Zero Hoopla

Alright, some of you non-subs may wonder what the Zero hoopla today was all about. Well, let me show you:

The gyrations of the past few days have been torturous – even the Zero was having a tough time making sense of it all. But it’s a triple witching OPX week after all plus we are in a Minor 2 wave correction. Things have a tendency to get crazy under such conditions.

There was a ‘turn on the dime’ moment on the Zero Lite (lowest right panel) late in the session and I simply couldn’t make sense out of it. We didn’t even get a divergence there, which is quite frankly unusual for a pattern like that (Zero subs – please chime in – I am not making this up I hope). Anyway, we dropped down steadily and the tape looked like it was about to fall off the plate at the 1102 mark. However, the Zero Lite was pointing up. I sensed that a divergence was in the making, so I painted a green line indicating just that.

The bulls did however give us one last fake out – as you can see the signal line droops down a little more. I thought to myself – damn it, I just told everyone to not chase this move! But I kept my emotions in check and decided that as long as the prior signal low wasn’t breached the divergence was not violated. So, I straightened the line at the prior low mark as a ‘line in the sand’ for anyone who had gone long.

Turns out the Zero Lite was spot on – that ramp up was merciless and a bunch of bears are applying Vaseline to their hines as I’m typing this. See, the ZL does not catch all the moves – but it usually catches the good ones. You can call it ‘taking it up the rear by evil market makers insurance’. The monthly fee for the policy is one handle on the ES futures – I personally think it’s worth the investment. I’m sure today the subs would agree 😉

This chart was actually sent to me by a subscriber who managed to play a cross-session divergence as painted on the chart. It’s another example of how divergences can give you additional hints about market conditions and help you in making directional swing calls. However, I have to point out that I usually don’t play cross-session divergences – reason being that I believe each session has its own flow and characteristics. There is also a lot of tape in between (i.e. overnight) that is not being accounted for by the Zero. Unfortunately I cannot extend the Zero to overnight sessions as I require certain market measures which are not available outside of the NYSE session.

If you’re interested in giving the Zero a spin then here’s where you go to sign up. There are no auto-renewals – if the Zero doesn’t earn its keep you simply don’t resubscribe. The daily Zero also happens to be a pretty nifty tool for long term traders. I have posted that chart on several occasions and it’s been spot on calling that June 8 low – and all of the major ones in the past year. It’s up to you if you want to trade without it – I for sure wouldn’t.

Cheers,

Mole