Friday Morning Briefing

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.

It’s rather quiet this morning with equities still gyrating around yesterday’s lows. I think we’re probably going to see a little bounce here today or on Monday as it’s been a long time since we’ve seen more than five consecutive lower lows in equities. Of course a breach below 1960 would trigger a ton of stops and if it happens all bets are off.

However as of right now the onus remains on the bears to finally take this thing lower. Several times they’ve come very close to inflict some serious damage in the past few years, but in the end wound up being short squeezed into oblivion every single time. And all that’s needed right now are two or three sideways days near this inflection point and buying interest will most likely represent itself. That said – even if we see another squeeze higher things have fundamentally changed. On several occasions now I made a point about the increase in intra-day volatility – clearly this is not a healthy market and a meaningful correction is way overdue.

However – long term tops take their merry time to form and usually resolve beyond the trading horizon of (bearish retail) market participants. A good indication of this phenomenon is the recent lack of participation I’ve observed in the comment section. You guys should be all over this quite frankly, but I’m afraid many may have irreparably damaged their accounts shorting the various rallies of the past few years; or more recently may have attempted to pick a low over in crude or the Euro. It is the eternal purgatory of the retail trader to think contrarian when it’s so much simpler to simply follow the tape. But thing are changing and right now the tape is telling me that 2015 is probably going to be a rough year for equity holders.

On the short term front natgas is looking pretty interesting – it spiked higher and then reversed back to its 100-hour SMA. I’m long here 1/4 R with a stop below 3. You may remember that I was long near 2.8 a few days ago and got stopped out by just a few ticks (my stop was below 2.7). Which means I missed out on a juicy rally and that’s been tough to watch. But that’s what happens and you can’t get those things get to you.

Fortunately gold has been more than making up for it and silver is following suite now – please meet me in the lair:

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Cheers,