Morning Update

“Success is as dangerous as failure. Hope is as hollow as fear.” – Lao Tzu

What really matters is what we get out of the ECB and FED, not bs o/n headlines. Naturally, this does not mean that markets can’t move aggressively on these reports, especially in thin o/n conditions but don’t forget to keep the bigger picture and levels in mind.
As we discussed live on Twitter, these squeezes can easily extend aggressively inside the most recent range but the base-case assumption is always that the o/n ramps will ultimately get undone. Usually the tell can be in how the most correlated asset classes are reacting through the pop or drop around key levels and these tend to guide us in looking for the best r/r and quickest opportunity to fade the move.
Remember that markets are still extremely complacent… no fear at all. If anything, you’ll see that come in with a flush and that’s when we’ll have a good chance at setting a proper short-term low.
No big change since our latest outlook video:
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Into NFP

markets managed another miraculous squeeze following yet another host of old headlines but still closed below the key pivotal bull/bear lines. We remain very suspicious of this action and are not seeing this as another key low that will trigger the famous santa rally for a move back into all time highs.
Naturally, especially into NFP, we still see a possible attempt to squeeze these back into proper gap fills but the real focus will be on how we close the day/week and not on intraday shenanigans. Both complacency and headline risks remains very high and we would not be fans on risk-on o/n holds.
The main key chart for NFp will be the dxy. We are still hovering around the 97 mark and unless we see a proper close above 98 of below 96 we will likely continue to see very choppy trading. As already discussed, this is the key piece of the puzzle and we will review our outlook and implications in today’s webinar session.
Remember that even if the usual suspects have been talking about capitulation and reversal, we have see zero panic in the markets. From current levels, unless you see the VIX trading above 30 but really, into the 35s and 40s, this is still pretty much a ‘nothing burger’.
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Early Morning Outlook

POSITIONING: Heron stands in the blue estuary, Solitary, white, unmoving for hours. A fish! Quick avian darting; The prey captured.
People always ask how to follow Tao. It is as easy and natural as the heron standing in the water. The bird moves when it must; it does not move when stillness is appropriate.
The secret of its serenity is a type of vigilance, a contemplative state. The heron is not in mere dumbness or sleep. It knows a lucid stillness. It stands unmoving in the flow of the water. It gazes unperturbed and is aware. When Tao brings it something that it needs, it seizes the opportunity without hesitation or deliberation. Then it goes back to its quiescence without disturbing itself or its surroundings. Unless it found the right position in the water’s flow and remained patient, it would not have succeeded.
Actions in life can be reduced to two factors: positioning and timing. If we are not in the right place at the right time, we cannot possibly take advantage of what life has to offer us. Almost anything is appropriate if an action is in accord with the time and the place. But we must be vigilant and prepared. Even if the time and the place are right, we can still miss our chance if we do not notice the moment, if we act inadequately, or if we hamper ourselves with doubts and second thoughts. When life presents an opportunity, we must be ready to seize it without hesitation or inhibition. Position is useless without awareness. If we have both, we make no mistakes.
365 Tao: Daily Meditations
Deng Ming-Dao
As google searches for circuit breakers and trading halts will likely be spiking today, we will remain focused on price and how it reacts around key levels. Remember not to get confused by velocity of move inside range and that price is always telling you what you need to know.
What really matters today in the equity markets is how we will close the day. Should we close above the pivotal bull/bear lines then, we’re still stuck in the chop range. However, should we close below, expect the selling to intensify and potentially get ugly. We will review this and discuss how we expect things to play out in detail in today’s webinar.
As we discussed coming into Q4, this is where things get really interesting as more strategic and experienced traders get really focused. This is the kind of market where veterans have a real chance to deliver and leverage their experience. May it continue until year end/into 2019 and good luck to all.
Yesterday’s blog post along with all summary links, should serve as a good refreshed of where we stand and our base-case scenario outlook.
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Wishing you a great day ahead.

Morning Update

“The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts.” – Bertrand Russell
If you missed our latest update heading into this weekend and our discussion focusing on the possible repercussions on  equities and the dxy, you can watch the recording > HERE.
Focus this week is going to be on how the market settles post weekend events. Furthermore, Qatar withdrawing from OPEC also means that we’ll likely continue to see a lot of headlines in an action packed week > China, Russia, RBA, Carney, Draghi, Powell, BOC, OPEC and NFP should keep traders very busy.
Heads up as this week will likely prove to be pivotal in setting the tone for action into year end.
Note for active 50Scouts members: *make sure you read out latest update* and keep an eye on your inbox for a free pass to Friday’s daily webinar session (make sure to check your spam folder too).
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Wishing you a great day ahead

Chart of the Day

“Success is as dangerous as failure. Hope is as hollow as fear.” – Lao Tzu
Our latest post with a collection of Key Charts remains very much in play as we move into the last trading week of the month.
Remember to keep in mind that we have a lot of headline risk this week, not only from scheduled data releases but also from Russia, China, Italy, Brexit, Opec and a host of Central Banks.
Don’t forget to keep and eye on Commodities and Credit for clues…
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Wishing you a great day ahead.

Early Morning Outlook

“In my experience, I have to say that there was very little critical difference between the net winning traders and the net losing traders in most areas. All of them had good understanding of the basic market fundamentals, used a solid technical analysis or research of some kind, and exercised a lot of personal discipline. The one thing that stood out, the one thing that separated the net winner from the net loser, all things being equal, was that the net winner had a trading plan in addition to his other skills. The net winner knew he was up against not just the market and his competitors, but he was up against himself, too. To guard against the possibility that he (the trader) could blow himself out of the water at any time if he wasn’t careful, that trader had a plan.” – Jason Alan Jankovsky
If you missed it, you might be interested in watching our Latest Weekly Outlook Video.
As we have been discussing on our Twitter Feed, the tape has changed and more and more charts are lining up pointing to more downside across the board. Our base-case scenario hasn’t changed on the equity side > we are still looking for a test of yearly lows. Even if the action has been very choppy, the dynamics have been clear to us all the way from a couple of earnings cycles ago when Netflix first broke. We’ll discuss this in today’s webinar once again, also highlighting the importance of acknowledging a turn in the tape and adjusting to the new flows.
On the commodity side, metals continue to be stuck in the middle of the whole USDCNH debacle and the energy space is being completely dominated by this Crude/NatGas unwind. As always, it’s best not to try and be a hero but it is also important to understand when the traffic light starts to go from Red to Orange and then changes to Green. This will be a key focus of our discussion later on today when we review this in the context of our seasonal trades that are currently in play.
Naturally the DXY remains one of the key pieces of the puzzle and we would suggest to continue to keep an eye on that weekly chart and not get carried away with reading too much into intraday action. The market remains very long USD and despite the fact that we would not be surprised to see more strength, we still continue to believe that it will not be a sustained structural move. We will discuss this more detail in the webinar along with reviewing open swings and other opportunities that are currently setting up.
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Wishing you a great day ahead.

Early Morning Outlook

“That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.” – Aldous Huxley
Just to put things in context, SPX off just over 5% from ATH. Not even a proper ‘correction’ yet.
As expected, the damage is appearing in Tech after we started to break with the first earnings gap downs a while ago but still, all things being equal, not that ugly. Blog readers are very familiar with all these breakdowns we have been reviewing for a long time: Netflix, FaceBook, Tencent, Alibaba and so on.
Remember that playing for markets to move in straight lines (on either side) is not a repeatable long-term way to build a solid track-record. Focus on the levels and structure. Especially when things start to move, it’s important to stick to basics and keep a very calm head.
All things being equal, one would expect to see some kind of sharp corrective rally at some point but that could be after an ugly open. In the current scenario, things should get worse before they get better and we’ll very likely be in ‘sell-rally’ mode unless something big hits the wires.
Keep in mind that expectation is for aggressive moves in either direction as the bigger patterns/move play out. As always, it’ll be imperative to stay nimble if trying to be aggressive on either side from here on.
In any case, this is where things get interesting / more strategic as experienced traders get really focused and have a real chance to deliver / perform. may it continue until year end.
If you are confused by the recent action, feel free to look back at some of the latest blog posts, along with the recent weekly outlook video and free access webinar session we posted that may help give you a better understanding of what is going on an how we see things playing out.
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Wishing you a great day ahead.

Waiting for FOMC

“Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferable one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That to me, is the epitome of professional trading.” – Mark Weinstein
As discussed in our latest weekly outlook video and yesterday’s blog post we are in wait and see mode. We can’t stress this enough > remember that it’s also month-end / quarter-end so what really matters is how we settle into the end of the week.
It’s always hard to be patient and not read too much into action pre these kind of events but it’s key to avoid getting chopped up and not having any power dry for when it’s really needed.
Remember to take a step back and look at the bigger picture and how price reacts at key levels / inflection points. It is very easy to get stuck in your own views and not see what is really happening. Price tends to do a really good job at telling us what is happening and we have to be ready to internalize price action and act accordingly without hesitation and bias.
Note for active 50Scouts members: *make sure you read out latest update* and keep an eye on your inbox for a free pass to Friday’s daily webinar session (make sure to check your spam folder too).
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Wishing you a great day ahead.

Morning Update

“The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught. What they can’t do is give (people) the confidence to stick to those rules even when things are going bad.” – Richard Dennis, on Turtle Trading
As discussed in our latest weekly outlook video, this week is all about the Fed. Furthermore, don’t forget that we’ll have to deal with month-end and quarter-end flows so don’t be surprised if trading gets a bit funky into the end of the week.
We are at key levels across the board so our expectation would be for choppy fake-out action as liquidity is sucked out of the system into the FOMC / Press conference and then for the market to find direction in the following 24/48 hours.
Our focus remains on the current DXY move. The key tell on this latest move will be if we get the usual firmness into the expected rate-hike that fades post release. We’ll be watching closely with an eye on possible opportunities opening up in the metals complex too.
Note for active 50Scouts members: *make sure you read out latest update* and keep an eye on your inbox for a free pass to Friday’s daily webinar session (make sure to check your spam folder too).
If you are interested in a more structured way of tackling the business of trading, attending a live daily morning call or a more detailed discussion on the charts we post / trade ideas, don’t hesitate to check out our Premium content.
Wishing you a great day ahead.