Zero Daily Signal Streak

The recent re-discovery of the daily Zero (it was MIA due to TOS data problems) has given us important clues as to when conditions for market lows are ripe and a reversal may be in the works. And looking at the updated chart it seems that we all should have paid maybe a teeny bit more attention to a fractal pattern that has proven to be spot on in the past year:

I have taken the liberty to draw the dotted lines right at major lows which were accompanied by quite distinct divergences. The fractal pattern is quite easy: Look for a spike below -3 followed by a snap back towards the zero line which is accompanied by lower prices. And that’s it – pretty simple to follow even for novice traders.

Now, the daily Zero is not a short term indicator – but on a medium to long term basis it seems to kick butt in a serious way. I do not see the same pattern on the long side, for that we obviously have other measures which I have presented in the past few weeks.

If you are interested in becoming a subscriber and enjoy the transparency the Zero offers on various time frames (i.e. short/medium/long term), then don’t waste time and sign up here.

Today’s Session

Quite frankly, I don’t see anything significant in the works. We seem to be gyrating around VWAP to reel in a few more bears and after that I believe we will continue on our journey to complete Soylent Green. Which either ends around 1095 or may push into 1120, at which time we can re-label it Soylent Orange.

Here’s the updated wave count – nothing much has changed since yesterday afternoon:

As you can see we are closing in our our target of roughly 1095. Now, it’s possible that the exuberant bulls push this thing higher from there – after all, on a medium term time frame we are oversold. If we breach the 1105.67 mark then the wave count would switch to Orange – I know that is purely academic as I expect a reversal lower at minimum towards the end of this month, and if the bears play along some time next week. This week belongs to the bulls and I don’t think we are going to see much downside.

I’m going to go hunting for some symbols, but before I do I want to make a point: This morning retail sales numbers were released and as you probably know by now the numbers sucked blocks. Nevertheless equities are stair stepping higher now – bad retail or gushing oil wells notwithstanding. So, what does that tell you about trading the news?

Yelnick, a fellow blogger who sometimes refers to some of my humble charts, made that very same point just yesterday:

.. sometimes the real world is dumb and dumberer – such as today, where the pundits asserted one cause of the market’s rise and the same cause for its later fall:

• the market went up on the Fed’s remarks that the recovery was still on but the improvements in employment were only “modest”
• the market fell on the Fed’s Beige Book which showed that the recovery is still on but in some areas growth is “modest”

I keep saying this over and over again – fade the news – it’s inherently about stuff that ‘already happened’ 😉

Cheers,

Mole