Tuesday 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.

After a three week melt-up the bears are feeling pretty crappy right now – there’s very little desire to short this rally and in combination with yesterday’s doji we may be due for a small correction. Far from predicting one however I would look at the hourly panel for early clues. We have lost the 25-hour and that suggests at least some weakness as it has been leading the tape higher now for weeks. It is very much possible that we get a revisit of the 100-hour sometime today or tomorrow – this is where we either see a bounce or a drop toward a daily support level. For now I would stay out but I am watching with interest. If you are still long then simply advance your stop and hold – no reason to cut and run just yet.

On the setup side it’s pretty thin out there right now – the one chart I found I’ll have to keep for my subs. However if you’re in a GDP related pair then watch out around 10:00am EDT:

Please step into my lair:

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Finally enjoy a re-run of yesterday E-Mini session exhibiting participation as measured by our Zero indicator. On the left side is the hourly panel and the Zero Lite runs on the right via the 5-min panel. Swing traders and scalpers are encouraged to watch the 5-min panel for early clues – in particular price/signal divergences and lack of participation as expressed by a flat signal. If you like what you see then may want to watch some earlier ones – you will find plenty of examples of what to look out for and how to avoid common traps when trading the E-Mini. Plus you may enjoy the tunes 😉

A few very valuable signals on the ZL yesterday – in particular the blue reversal signal at the top was golden. I am often skeptical when I see them in a strong trend but if you see the signal weaken then it’s time to follow any of your own short signals. Also note how the signal went completely flat toward the end which suggested buying exhaustion as supported by the doji on our daily chart. So I would pay close attention to the Zero Lite this morning at the open as it may provide clues as to whether paint a correction here or if we continue higher after a brief visit of the 100-hour SMA.

Cheers,