Special Morning Alert

Equities are on the move this morning and instead of the usual briefing I’m going to post a special alert today as the configuration at this very moment has significant medium term implications.

You surely remember the volume hole which I have been highlighting here over the past week or so. Overnight our equity future trifecta has descended lower and the E-Mini is once again trading below 1600. But that is only part of the story – in order to understand the implications of a drop lower let me show you our weekly panel:

It just so happens that the weekly SPX chart has us in a potential RTV Sell setup. There’s the spike high, then two weekly lower closes, then one higher which primes the pattern. All that’s needed now is a drop through 1598.23 and we have ourselves a weekly short entry.

What makes this issue more pressing right now as I’m typing this is that the spoos are but a few ticks away from that very inflection point – due to the fair value delta the trigger here is at 1590.75. I think we have an excellent long here with but a few ticks worth of risk. But if she breaches 1590.75 then I am going to be short with a stop above 1640.00.

For some that stop may be a bit rich but for me it represents 1R and thus you need to adjust your position sizing so that you will not lose more than 1% or 2% max of your assets should you get stopped out. That in fact is the position sizing rule Scott and I use for CrazyIvan and we will impart more pertinent information about our position sizing rules in the near future.

Here’s the daily on my Ninja chart via the Kinetick feed – when I pulled that chart I was still looking the old contract (we are rolling over into August today – ES U13 – the original spoos!) so go by the TOS data. Either way, please note the NLSL which is located at 1590.75 precisely at our RTV Sell trigger. Happy coincidence I guess 🙂

Public Service Announcement: The spoos are rolling over into the August contract today (i.e. ES U13 or ES 09-13) – make sure you’re not getting caught looking at the wrong contract this morning.

Happy hunting but keep it frosty – this is only one trade out of thousands in your trading future. I know some of you are itching to get short but do yourself a favor and don’t get over exposed.

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Cheers,