Cognitive Dissonance

Right out of Wikipedia: Cognitive Dissonance is a discomfort caused by holding conflicting cognitions (e.g., ideas, beliefs, values, emotional reactions) simultaneously.In a state of dissonance, people may feel surprise, dread, guilt, anger, or embarrassment.

When looking at my usual suspects this weekend I could not help but feel a bit of cognitive dissonance of the confused kind. A lot of things just don’t make sense right now and you don’t have to be a seasoned trader to sense that something’s rotten in the state of Denmark. For starters – we should be climbing up right now – not gyrating around the 1200 mark – what ever happened to our Santa Rally? Let’s try to make sense out of what the charts are telling us right now.

This will be our core chart for today’s post – as the general confusion I sense is reflected in volatility. If you are a sub then you have seen this chart a few times in the recent past. We are looking at volatility ratios and the name of the game is to pick up divergences against the SPX as well as against each respective ratio. In case you are a noob or simply forgot what each symbol represents then you are in luck as I have provided rough summaries on the SPX panel. Subscribers may refresh their memories via my ‘Volatility For Dummies‘ post I put together earlier this year.

Alright – if you are not used to ratio (or FX) charts then this may be a good mental guideline: The first symbol is the dominating one – meaning if the signal line pushes up it is gaining against the second symbol. Ergo the second symbol moves inverse to the ratio – if the line drops then it is gaining, if it climbs then it is losing.

Now let’s review these respective ratios and then try to make sense out of what they are telling us:

More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or Zero Data Feed (recurring) or ES Gold (non-recurring) or ES Gold (recurring) or geronimo/ES (recurring) to view this content.

Public Service Announcement: I have an early Christmas gift to reward all you well behaved Zero subs – over the weekend I implemented the ZeroFX spike alert notification system and even tested it earlier today.

This is the email I received:

Extreme signal condition detected on 5-Minute EURUSD panel:

White momentum signal UP spike to 3.77 – possible buying momentum exhaustion!
Blue participation signal UP spike to 1.9 – possible buying participation exhaustion!

ZeroFX Live Feed: http://evilspeculator.com/?page_id=20376
Disclaimer: http://tinyurl.com/dsclmr

Everything seems to be working as expected and thus I decided to turn it on for everyone. Please make sure to have alerts [at] evilspeculator.com in your contact list. Merry Christmas and enjoy! :-)

Cheers,

This entry was posted on Sunday, December 18th, 2011 at 10:08 pm. Both comments and pings are currently closed.



  • TwinTurboRX7

    Hmmm ZFX looks different…instead of looking at the bottom, now we look at the top one for equities…

  • http://practicalt.blogspot.com/ Gold_Gerb

    AUD/JPY 5m
    some swinging, did some market just open up?

  • Anonymous

    so it’s up/down/no idea ? next move..

  • Anonymous

    Nope a lunatic passed away!

  • Anonymous

    way too much bad news. I am betting on up! Unless we crash…

  • http://practicalt.blogspot.com/ Gold_Gerb
  • Anonymous

    haha. USD jumps when a jackass dies. hmmmm

  • Joe_Jones

    jackass? the History subject was not your strength, isn’t it?

  • Joe_Jones
  • Anonymous

    JPY looking weak

  • http://evilspeculator.com molecool

    Yes, I stacked it differently – AUD/JPY first, then the EUR/USD, then cable on the bottom.

  • Joe_Jones

    now where does this go again?

  • Anonymous

    Mole – why is the 60min on AUD/JPY stuck @ 77.75?

  • Anonymous

    ok..

  • Anonymous

    Don’t like the action on the EUR at the moment. Should have started a rally, especially with the record bearish sentiment. If the low is broken, this would be an extremely bearish sign. If it holds, we may see a nice RTV buy setup for a juicy short squeeze..

  • Anonymous

    ST targets:

    /ES test 1198
    /GC – 1567  (showing weakness)
    /HG – 2.95  (showing weakness)
    /CL – 85
    AUD/JPY – 77.2

  • http://evilspeculator.com molecool

    I’ll do a post on all those tomorrow.

  • Anonymous

    Sweet!

  • Anonymous

    Great call on going short on the aud/jpy before.

  • Anonymous

    No brainer, especially with all three pairs correlated. Could of short all thee:) That tells me one thing – dollar up!

  • Anonymous

    OK – looks to be working again.

  • Anonymous

    First session HSI -2.62%

  • http://evilspeculator.com molecool

    Skynard – any thoughts on the volatility stuff I posted?

  • Joe_Jones

    I hope this post brings back BobbyLow

  • Anonymous

    Think you hit it on the head! The recent volatility action is reflective of everything you have explained:) Complacency!

  • http://evilspeculator.com molecool

    To be honest – I wrote all this down in order to make sense out of it for myself. But it still leaves me a bit uneasy to say the last. Well, you know which way the DZ is swinging – so let’s hope that one is correct.

  • Joe_Jones

    hope?

  • Anonymous

    Don’t count waves any longer, by the looks of the unsuspecting nature of this move it could be a biggy!

  • Anonymous

    IMO, if 1200 fails next stop 1190

  • http://evilspeculator.com molecool

    Subs – I just sent out an email to everyone.

  • http://evilspeculator.com molecool

    Guilty as charged – what was I thinking?? ;-)

  • http://evilspeculator.com molecool

    Someone wrote me about it and I reloaded the data. Due to all the coding and configuration changes I had to reload the charts a few times. Sometimes this affects the feed as I’m loading a LOT of data to run ZeroFX. Each panel takes about one minute to load – just to give you a rough idea of the complexity.

  • Joe_Jones

    It happens to the best. Hehe!

  • Anonymous

    Just ran stops on /GC & /HG, the down trend should resume.

  • Anonymous

     Thanks for the new alerts.

    Also, zerofx is stuck as of 12:57 AM EST

  • Anonymous

    Gotcha!

  • Anonymous

    @ mole, interest to subs zero, but newbie , 

  • Anonymous

    should have an advance background to understand zero ?? 
    tia.

  • Joe_Jones

    no. 

  • Anonymous

    Thanks Mole!  Interesting charts for sure.  Looking forward to the new alert.

  • Anonymous

    Think we know where this is going:) See if we fill the gap.

  • http://practicalt.blogspot.com/ Gold_Gerb

    AMC,
    what I was talking about last night.
    I read the book from welles wilder new concepts over the weekend.

    http://i43.tinypic.com/20iuatu.png

  • Joe_Jones

    Now that the silly hour is over, we can play again.

  • Anonymous

    GG, your post. (flipping through pages of back woods slang) I think I know what you mean by she is dead. Do you mean the action is dead? Or are you implying something else. EDIT: is anyone else having issues with ThinkorSwim I would really like to know how SPX is doing anyone provide a chart I have a position in it currently.

  • Anonymous

    Added puts at VWAP test.

  • http://practicalt.blogspot.com/ Gold_Gerb

    action is dead.  no volatility.
    could because it’s a holiday week.

    http://marketvolume.com/technicalanalysis/atr.asp

  • Joe_Jones

    LOL. The background is killing me. :-D

  • Anonymous

    thanks JJ , 

  • rhae

    SPY 10m… It is what it is, until it isn’t…
    http://screencast.com/t/gbtgORwndaBW

  • Joe_Jones

    Glad that we stopped fucking around. This was getting pathetic.

  • http://evilspeculator.com molecool

    I’m going to write a more comprehensive tutorial over Christmas. What do you need in the interim?

  • Anonymous

    Damn! Cliff diver:)

  • Anonymous

    This is one of those times when I have to remind myself about pigs and hogs!
    (covered my short /ES with three points of profit just before it dove off the cliff for four more…) 

  • http://practicalt.blogspot.com/ Gold_Gerb

    Bollinger Band constricted, check.
    Price under averages, check.
    Sto’s in Bear territory, check.
    Everyone waiting for Xmas rally, check.
    BadGuy dead, check.

    it’s too perfect.  taking the day off.

    http://i40.tinypic.com/2e1rax1.png

  • Anonymous

    hourly?

  • http://practicalt.blogspot.com/ Gold_Gerb

    2hr candles.

  • Anonymous

    thanks. 
    may be a good day to just chill, 
    enjoy

  • Anonymous

    Looks like a bear flag 5 min, waiting for 1198 test:)

  • Anonymous

    currently negative 1 pip with the eur/jpy position.

  • Anonymous

    GG I downloaded that pdf. AS in new concepts. The article was written in 70s right?

  • Anonymous

    yep Euro holding well at that 1.30 

  • Anonymous

    Good calls my man. I am still having some longs. Lets see if the Euro can hold it here and bounce back.

  • Anonymous

    lowest tick so far today 5 minutes ago,
    also liking that hourly BB range support area 
    1199 +/-

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/88c252ad-b335-4ef9-ad5c-8397eff69764/2011-12-19_1153.png
    this bad boy does not even try to give hope of recovery. The only thing that does provide is it “LOOKS” oversold.

  • Anonymous

    Do you think we’ll touch 1198, or just get close? I see support on a 15 min 100 SMA lower BB at 1202, and hourly at 1198.

  • Anonymous

    I do not like the tone and wording my boy Draghi is using. 

  • Anonymous

    Dumped 1/2 puts and will reload @ 1210:)

  • Anonymous

    5 min diverging, waiting to reenter.

  • Anonymous

    Yeah. Hes pretty sober. Did you hear the guy from BOE? He said now its worse than 2008! With comments like these from central banks who needs bears?

  • Anonymous

    I would be wary however. Nuclear option will be used. Of course a waste land for trading will be left.

  • Joe_Jones

    It’s all well planned. The only thing that can save bulls right now is more QE. That won’t happen at the current market level.

  • Anonymous

    All pretty negative on the Board today.  I see a bit of a positive divergence forming on the zero.  In the spirit of quick and nimble, in for a good time not a long time etc., took a gentle plunge long with a reasonably tight stop.  Otherwise, I am too choked with grief at the passing of the Dear Leader to pay much attention today… :)

  • Anonymous

    JJ I dont know if you read a piece by S&P a week ago or so. But in summary they stated that it would take another financial crisis to get EU authorities moving faster to a real solution. In my book that is called extortion.

  • Anonymous

    The thing that bothers me is that most people seem to think exactly that. The lack of a Santa rally has sparked a lot of doom and gloom talk. I’m not saying we won’t be seeing a big plunge in the near future (I don’t know what will happen), but all of this negative sentiment bothers me a lot in regard to the bearish case.

  • Joe_Jones

    EU was built through crisis.

  • Joe_Jones

    AAII sentiment survey was quite bullish last week. Usually CBs are bullish. When they are not, there is a plan afoot.

  • Anonymous

    Food For Thought

    Market not responding to Bullish Opportunities yet the bears seem to be taking their time as well.  Could be we are marking time into the next Bradley Date which is Christmas Eve.  I’m thinking a beautiful rally starts then to help setting up some sweet bear trades down the road and perhaps a final leg in the Bond Bull.  Watching the TBT Leaps

  • Anonymous

    10ma SPX coming in @ 1214

  • Joe_Jones

    Me thinks we rally after Christmas when volume is dead.

  • Anonymous

    F**King awesome response JJ! (looking for way to click like 20x)

  • Joe_Jones

    hehehe! ;-)

  • Anonymous

    Waiting out the chop to go short again @ 1500 hrs:) Of coarse, that could be it already. 

    Yep, one more swing high.

  • Anonymous

    Close enough for me, added short:)

  • Anonymous

    Lots of BOOZE!!

  • Anonymous

    WTH, maybe see 1198 after all.

  • Fibz

    Yea, they’ll print eventually. The rest of the world will squeeze all they can out of the EU.

  • Anonymous

    MWAH!

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    Yeah, I myself burned a candle for him today – by strapping it to a firecracker :-)

  • http://evilspeculator.com molecool

    Extortion is the name of the game now. Read this article:

    http://www.counterpunch.org/2011/12/09/europe%E2%80%99s-deadly-transition-from-social-democracy-to-oligarchy/

    Originally this was posted in the German FAZ, which is in importance what the NYT used to be here in the U.S.

  • Joe_Jones

    pin-ups

  • Anonymous

    sweet read Mole thanks!





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