Engaging Autopilot

Apparently grilled snapper has been a popular choice as of late, as participation has been dying down and equities are now officially running on autopilot. Curiously participation as shown yesterday on the Zero indicator was mainly bearish with prices pushing sideways and then climbing higher overnight. What most likely follows next over the coming days will be nothing but stop runs and more noise aimed at hassling any remaining participants.

Also worth noting on the hourly Zero (left panel) is that selling and buying comes in sudden pulses and then disappears again. This is a pretty typical characteristic of whipsaw periods in which the main goal is to simply swing for the fences and trigger as many stops as possible. One of the qualities of the Zero indicator is not just that it shows us true participation and that it often leads instead of lags like most vanilla momentum indicators you’d find on your trading platform.

The biggest benefit in my mind is that it often shows us lack of participation and suspicious divergences that reveal tape banging and other types of traps. For instance taking out a long position with prices churning higher without a solid participation signal on the Zero most likely will lead us to another shake out a session or two later. So implicitly the Zero is telling us to watch our backs and to not get drawn into chasing the tape.

This pretty much is the last stop for anyone holding short or considering going short below our line of scrimmage at 2150. Above it we are once again in bull territory and the only scenario that would lead me in considering a short position would be a quick spike higher (with lack of participation on the Zero) followed by a drop below the diagonal on the hourly panel. Quite frankly I’m not too hell bent on participating here. My original short position is still in place but a final resolution ahead of the election does not seem very probable. Once again we find ourselves in waiting mode, a situation that thus far has become the main feature of this trading year. Quite frankly at this point I don’t think anyone cares how this resolves anymore as long as we finally get some movement.

I happened to pitch crude to the subs yesterday but the scenario I was waiting for was rather specific, meaning a quick fake out drop to below 50 which is where we would enter. Call it luck or one of Mole’s premonitions – it is exactly what we got. I waited for a spike low before I hit the buy button which cost me a few ticks but I wanted to make sure as crude is a fast mover. So far it’s looking splendid and if you entered yesterday near the lower diagonal then I suggest you move your stop to break/even.

The Ozzie Dollar gave us not one but two juicy entry opportunities and if you snoozed both times you only have yourself to blame. If you’re on board then your stop should also go to break/even here.

It's not too late - learn how to consistently trade without worrying about the news, the clickbait, the daily drama and misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.