Earning My Keep

I’d say the Mole earned his keep this morning when he kept you rats from getting emotional and chase this sucker to the downside. If you even managed to grab a few longs during the squeeze higher than you must be feeling rather giddy right now. Another bear trap averted, right? Well curb your enthusiasm – for the bulls are far from being out of the woods here. Let’s take it from the top:

As you can see the drive down pushed us against a small volume hole, which has however been filling in a little now. But it may establish a new bounce zone here which gives the bulls a chance to gather some strength. Now, I’m saying they will – what I’m saying is that any bullish scenario most likely involves some teasing around up here between ES 1938 and 1960.

On my Bollingers we’re seeing the E-Mini attempting to overcome hourly resistance – that’s a good start. As you recall there is a NLSL at 1944.25 and we need to stay above that one as well. A close below that one this week would trigger a daily sell signal.

For anything bullish to materialize now that 25-hour SMA on the SPX needs to be retaken. We are still below it and that opens up for a ‘last kiss goodbye’ scenario.

Now here’s the ba-aad news – check out that participation on our Zero indicator, in particular on the Zero Lite. Complete flatline since the session started and that was ‘after’ all the bad GDP news was being announced this morning. This kind of smells bad to me but as of right now we have no signal telling us to go short either.

Now this is interesting. Look at that divergence prior to the drop starting on the 20th. I didn’t see it but in my defense I did warn you guys near the top so I guess I’m forgiven 😉

The signal is currently in sync but it it remains far below the SPX. And that means MMs are being a bit cautious here on the medium term. Let’s watch this tomorrow and Monday for early clues as to whether we’re heading into a real correction or not.

It’s been a bit dry on the setup front here in the past two sessions but as you all know I am not one to force the issue. I only feel comfortable posting setups if the tape throws them my way.  But I have an inkling things are going to start aligning rather quickly – just like with volatility cycles (see my post earlier this week) trading flips between periods of relative inactivity (actually we are monitoring and watching) followed by short bursts of action (i.e. getting positioned). But both are necessary for successful trading – it is not a linear activity and neither should it be.

It’s not too late – learn how to consistently bank coin without news, drama, and all the 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.

Cheers,