Mushin – No Mind!

If you paid attention yesterday then you may just have picked up some of those 100-hour SMA breaches I was pimping to my subs. What I find very interesting is the fashion in which entries in various verticals seem to have correlated. Let’s drop by the nursery and review some of our recent victims:

USD/CHF – if you missed that inside day setup – I also proposed a long at the breach of the 100-hour SMA. Well, you had two opportunities and I hope you took one of them. Nothing but an empty vacuum looming above. You got a prime entry so keep your stop and forget about it for a while.

Cable – another member of our 100-hour theme. It was teasing us there for a while but eventually it fell away. We are not ouf of the woods here yet – not by a long shot. I definitely want to see it back inside box. If it does then it needs to keep falling hard – if not then it probably just pauses in order to stretch that 100-day BB higher in preparation.

Ole’ bucky – boy did we get a great entry on this sucker. Again, if you snoozed the floor entry then the 100-hour SMA was the name of the game. Same pattern – fake out – shake out – swing back above. If you are sitting on longs then set your stop and sacrifice a chicken to the deity of your choice in hopes of a punch back inside the box.

And interestingly the same theme over on the spoos. Fake Out Central – and finally it relents and drops below the 100-hour SMA. Which will define your new stop by the way. We are back inside the box but I’m not sure it’ll hold. Call me jaded but I just haven’t seen any bearish tape of note here recently and I’m short in principle only (meaning only a few positions). As soon as the 100-hour is as much as being breached I’m heading for the hills. May even take a long positions if we get back above, so set your clocks.

Before we get to the two measly setups I was able to eek out today – here’s a quick update of my 1-min Mole signal prototype. Not looking so shabby – is it? I think it’s fair to say we’ve got an edge here. Just a matter of defining the entry/exit/stop rules properly. Perhaps correlating it with other momo indicators – or even price patterns. I am open to any input if you see anything on your end.

FYI – I just ordered my brand spanking new pimped out Macbook Pro Retina today – going to pick it up in Los Angeles early October. As soon as I have all my old tools back I plan to get cracking on implementing this in NinjaTrader. As you can imagine I’m licking my chops in anticipation. Some people asked me if it will be available as a blackbox like Geronimo and to that I can only say ‘tranquilo’ – we have a lot of work ahead of us and even if I go that route it’ll probably be a few months. But suffice to say that good things are in the works as I always thrive to keep you guys hooked 😉

Okay – here are two goodies for my intrepid subs:
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ZN – not a prime setup but an interesting one considering the long term picture I recently reported on. Obviously that 100-day BB is rather compressed and I expected support kicking at the bottom fo the box. We are now back near a NLBL and I think this will be a crucial litmus test of whether or not bonds are ready to descend lower. If it breaches higher then I see a lot of new resistance ahead and that would be a tough trade IMNSHO. So I want to be short here with a stop above both that NLBL and that 25-day SMA.

The nutty gas meanwhile seems to be in a bouncy mood and has thus far observed its Maginot Line. I think we have a great opportunity here to play whatever side it’ll wind up picking. I’m currently long with a stop below the 100-day. IF she breaches below then I flip my coat without as much as breaking a sweat.

Sorry, that’s all I was able to dig up today. Sometimes the picking is good and other times you kick up your feet and wait for a better time to strike.

In respect to equities and various correlated markets I encourage you  to adapt a mental state of ‘mushin’ (or wu-wei in Chinese) – which translates to ‘no mind’. Shaping your mental state of mind as well as managing the information you expose it to is of crucial importance to a trader- in particular to highly intelligent and analytical individuals. It is them who usually trip over their own feet as they constantly feel compelled to find patterns within chaos or limited sets of information (or worse a surplus of bad information). It’s a complex topic I have been exploring here repeatedly and if you are a regular then I’m sure you understand what I’m getting at.

To dumb it down for y’all: Do not try to pick a top (in equities) or a bottom (on the Dollar side) – we are sitting on good entries and if we’re wrong then we’ll probably be stopped out near break-even and will try another day. It’s important to retain a sense of clarity when picking your entries – as soon as you start losing control you get emotional and that leads to trading losses. And we want to keep those to a minimum, don’t we? 😉

Cheers,