start posting about it – simple. What I am seeing is that the stochastics rightfully predicted a nice run up on the EUR/JPY which was completely faded by equities – we actually pushed down and sideways.

Now the currency pair is close to rolling over and equities are already descending into base camp. The short term wave pattern on the ES futures does not satisfy the characteristics of a Minuette (2) reversal – way too small. So, seeing all this and considering the fact that we are close to the daily lows it would not be unreasonable to think that Minor (1) is extending further down.

Which btw surprises me to no end as we are statistically (see daily SPX long odds at retracementlevels.com) way overdue for a bounce.

The Zero Lite presented us with some textbook divergences today which kept my subs out of getting their rectum adusted both ways. The pattern however does disagree with the above as it is showing a very distinct floor where we keep bouncing. The combined pattern however is not an officially recognized trade setup (we usually focus on one time divergences), and I would be cautious going long expecting it to hold ad infinitum.

Bottom Line: Diverging signals right now – and the very small degree count (i.e. Minuette and smaller) is a bit of a head scratcher. Not sure what to suggest besides either sticking to the very long term (e.g. Mole’s approach) or trading the swings ZL style.

FWIW – I am greatly enjoying the comment section today. Good substance mixed with some chatter and fun – that’s how a trading blog should be – I’m proud to see you guys keep coming back for more.

UPDATE Closing Bell: Call me subjective but in my book the Zero Lite was kicking ass and taking numbers today:

Those divergences were textbook and they kept my subs in the zone all day. A session to remember. If you trades those swings without it – my condolences.

If you are interested in becoming a Zero sub then don’t waste time and sign up here.

Cheers,

Mole