There Be Dragons!

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

More downside overnight over in crude and the Euro – I still have little interest in catching any of those falling swords. Bonds are looking interesting and I’m long the ZB with a stop below 145’10. Half an R only though as it’s turned into a bitch of symbol lately – actually what hasn’t? Seems like the gloves came off across the board in early December…. be on your guard – there be dragons!

Natgas not really showing a clear direction just yet but there’s a reasonable chance it’ll hold the 100-hour SMA here, especially as the 25 is now crossing above it. Long here above that NLSL with a stop below the 100-hour. Again only 1/2R – just easing myself back into the tape here.

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Per my dragons reference above – I’m seeing an accumulation of nasty traps and stop runs lately, especially over in Forex. Meanwhile we’ve got a race to the bottom in crude and of course in the Euro crosses. All that volatility offers opportunities but we also need to be cognizant of the fact that it brings with it increasing risk. For instance during fast moves you may not get properly filled on your stop – so be conservative and use market orders instead of limits. Better to get a shitty fill than none at all – or use a looser limit as to ensure a fill at a price you can live with. That of course also means that you need to reduce your position sizing accordingly to maintain your risk management. Finally be doubly aware of correlation risk – for instance, if you’re short EUR/JPY and the spoos then you are correlated to some extent, so reduce your exposure accordingly.

You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,