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.

So let’s understand what just happened here over the past two days. The chart above shows you various intervals on the spoos starting with the daily down to 15 minutes. Below each panel there is a StretchStat indicator which uses an ATR based formula to measure market momentum. As you can see StretchStat was painting pretty low on the daily, the 240, and the 60 at the recent lows – so the potential (not the necessity) for a short squeeze was present. Repeat that last bit in your head a few times because I really need it to sink in. Just because a move can/should/may/is expected to happen does not mean that it WILL. But that’s a whole different conversation and Scott addressed some of it in the prior thread.

Anyway, so we did indeed get a squeeze into yesterday evening and now the E-Mini is finding itself sideways and testing a fast rising 25-hour SMA. What happens here is very crucial as it will influence the activity of the smart crowd as well as the dumb crowd (don’t fool yourselves – most of you are the in the latter category). The smart guys got positioned early (perhaps they had a subscription to the Zero indicator – hehe) and they know that the onus is now on the bulls to prove they can take this higher quickly. As they’re nicely in the green they’re pretty relaxed (but not ambivalent) about the whole thing and that’s why they’re considered the strong hands.

The dumb guys started chasing this thing near the current highs and are now nervously monitoring their trade as they very much would like it to continue. They’re barely in the green and perhaps they’re even pushing red right now. Those guys are also usually the first to pull out at the first sign of trouble, a.k.a. weak hands.

If we fail that NLSL and that 25-hour then most likely we’re going to look at a shake out. Now, that does NOT mean that we’re going to fall all the way back just yet. It MAY mean that if bullish momentum completely disappears here. But as of right now there is no pertinent evidence so don’t get your panties in a twist if we drop a bit lower today.

What you do here all depends on how you are positioned. If you are in cash then this is not a bad spot to look at this from a bi-directional perspective – long above the SMA/NLSL and short below it. If you are already long then you may want to add new positions if we are pushing sideways. Perhaps take partial profits if we close below that spike low 1683.75. All depends on your trading style and your stop rules.

This here is exactly why I don’t try to predict what the tape is trying to do next. I am simply responding to what price and momentum are telling me. I collect some evidence and make a list of what I know, e.g. SMA’s, BBs, Net-Lines, support/resistance on other time periods, acceleration, candle patterns, bleached chicken bones, you name it. And then I simply pick my inflection points and say – this here is where I want to be long and this here is where I want to be short or perhaps out of the market altogether. It’s all pretty bare-bones and with a bit of training your dog could probably do it – so why couldn’t you? 😉

Of course I have one or two tricks up my sleeve plus I’m incredibly handsome – but the latter does not help me much in the markets. Alight, while I’m boring you to tears there’s the USD/CHF which is painting a pretty sweet RTV-L setup on top of its 100-hour SMA. Nice entry there and the only caveat is that NLBL above. I would also consider a short position below the recent lows (triggers on the chart – but be aware that your FX provider may give you slightly different data). Be careful around 2:00pm as Danthine is giving a speech.

USD/JPY – not bad looking either and I would be long on a breach of the 98.33’5 high – after conclusion of this candle which means starting 9:00am EDT.

Have fun but keep it frosty – too much over-thinking here lately. I want to see more charts – and a setup would be nice here and there!

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,