Rope A Dope Friday

I was cruising for some bruising yesterday and was surprised to see how many ‘trading professionals’ got their legs cut from underneath them courtesy of that little correction. I’m not trying to rub it in frankly – it was tough to call this one and I probably just got lucky.

But I suggest you take this as a learning experience – complacency knows no bounds and often it gets even the best of ’em. Nobody is immune – ever. I’ve said this before and it bodes repeating. If you’re a trader you automatically join Affectus Anonymous – no matter how long you’ve been sober, all it takes is one slip and you may find yourself laying in a gutter strung out on cough syrup (your mileage/poison may vary). Emotion comes in all varieties  – complacency, arrogance, fear, anger – you name it. For wee can never be free of it, as it part who/what we are. You can not abandon it – you can only manage it. Unless of course you’re an Evil Speculator reader 😉

I recently read something that really peaked my interest. There was this guy who started trading systems for a living and worked himself up from a starting capital of $35k to what is now roughly $5 Million. When the guy mentoring him found out he was reading a book on trading psychology, he gave him the following gem: Only pikers worry about psychology, either you have an edge and you exploit it, or you don’t have one and you lose and chase every other excuse.

I think that’s a great quote actually. Maybe I’m a piker for talking about trading psychology. But in the end I consciously don’t worry about it anymore – I simply follow my systems and emotions aren’t really part of the process anymore. Perhaps there’s a way of completely curtailing the entire process by focusing on auto-trading. But trust me – if you trade discretionary then psychology will be part of the battle, whether you like it or not.

I was so busy bitching about the trials and tribulations of being a financial blogger that I kind of fell behind a little today. So forgive me if we run through today’s charts telegram style. Obviously you guys want to see the goods while they’re relevant. The daily panel on the spoos doesn’t really tell us much today but the hourly shows us our next line of defense which is 1515, nice round number. Unless you went long yesterday already I suggest you wait until we get there to get positioned.

The NQ is painting a pretty interesting expanding triangle – which may not be necessarily bullish, I’m not sure yet. Anyway, what’s important right now are the touch points and the fact that the 25-day SMA is mostly being ignored.

Just to make sure everyone is on point here – unless we drop hard into the close I expect the VIX to complete step two of a bonafide VIX buy signal. Noobs – please check the cheat sheet if that term confuses you.

Platinum – a first here but it’s really looking interesting right now. The daily just dropped below its 100-day SMA but much more importantly it will be closing a weekly candle below both its 25-week and 100-week SMAs! Yummy….

Okay here’s one freebie (yes, I know I’m not supposed to spoil the leeches) – AUD/NZD bumping into its 25-day SMA. If that 25-hour carries higher then we may just get a breach. If not then use the daily SMA to trail your stop (for your short position) lower.

Let’s do a few more setups – juicy stuff today:
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Bonds are now an official buy. You are probably aware that the 10-year already took off.

Coffee – now a buy as it breached its NLBL – long as long as it holds.

EUR/USD – waiting for a touch of that 100-day SMA – let’s hope we get it before a bounce.

EUR/NZD – also waiting for Godot here – we want a touch of that diagonal. There will be blood soon however as the upper diagonal is approaching fast.

EUR/CAD – long as it’s above its 25-day SMA and it defended a few NLSLs very well. Odds are good on this one.

CHF/JPY – long on 25-day SMA – short on a drop below

Well, you all know what time it is now for the Mole 🙂

Good show everyone – very much appreciated all the positive comments today. Enjoy your weekend!

Cheers,