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Zero Implicit
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Zero Implicit

by The MoleJune 3, 2010

In retrospect the signal on the Zero was pretty enlightening today. I thought it important to post this chart for the rest of you as a big learning experience when studying the Zero myself in the past two years were two things: One are explicit signals of course –  what the Zero does and how it lines up with price gyrations. Another example of explicit signals are divergences, which have kept us out of trouble on countless times. The second most important clues for me is too look out for are implicit signals, meaning what the Zero doesn’t do. Instead of boring you with paragraphs of dry explanations let me just show you:

Early this morning we got a pretty nice bearish divergence (green and red arrows) and it was pretty clear that this blow off top would have to come down during the session. After that the tape kept gyrating lower but the Zero Lite stayed almost completely flat. Only when a few stops were being run it managed to stoop a bit lower but only marginally, especially compared with yesterday’s positive signals.

I knew right away that something was up and that any drop would be reversed – and I was not shy about pointing this out to my subs. The rest is history and we closed near the highs today, another daily white/green candle. Now, you may ask – how about the flat signal during the ramp up? I am glad you asked – and it’s an important consideration as well. If we cannot trust the down tape when the ZL is flat – how can we trust the rally when the signal remains so?

I think this is best answered by referring to a lesson I learned a long time ago, which is that everything in trading is context specific. Had this happened a week or two ago when we were dropping I would have thought – well, the upside is not believed. But it seems to me that we are right now in a temporary up cycle, and the medium term trend rules the day until it is broken. So, when I get downside in an uptrend – I need to believe it! Otherwise it’s just a down fake to reel in a few more bears. The upside does not have to be proven to me – and simply suggests that there is a lack in participation. There – I actually got to the core of the issue. If there is a lack in participation then probabilities usually point towards a continuation of the current trend. Only a sharp and strong counter signal can question the current move.

The above is why turning the Zero into a black box trading system is quite difficult – because there are explicit and implicit considerations. There are probably ways to code all this into a strategy and I may try in the future. But until then just using our own human brains mixed with a bit of intuition (sparingly please) does the trick just fine.

Shameless plug: If you want to give the Zero a spin – here is where you sign up. And if you happen to need any further motivation – if you think this is cool then you should see the way the daily Zero is calling major lows consistently for the past year 😉

Cheers,

Mole


About The Author
The Mole

Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.

  • jigdaddy

    mole any comments on the divergence between SPX & EUR

  • http://evilspeculator.com molecool

    Yes – my tip: Follow the EUR/JPY instead 😉

  • jigdaddy

    that too didnt retrace as much as SPX did though…i guess im reading to much into it..

  • http://www.portfoliotilt.com PortfolioTilt

    Many of the key indices we track have retaken their 200 day moving averages. It will certainly be interesting over the next week or so to see if these levels can be sustained.

  • equity_momo

    Mole, you sound suspiciously like you're condoning discretion or dare i say it , gut instincts.

  • yudhisthira

    Mole, you answered exactly the question I had in my mind today as I was working and also watching zero lite.
    I know that when zero goes flat, then the market is likely to break hard one way or another.
    From your noted comments on the zero png, you seem to know ahead of time which way the break is more likely to go.
    Your instructions above clarify how you get that insight. I'm not sure I can do that yet myself, but this article is instructive.

    I did step aside and so far have preserved my profits. I guess I am not convinced to take a bull swing position, but at least I am not getting gored like the matador.

  • Tooncez

    He did say the word intuition, but from the context I don't read that he was condoning it. And I did like the point about context. I'll take any bread crumbs I can about how to use ZL.
    http://www.youtube.com/watch?v=cD91lWlqmNE

  • yudhisthira

    Question about the daily zero chart.

    There are two large spikes up roughly coinciding with what could be A and C of a current zigzag since the bottom.
    There is slight bearish divergence in the second spike, and it may be unlikely that any further up move will be confirmed on the daily zero value.

    Significant divergence in a longer-term view?

  • alessiov
  • http://evilspeculator.com molecool

    Good point – and I knew you guys would be calling me on this. What I am referring to is human reasoning in terms of the context of where we are. It's difficult to stick all the stuff I am presenting here (i.e. all my momo charts and divergence stuff) into a computer program. So, by keeping that in mind and then viewing the Zero in the context of that information we arrive at a particular decision. You could call it 'gut' or 'instinct' – but it's different than simply making a decision without context by guessing.

    I know this is border line – and I invite any criticism. Maybe my approach is flawed and needs refining. That's why I run a blog – constructive input is always welcome.

  • http://evilspeculator.com molecool

    Yes, the form is almost identical, but the magnitude varies. Equities are more biased toward the upside.

  • katzo7

    I should be napping on the couch per mole's orders to get more sleep but . . . some discussion about the VIX today here so thought I would take a look. Not saying this will definitely happen but a possibility. Look how important this level is, the yellow arrows.

    http://www.screencast.com/users/katzo7/folders/

  • http://www.mylifemytrade.com MyLifeMyTrade

    I noticed that the evil-tees are priced in euros..

    Mole, did you bump up the euro prices after the dump that EUR recently took – LOL

  • jigdaddy

    game plan for tomorrow – wake up, surf, meeting and drink afterwards..i refuse to look at the market as i have a feeling that my long term puts will be absolutely raped tomorrow..

  • Clint

    The silence is deafening…and speaks volumes. Hope we can get a breakout next week…one way or the other.

  • http://trading-to-win.blogspot.com/ DavidDT

    to da Moon Alice

  • katzo7

    Natty moving up, UNG hit my T2 target high of 8.00 today (my T1 was 7.40) reaching a high of 8.06 (120 min.). Never a bad idea to take profits after target hit. A substantial break above this 8 target/resistance level means it goes higher ~ I am thinking this as my lower indicators have not fully peaked yet coincidentally with the target. Also, the EW1 looks too small in comparison to the length of the 3. Look at that angle of assent.

    http://www.screencast.com/users/katzo7/folders/

  • Clint

    Alright then….the moon it is next week. I'm dedicating next week to Jackie.

  • http://colechambers.com c2

    I was long this week and took profits today, and then when short at the close. Todays action did not feel bullish to me. At times it seemed like the market had to bid, but the bears never pounced on the weakness. I'm not sure why yet.

    Plus, does This make you feel bullish?

  • http://colechambers.com c2

    That VIX does look pretty scary right now.

  • http://evilspeculator.com molecool

    Everyone: I just completed two charts which will completely blow your brains. Will post it for all the subs tomorrow – something to look forward to 🙂

  • http://evilspeculator.com molecool

    Actually – I don't sell those but you remind me to finish up my cafepress account. Please stand by and wait a day or two.

  • http://trading-to-win.blogspot.com/ DavidDT

    OMG
    I am so excited
    we are going to 1300

  • MDX

    Ohh man, can we make it 12:01am? 🙂

  • http://evilspeculator.com molecool

    Patience grasshopper! 😉

  • psycho_puppies

    Do I have to order in the next 25 minutes?

  • http://evilspeculator.com molecool

    Everyone: The Evil Speculator SWAG Outlet is up and running:

    http://www.cafepress.com/evilspeculator

    Yes, I am banking a few bucks off of these – the prior situation was untenable for any self respecting market megalomaniac. Anyway, knock yourself out – and if you want a special product that I haven't put up just let me know 🙂

  • http://evilspeculator.com molecool

    Yeah – in 2020!

  • equity_momo

    I actually think thats smart. I know some diehard TA's believe it should all be 100% systematic approach but call me Luke Skywalker , one has to use intuition and instinct a tiny amount when interpreting data and then opening a trade. Clearly experience helps in this regard.
    Good luck for Friday all , could break this pingpong game (posted my set up on the last thread and am fully prepared to go defensive if proven wrong after 90 minutes from the open)

  • http://evilspeculator.com molecool

    Okay, I made a little correction above, which is crucial for anyone who has already read the post:

    “The above is why turning the Zero into a *black box trading system* is quite difficult – because there are explicit and implicit considerations.”

    I hope you guys caught that – obviously we are trading the Zero all the time. Making it an automated black box is another story and will require carefully chosen rules that can emulate what we do as human beings.

  • http://evilspeculator.com molecool

    Yes, if you do I'll throw in a set of Ginsu knifes 🙂

  • equity_momo

    Im assuming its a right shoulder pattern to 114x or 117x? I hope its not a marginal high of 121x a la 3q 20007 after BB started dropping rates. Because its going to be tough to ride that Bronco and remain of sound mind to short it knowing the lows will be tested. On the one hand 121x would be a nice entry point but if we close above 1220 on a weekly timeframe its going to be a nightmare. Maybe getting ahead of myself , will wait for the noise this weekend.

  • http://evilspeculator.com molecool

    No no no – muuuuuch better than that…

  • equity_momo

    Damn im gonna have to subscribe later , you know how to market , should get a job at an IB 😉
    i gotta get to work . peace.

  • http://evilspeculator.com molecool

    Well, the freeloaders get it eventually – so I think I'm being pretty fair. And that IB comment is almost an insult – those guys churn accounts – not the racket I'm in. Difference is that people here either bank coin with my services or walk away. You try that once you opened an account with an introducing broker – good luck 😉

  • MDX

    Now we're talking!

  • equity_momo

    No insult meant ,was purely tongue in cheek 😉 i'll be singing up when i get a chance this weekend regardless , should have done so by now to check it out. Ok now im late.
    Later!

  • Bob the Horse

    bananaben – are you out there? The latest ISM report said severe inventory shortages of components in Tech space, wondering what you were seeing.

  • Scoops

    That could be it for the bounce.Guess we shall see

    Edit, must have erased the link accidentaly. Here it is, and there we went.

    http://dl.dropbox.com/u/1221522/6_4_2010.jpg

  • katzo7

    Overnight bullishness has set all EWs on all charts at EW5s across the board and all indicators are peaked except for the oscillator and MACD which shows divergence under the EW5, a necessary and good precursor for a turn. Can it go even higher? Yes.
    Here are the turn levels I am getting.
    1108 – 1113 to 15 – 1130

  • katzo7

    UNG at 8.10 in AH action, huge candle (BGUp), looks to want to go higher.

  • katzo7

    Will oil spill add substantial unemployment to jobs number?

  • jaxon

    when looking at the recent uptrend since the May 25 low the volume has been steadily dropping off. would this not imply that this is merely a “lack of participation” on the part of bears and that probabilities are that we will soon see a reversal back to the current medium term trend which is down? (medium term meaning a month from high on April 25 to low on May 25)

  • amokta

    The German Dax seems to be suffering from cheap viagra syndrome? Didnt stay up for too long (also applies to ftse!)

  • amokta

    FLASH CRASH ALERT !

  • Bob the Horse

    I am having a day trade on the longside here (Estoxx 2590) – this Sco Gen story is old news, most people knew about it last week

  • katzo7

    Holy mackrel, take your eyes off for a minute . . .

  • katzo7

    That sell off substantially reorganized the chart. Everything pointing down now IT.

  • Bob the Horse

    if that is the case, i will lose money.

  • katzo7

    Bob, what was it that triggered your trade at that point? Go back over your trade and try to reevaluate it. There was no trigger there.

  • http://www.google.com/profiles/alexdg alexdg

    Gold trying to make a comeback, as is silver.

  • amokta

    to add balance, it could have been a downside over-reaction – there may be players who are prepared to go long, and profit also.

  • katzo7

    See what I said below, I am not a guru but this was fairly obvious, you do not go in when all indicators are peaked.

  • Bob the Horse

    there is some support in this area. I have no idea if it will hold but it is worth a go. As I said, it's a day trade not an all-in bet. We've now been in this area for 45 mins, with payrolls in another 45 mins. The longer we don't break down, the higher the odds of a squeeze into the data.

  • amokta

    i am bearish, but trying to understand how Bob trades, so that we can profit from going long & short!

  • Bob the Horse

    I won't go into why i thought there was some support around 2590 but you almost don't need to know.

    Here's some logic:

    1. Recent pattern has been for Euro to make new lows, cause wobble in equities (which don;t make new lows) before equities rally as Euro corrects up. So Euro breaking lows and triggering stops should alert you a day trade long at the moment.

    2. Even if you weren't looking for 2590, mkt hit 2582 at 12.05 (UK time). It has been messing around in this area for 50 mins now. So the support is very visible on a reactive basis now anyway.

    3. Supports either hold or break. It's binary. If it hasn't broken, it's going to hold. Or vice versa. And right now, this one is still holding. So you can have a small go here.

    4. With data coming up in 30 mins time, the capacity for a reversal is going to be high so that helps as well.

    All in all, worth a go in my view. I never know what will happen – I am just looking for good odds.

  • katzo7

    Possible retrace soon to the 1096 area, then down again. Retrace looks very weak, IOMs this retrace should be at a much higher level. I mentioned the ABCs that basically go back to May 20th yesterday, meaning market was stuck. ABCs can precede a change in direction. Of course, this is much easier to analyze in hind site.

  • EvilTrader

    odds favor a reversal from opening (gap down close higher , gap up close lower) in days when employment data is released.

  • sela84

    looks like great opportunity to short every bounce

  • katzo7

    Let's see what the opening does, I usually stay away from that insanity unless playing a gap fill. ES moves too fast for good entry/exits. Could hit 1108 area again in a speculative burst and then come down if job#s are good.

  • sela84

    was this purely technical move or is some news behind? i tried to find one but there was no. except job number but they will come out in 15 min or so.

  • katzo7

    Euro hitting new low, Soc Gen and Hungary problems announced

  • fuw

    This is probably old news, but I just want to point out that DAX is painting an erratic bull flag on the daily. We are now at the upper channel line. Possible trades could be to look for the breakout up, or to short and look for another wave down in the channel.

    http://www.screencast.com/users/fuw/folders/Jin

  • Bob the Horse

    i am offered @ 2625 ahead of the number

  • katzo7

    Ut oh.

  • http://thefxspeculator.blogspot.com Onorio

    Well..the shit hit the fan….

  • http://thefxspeculator.blogspot.com Onorio

    “U.S. economy adds 431,000 jobs in May; 411,000 are temporary Census hirings”

    20.000 jobs? so much for the Obama leak…

  • Bob the Horse

    i am now losing money. will run it for now though.

  • n2thezonez

    The Euro was the tell yesterday, IMO. It knocked the SPX down early and wanted nothing to do with the afternoon rally.

    At this moment (not saying it is always the case), the SPX is the tail and the Euro is the dog (quite literally, as it turns out). The tail does have a mind of its own, but ultimately it will be going where the dog takes it.

    My concern in trying to watch the Euro is that it is impossible to know when a central bank is going to come in an mark it up sharply in less time than it takes to visit the bathroom.

    It'll be interesting to see if the market gets bought up on the early dip

  • psycho_puppies

    “22 hours ago
    Thursday Roadmap…Today the DOW closes below 10k and the virgin finally gets to squirt his load” If I was a day early do I still get a prize?

  • katzo7

    I repeat “Possible retrace soon to the 1096 area, then down again. Retrace looks very weak, IOMs this retrace should be at a much higher level. I mentioned the ABCs that basically go back to May 20th yesterday, meaning market was stuck. ABCs can precede a change in direction. Of course, this is much easier to analyze in hind site. “

    http://www.screencast.com/users/katzo7/folders/

    Be care listening to the bullish fever than has recently permeated this board, trade your charts and charts alone, not rhetoric. No trigger (vased on a real chart) = no trade. I read this statements as to why ppl went long and scratch my head. If they cannot post a chart, with reasons, plz be careful.

  • sela84

    congrats Katzo you did it again, spot on! you have been right on both 1108 and 1096 amazing i just hope GS wont offer you a job because we would loose great analyst. if they do hope you will sell yourself for 6 figures salary at least:)

  • katzo7

    Thnx sela

  • katzo7

    Question ~ will oil spill increase jobs and the velocity of money or decrease it?

  • katzo7

    Trying to find some numbers, the BRD has skewed theses, but 1079, 1075, 1064 ES. Break one we go to next.

  • Tronacate
  • katzo7

    +100

  • Tronacate
  • katzo7

    Hmmmmm, megaphonw with a bear flag. Target 975???

  • http://www.mylifemytrade.com MyLifeMyTrade

    Do I get a free T-shirt for serving you a reminder?

  • Tronacate
  • Thespookyone

    Nice call Tronacate. I fully expected this drop, as well.

  • http://thebhbgroup.com TheBHBgroup

    is the zero not working?

  • captainboom

    Market isn't open yet. Only works during market hours.

  • http://thebhbgroup.com TheBHBgroup

    u sure…i don't remember anymore…LOL…too much trading lately.

  • Tooncez

    You can prove it to yourself by looking at the thurs-wed transition still visible on the zero…

  • Tronacate
  • katzo7

    You Sir, are a freakin Pro.

  • http://www.mylifemytrade.com MyLifeMyTrade

    SPX 30min chart… connect the lows on may 25, jun 2 – uptrending line
    same chart.. connect the highs on may 28, jun 1 – downtrending line (mole has this line on the 1hr Zero)

    the two lines intersect near today's open at 1080. this is the acid test.. Where will the first 30min candle on spx close.. if it closes near or above 1080… this was yet another bear trap. If the candle closes below both those TLs, then we may revisit 1064 or 1070 area

  • http://www.mylifemytrade.com MyLifeMyTrade

    What I am trying to say is I would wait till 10am before going either way

  • Tronacate

    Far from it……..just have several sources of info……

  • katzo7

    10:10 AM.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Thanks mate… Can you tell me where would the uptrending TL be on the spx 30m chart (at today's first candle)

  • Clint

    Wow….good morning Viet Nam. Got up late…and we're gonna open down 200 pts. At least that ain't boring.-

  • sela84

    great thanks

  • katzo7

    Not sure if this is right or what you wanted. Others can do this better. I am an E Wave guy.

    http://www.screencast.com/users/katzo7/folders/

  • tradingmom

    Anybody concerned about how weak the zero lite signal is for how strong this move was?

  • amokta

    Where is Mole – his must be at the PPT HQ, and locked everyone out of the 'control room'

  • Tooncez

    I suspect he was asking for a TL from 1040 on 5/25…

  • jigdaddy

    just thinking that. also another gap that will probably have to be filled

  • katzo7

    I don;t really know that stuff or use it, only on VS time frames, 5 min.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I violated what i said .. I added to longs at the open

  • shortcover

    we gotta crack that 10k once and for all. get a final swoosh to build off…i'll buy at 9750 with one fist and 9300-9500 with both for an intermediate bounce that lasts more than 1.5 days!

  • Tronacate

    ^^^^^thnks

  • http://www.mylifemytrade.com MyLifeMyTrade

    super weak signal on ZL so far says god-send dip-buying opportunity for the ride to 1170

  • bananaben

    If this joke of a market rallies back even < 100 pts, then I guess we're back to where we were last year – rallying on every loss of jobs? I mean for the past 15 months now there has been practically zero private sector job growth. You can tell they are doing everything to prop this sucker up right now. I'm so tired of this bullshit but will see it to the end whatever that may be. I'm ready for the dam to break.

  • katzo7

    MLMT, can you give us a first target that will validate your call instead of pulling a beanie on us? Perhaps a chart?

  • Clint

    That doesn't look like an impossibility for next week at the moment.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I posted few minutes ago. I said a 30min close of the first candle above the 2 TLs… I said it very clearly

  • Tooncez

    It takes at least two points to make a line. If you could provide two (price,time) points that would be helpful.

  • http://www.mylifemytrade.com MyLifeMyTrade

    To be specific…

    1. Close the first 30m candle above the 2 TLs
    2. Stay above the 2 TLs for the entire day would be good
    3. The biggest hurdle is spx 1110 – draw a horizontal line at spx1110 on the daily line chart of spx, you will see what I mean
    4. Next hurdle is spx 1148

  • WTFed

    Yes.

  • http://evilspeculator.com molecool

    Wow – look at that opening gap. It's becoming a regular occasion now.

  • WTFed

    e wave?

  • http://www.mylifemytrade.com MyLifeMyTrade

    This is THE comment I made at 9:15 AM ET:

    “SPX 30min chart… connect the lows on may 25, jun 2 – uptrending line
    same chart.. connect the highs on may 28, jun 1 – downtrending line (mole has this line on the 1hr Zero)

    the two lines intersect near today's open at 1080. this is the acid test.. Where will the first 30min candle on spx close.. if it closes near or above 1080… this was yet another bear trap. If the candle closes below both those TLs, then we may revisit 1064 or 1070 area”

  • katzo7

    Back test of 1090 failed IMO, 1075 ES has a magnet on it. Again, if it cannot hit a proper target, that tells me something.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I love this market.

  • BobbyLow

    Last night I said that I was leaving my Long XLE Hedge Profits in my account. This morning when I saw the futures down so big I kinda cringed.

    That is until I remembered what some one wrote yesterday (I wish I could remember who). Maybe it was Mole?

    I'll paraphrase: “After the jobs report, it would be much better for the Bears to have the market Gap up and sell off later in the day than Gap down and close flat or up.”

    We'll see if that statement is true or not. In the mean time even though the market is broken, IMO, it is not dead. You can cut the head off a snake and it'll still flop around for quite awhile. Sorry no chart for that. 🙂

    In any event, at this point, I'm glad my hedges are still on.

  • amokta

    oh dear, just sold some spxu, and $inx goes down! (obviously the size of my trade affects the market)

  • amokta

    Bam magnet (baminvestor?)

  • katzo7

    ??

  • katzo7

    Watch %R on the 5 min. for direction, other time frames corrupted by the BRD.

  • http://evilspeculator.com molecool

    I was here at the open, why?

  • http://evilspeculator.com molecool

    Quite unusualmfor such a big gap – let's see how it resolves.

  • katzo7

    Hey mole, do you know what the %R measures?

  • skynard

    Another 4% on ATPG. Amazing!

  • http://www.mylifemytrade.com MyLifeMyTrade

    For those who followed my ATPG Jul calls trade, we are now probing the 10% down gap from Jun 1… we are starting to fill that gap.. Take some off when the gap gets filled

  • http://www.mylifemytrade.com MyLifeMyTrade

    Glad you are still in

  • skynard

    Good call on that one, some very nice plays!

  • amokta

    Oh, ok. I thought maybe today was one the days when you are away, as didnt see any comments from you earlier

  • BobbyLow

    XLE almost green and my options are now higher than where they closed.

    Maybe looking for a place to hide in Integrated Oil Companies without specific company risk?

    I have no idea how we'll close but it should be an exciting day.

  • katzo7

    IMO we have just reached the pivot and should be moving lower now. ROD? I hope so. A trend down day?

  • http://www.mylifemytrade.com MyLifeMyTrade

    IMO we should test the vwap… it is not such a strongly bullish day that we won't even go and test the vwap.

    As long as we stay above the TL from the 1038 lows, bulls are in charge.. if we dip below it.. then we could get what katzo is wishing for.

  • katzo7

    Time is an issue too, if it screws around at this level it builds a base for a PITA move up. It should just kiss and go down from the 1087 area, actual predicted area was 1090 ES.

  • gsavli

    i agree. it looks like it should go down, but this setup is just not convincing.

    plus one more thing – volume is diminishing and in an uptrend bullish channel, this usually means…

  • http://www.mylifemytrade.com MyLifeMyTrade

    For those in the oil related names, BP managed to place a cap on the oil pipe.. and we will know in few hours.. how successful it is in siphoning off the leaking oil. If it is successful, then we should see continued bounce in OIH, RIG, ATPG and other oil related names…

    However, if some bad news comes out, then we will likely take out this weeks lows in a hurry because the dip buyers will RUSH to the exits.

  • tooshort

    can't be that great since the cut was so damn ragged, imo.

  • katzo7

    Cracks appearing in the lining.

  • http://www.mylifemytrade.com MyLifeMyTrade

    What matters is the perception and not reality – LOL

  • tooshort

    the perception is that is it catching some until somehow BP gets caught in a lie, then the truth comes out. But the live picture of oil still spewing out does not lie. The cut was too ragged. End of story.

  • DudePlunger

    Zero flat. If you guys listen to Ben Lichtenstein's squawk of the S&P 500 pit in Chicago you'll know that paper (institutional traders, ie-Goldman, Merrill, Morgan Stanley, JPM, etc,) have been very quiet this morning, so quiet that the Goldman clerk is reading the newspaper at 10:46AM. Limited activity means this is a dull market and if there is one rule I've violated a lot and lost a lot of money on its—-NEVER SHORT A DULL MARKET.

    I'd rather blow my account out on May 6th then hope for downside action on June 4th.

    Good luck to everyone for the rest of today, I am calling it a weekend right here. take care.

  • Scoops

    If they can't ramp this thing, looking for massive margin calls at 3:30.

  • Scoops

    http://www.jtnog.org/

    All cams on one page.

  • roncofooddehydrator

    Current volume ($UVOL-$DVOL) suggests this is going to be a down day.

  • katzo7

    I want to urge caution and good $$ management (stops) but I am seeing EW5 down setups on the numerous charts I watch. We like EW5s, they really move fast once they start. This is something I call SuperPositioning, when numerous charts stack up like this, it can, and I underline the word can, be hard from market to break all of these. It can happen, not impossible but takes much force.

  • tradingmom

    Probing below VWAP now…euro continuing to fall.

  • tradingmom

    and is a 5 wave to the downside? I'm just double checking my understanding of what you're saying.

  • katzo7

    Yes.

  • katzo7

    Observe MACD cross on the 5 min. concurrent with the tick I watch. Looking for DJ to be down 210-20.

  • tradingmom

    $VIX daily looks like confirmed morning doji star pattern — bullish for vix, bearish for stocks.

  • skynard

    Picked up ATPG again @ 9,99

  • http://www.mylifemytrade.com MyLifeMyTrade

    On a play like this.. the best way to trade IMO is to keep a core position and keep scaling in and out… Just my 2c.. feel free to play it the way you want to…

  • katzo7

    ES
    T1=1075
    T2=1071

  • http://www.mylifemytrade.com MyLifeMyTrade

    That very likely is all the downside we get IMO.. we are right at the downtrending TL I described in an earlier comment…

  • shortcover

    …Hungary next on the agenda…folks may be timid to hold over weekend…

  • shortcover

    Have a great weekend…I love Ben's reiteration…good point!

  • http://www.mylifemytrade.com MyLifeMyTrade

    The uptrending TL from 1040 lows (from last week) is around es1081 for the 11:30AM 30m candle… which is when Europe closes.. we could likely close that candle at 1081… and mark the low for the day…

    Again as long as the uptrending TL is not violated on a 30m close basis, uptrend from 1040 is intact.. if it gets violated.. then bear case gets more weight IMO

  • katzo7

    Cut out the noise and learn how to watch candle progression if you do not already know how. Put up a 5 & a 15 min. watch how it pushes down, then comes back up establishing lower lows. When this ends, then we have found a temporary bottom. I am also applying my EWave stuff, looking for the EW5 down move.

  • katzo7

    My down DJIA 210 level hit, we do not know if this is the bottom, could push even lower.

  • katzo7

    My 20 DJIA down hit

  • BobbyLow

    Just about all the Indices making new lows including TNX.

  • tooshort

    clusterstock

    What's going on at Gulf Platform #23051? Satellite images may be showing a second oil leak. http://bit.ly/d0hH2Y

    they have been talking about this awhile.
    Like I said….

  • katzo7

    Looking now for 1073 ES

  • amokta

    Ok, i closed my spxu a bit early, but dto & edz still running – should i close today at some low point, or let them run into next week. also, options account – should i close all options, or let them run (long expiry!)
    p.s, i have to make these decisons, but what are others doing?

  • roncofooddehydrator

    Looking at $UVOL-$DVOL, it's rare for it to reverse from this point, so the odds are that today will finish still in the red, and likely further down than we are now.

  • katzo7

    I see one more AM plunge. DOesn't mean it has to happen tho. 1071 may be way too low.

  • BobbyLow

    Took half my XLE hedge off flat. Long SPY Puts really waking up now after a long sleep in the Bear Cave. 🙂

  • katzo7

    Going long. I will give this a hour or two to work.

  • shortcover

    …my TBT hedge still holding up although bashed pretty good here…still think we get a sub 10k dow close

  • katzo7

    Looking for DJIA to move to down 160 to 180 before next turn down.

  • katzo7

    JFYI, it is more about feel than exact levels, when she is ripe she is ripe.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Good to have you on my side.. 78 is a sweet level to be long

  • katzo7

    I won't be there for long. lol

  • tradingmom

    Anybody think the 5 min ES and SPY charts have painted a small H&S with the neckline being backtested right now?

  • http://www.mylifemytrade.com MyLifeMyTrade

    head and shoulder is a reversal pattern.. The pattern you spot DOES LOOK like head and shoulder.. but it is at the bottom not the top..

  • katzo7

    FYI ~ I said that was the EW5 down move, it was not the 5. It was an “B” move on the 5 & 15 min. meaning we go up to the “C” now or soon. EW ABCs will try to shake you off in any way they can. You will be rich one minute and poor the next. AND EW4s are real tough to call, my teacher just walks away from them and awaits the final EW5 down move.

  • katzo7

    Possible but at this point I think not. Let's see.

  • Long_John_Silver

    Your teacher? Sign me up –

  • katzo7

    He doesn't teach anymore. I am his product. lol

  • BobbyLow

    What I try to do is to have some type of game plan on where my exit point might be when I enter the trade. ie; Gain Targets and where my mental stop loss would be.

    Sometimes I can get a little jittery especially when it comes to taking profits and or reducing exposure.

    So what I will normally do when I'm in doubt is to take half. This way, pain and anxiety is reduced while part of the trade is still intact.

    I'm long term bearish so I'm not taking any of my Longer dated puts off. But earlier my profitable long hedge carried over from yesterday was almost negative so I took 1/2 off flat so it couldn't hurt me badly if the market picked up more momentum to the downside today.

  • Bob the Horse

    I hear what you are saying but consider this. Equities made a low on the 25th, since then they have made a higher low every time the Euro has made a lower low – very different to pre the 25th. That sort of divergence can often be a harbinger of a reversal.

    Also, the primary weakness of the Euro today is because the swiss central bank were absent as buyers. But now the CHF is through the highs, it is 90% likely they will be out buying euros on Monday.

  • katzo7

    Told ya EW4s were hard, we are in 3 down again obviously, stopped out.

  • n2thezonez

    I don't disagree, but I think that equities became accustomed to the Euro trading at 1.21-1.25. Breaking to a new range will likely be accompanied by selling on the SPX.

    That level holds some significance because a break makes for about a 5 year low and it will involve an upside breakout of the $USD.

    Anything can happen, I've been surprised many times before. Nonetheless, I would be quite surprised to see the Euro trade down to 1.15 while simultaneously the SPX traded to 1150.

  • roncofooddehydrator

    Given the amount of volume at this point in the day, odds are that if a reversal is to happen it's going to be an end of day thing (2pm ET or later). I'm still betting there won't be a reversal.

  • Long_John_Silver

    If the master has retired perhaps I could work with the student –

  • katzo7

    Any time, no masters just ppl who get some right and some wrong. I have been wrong plenty of times.

  • gsavli

    given the amount of noise here, it won't matter if i also contribute:

    this market sucks, it's PITA just to watch it, i was stopped out twice already. dude plunger was right to call it a week earlier.

    but since i'm not that smart, i'm long again now, betting on at least temporary double bottom here.

  • Tooncez

    zl div?

  • OldChicago

    What is your target of this C up? Would we do a ending diagonal? Hard to believe that it will do higher hi, breaking 200ma. But, who knows.

  • WTFed

    I see it too

  • katzo7

    It hasn't started yet IMO to hard to provide a firm target. ES 1081-88, wide range.

  • tradingmom

    You should know soon — watch that mini chanel on the ES to see if we break out. Should happen w/in the next 5 min bar I think.

  • gsavli

    i'm watching NQ, but it has the same mini channel.

  • Tooncez

    Mole are you taunting them into action? Or are your comments a non-confirmation?

  • Tooncez

    I expect liftoff in the next 5

  • WTFed

    Is the upper chart diverging from the ZL line or is it moving with it? If it is moving with it, I don't know if that's a divergence that we need to see. Newbie so I could be high.

  • tradingmom

    As soon as you wrote that the Euro dropped a few more pips. I agree though, seems like the channel is forming a triangle now, going to break soon. Will wait for channel break confirmation.

  • katzo7

    I'm getting nervous again about any possible substantial up move. It blew one good set up, nothing I can chart and post. This is not acting right.
    On Bloomy ~ “yes, it was about the jobs numbers.” WRONG, it was in the charts, I said all EW5s on all time frames pre-bell.

  • katzo7

    T=1071 ES

  • Tronacate
  • WTFed

    T?

  • tradingmom

    There is a slight divergence — ES made a lower low, but the ZL didn't. I'll take the lower low for now!

  • katzo7

    target

  • Tooncez

    … getting impatient…

  • WTFed

    waiting for the boss to pipe in….

  • DudePlunger

    I couldn't call it a weekend this early. A low participation day actually has turned out to mean there are no buyers. I've been waiting on oil to break 71.65 all week, and it looks like it's about to do it right now. http://i45.tinypic.com/4gntkj.jpg

    I have an order in to short 71.60…..2 contracts on /QM. I'll pull 1 off today regardless, win or loss (though if we break that shelf of support, we should see a burst lower, otherwise you know something is wrong .)

  • katzo7

    Markets can have interesting patterns. Look an # of candles. Ignore yellow divergence arrow for now.

    http://www.screencast.com/users/katzo7/folders/

  • equity_momo

    Your trend line got zapped. I suspect it will backtest shortly – im using that tick up to increase my shorts.
    (108.5 ish on the SPY)

  • Tooncez

    Now it looks like ZL div reversed itself. Time for lunch.

  • BobbyLow

    Although I agree with you about this tanking not being about the jobs number. I will say that the jobs number is part of market sentiment along with the Euro and Hungary, etc.

    This market sentiment is reflected in price that is in turn reflected in the charts.

    Price is the only truth. All the rest is market opinion that might be correct or might be wrong.

    News may not matter but sentiment does. As the news cycle makes its changeover to Bad News is Bad, Good News is Bad, No News is Bad and all News is Bad, this phenomena will be reflected in market sentiment which also would have been reflected in the charts.

    Just a humble non-technical opinion of the technical analysis that we rely on.

  • roncofooddehydrator

    As far as today is concerned, we've hit -500K on $UVOL-$DVOL and in the past 60 trading days, that's only reversed twice ($UVOL>$DVOL for the remainder of the day after we hit -500K). Both times occurred at 2pm and 2:30pm, so if there will be a reversal it seems like it would be around that time frame.

    Of course, those 2 times were out of 17 times total where we hit -500k (in the last 60 days), so the odds of a reversal happening are not good.

    I know price and volume are not always tied directly together, but if there's going to be a substantial price movement up, I have to believe that there will be movement with volume as well.

  • katzo7

    Remember I said I thought the up move was all about resetting the indicators on the 120/240? They reset from overbought to oversold in 1/2 a day, today !!

  • sela84

    is Mole around or is he on Urlaub? 🙂

  • http://evilspeculator.com molecool

    LOL – I am about to make a new post. Do I have to comment on every single gyration in the tape? 😉

    I think I'm spoiling you guys…

  • sela84

    hehe of course not just good to know that you are watching posts like a hawk 🙂

  • ricebowl

    This is called market makers destroying option premium and forcing weak hands.

  • Clint

    Well…they certainly destroyed 'call' option premium. Put premiums on the other hand are doing quite well.

  • katzo7

    Ut oh.

    l
    l
    V
    (down arrow)

  • bshah

    guys, is X sitting at long 2 yr support line.. ? learning so, if you can give your opinion.. Thx..

  • gsavli

    you are EWT guy here. does this look like an abc to you (from mkt open till now)?

  • katzo7

    Only if it went up right now and it ain't going up. We are still pushing down in an EW3 (15 min.) and trying to find a bottom. EW3s are slow deliberate calculating moves.

  • katzo7

    T=1071 ES

  • http://www.mylifemytrade.com MyLifeMyTrade

    Whoa.. I went out for lunch and market again fell of the plate like yesterday..

    Damn stopped me out of everything.. But hey no stops would have meant pain

  • katzo7

    Could you go out for lunch again? Now?

  • http://www.mylifemytrade.com MyLifeMyTrade

    Will you do the knife catching for me?

  • tradingmom

    I don't think so. I see X as being in no man's land. On the 2 year weekly chart, I see that X has fallen below the 50 MA, and is in the process of retesting it. Look for support at 33.34 (lows in Nov) and around 30 — there was a big cluster of support there but that was from last January and it was bouncing off a now broken uptrend line then.

  • bshah

    Thank you much…

  • tradingmom

    Getting a nice ZL signal now.

  • katzo7

    l
    l
    V

  • katzo7

    T
    l
    l

    (up) ST
    T=1081

  • sela84
  • BobbyLow

    Slow Steady Grind lower building some Mo Mo as we enter crucial part of the day. IMO, this usually leads to a strong close in the same direction as Mo Mo.

    The main savior could be a stick save attempt from PPT via MS, GS, JPM buying Spy as they've done before.

    But with all the crapola going on in the world and in particular with not many positives going on here, how heavily long would you want to be going into the weekend?

    No chart for this just plenty of battle scars. 🙂

  • katzo7

    T
    l
    l
    ST

  • http://www.mylifemytrade.com MyLifeMyTrade

    caught knife under 74

  • psycho_puppies

    What does that mean?

  • katzo7

    arrow up, short term

  • equity_momo

    Agreed. Think the bulls need to get a half hour to an hour counter rally going at 2pm otherwise we close LOD. I can only imagine all that dumb money lining up the last half hour eject risk orders – are there enough VST shorts to soak it up?

  • sela84

    Up

  • Clint

    10,000 & 1070 on the SPX.- Folks..this is big.

  • katzo7

    really?

  • http://www.mylifemytrade.com MyLifeMyTrade

    Potential positive divergence on ZL in the making..

  • http://www.mylifemytrade.com MyLifeMyTrade

    Scratch that…

  • katzo7

    T=1081-85 ES

    25 to 1 down to up

  • Clint

    I kid you not.

  • roncofooddehydrator

    NEW POST

  • DudePlunger

    We are down 2.5% on the day and the Russells are almost down 4%. Heading into the weekend, with a UVOL-DVOL of -7….we are approaching support here at 1070 and support on oil…….my opinion is that it should hold, but my opinion doesn't matter which is why I have a short oil order in @ 71.600. If support breaks for both, this could get worse quickly.

    Volume is pretty good today on the /ES, 2million contracts traded before 2PM Eastern…….but again the question is will we see buyers step in and support us by day's end?

    Furthermore, if you look at the /ES trading hours only, you'll see it took a long time to close that gap from May 19-May 20, and now we have another huge gap down after today's action.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
    ¨°º¤ø„¸ N E W „ø¤º°¨
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    It's not very pronounced – might not be worth more than 20 minutes or so. Be careful on the long side today – I would only look for bearish divergences quite frankly.

  • OldChicago

    poll – u short or long at the closing?

  • katzo7

    Bullish? F*ck no, I am following you from now on. Nice call c2.