Rolling With The Zero

If you are a sub then you know that an important aspect of what separates the Zero from traditional short term momentum/trend indicators are divergences. It’s not that other indicators (e.g. stochastics, RSI, MACD, etc.) won’t paint them – they do. But many times they trigger either too early or in many cases way too late, thus diminishing your potential edge. The holy grail, so to speak, is an indicator that paints appropriate signals before prices reverse, not afterward. I am not sure if the Zero should be called that but quite a few subscribers have been happy (and profitable) campers for several years now.

There are actually several good divergences in the past two days but today’s session is almost a textbook example of how to play them – in particular as we got one to the up and one to the down side – the Zero of course loves to play both. As you can see two hours into the session we are painting new lows but the Zero Lite (on the 5-min panel) is already starting to point up. You may have gotten in early or waited for a retest of VWAP after which we started to paint a positive signal. The inverse happened near today’s highs (at least as of this writing) – we rapidly pushed higher but the signal was slowing down – plus we were painting outside our 2.0 BB. If swing trading is your game then this is the kind of stuff you want to see. And if you want to see the Zero in action then you may be interested in some of my EOD Wrap Up videos – it’s a great opportunity to see first hand what separates the Zero from the rest.

Recently I also added scalp signals to our chart which are based on the Mole indicator shown on the very bottom right. If you are interested in more details then look no further than my recent post Scalping With The Mole.

On the charting side there’s not too much to write home about today – let’s look at the spoos. Thus far the 1330 resistance cluster on our daily chart remains in good shape. As you may recall we are more interested in what’ll happen over on the monthly panel:

As we today will finish the month of May I am eager to see how we close out – as always we should be cognizant of possible EOM tape painting. I am not going to call the bulls in trouble just yet but suffice to say that we have two more hours in the session to go until this monthly candle concludes. IF we close below then it would be one more strike against the continuation of what was a six month up trend. The next breach we are looking for was mentioned on my P&F chart – sorry subs only 😉

Speaking of which – there has been too much freeloading lately – please step into my summer lair:

I’ll be rather quick today as there isn’t too much on my plate – sorry, guys – I only report the tape, I don’t make it. Soybeans are at support and may be good for a low probability low risk entry. I am long at the 100-day SMA with a stop only a few ticks away.

ZN is showing us a Net-Lines buy entry – which is great as ZB already ran away from us. Frankly I have no idea how much longer this ramp can sustain itself but I what I do know is that short squeezes can go on for a long time. Anyway, simple entry here with a stop right below that NLBL – or you can use today’s lows if you play it very small. Don’t throw too much coin at this trade as bonds have been volatile lately.

Bottom Line: We are still in the 1330 – 1295 limbo zone. I recommend you don’t take sides or fall prey to overtrading until equities show its cards. Today’s EOM will give us additional information but we want to see prices follow suit. Also remember tomorrow is the FOM and things may revert a little – maybe Volar can give us an update on the pertinent odds for the month of June.

Target Alert:

We have a target alert on Natgas – you may recall that inside day entry three sessions ago. Not a trade for the history books but don’t underestimate how consistent nickel and diming can mean the difference between a good or a bad year.

Cheers,