Fishing In The Dark

I must not neglect to point out that the timing on dropping the big shoe on equities was nothing less than exquisit. Let’s review: Wednesday after some very carefully crafted comments were released into the wild all hell breaks loose and market participants expecting another ‘shoo-in’ find themselves bend-over with their pants dangling below their ankles. Of course here’s the segway to one of my favorite subjects – that of market psychology. The bulls who just got royally reamed are now looking for the ‘obligatory’ bounce here while the bears (most of who missed yesterday’s wipeout – recall my point regarding capitulation) are looking for clues as to whether this thing may have legs.

Now, let’s take a look at the Zero Lite for some further insights on how this game was played. First up, for the uninitiated, take a look at the Zero Lite signal range (right panel). We’ve got a 2.0 before all the drama, which is respectable and we have a -1.5 during a concerted sell-off which is barely outside what I would consider a median range of participation.

Of course today we get (drum rolls) absolutely nothing – sideways churn designed to keep everyone guessing ahead of a three day weekend. Forget about tomorrow’s session – anyone who’s anyone made their money yesterday and are probably already heading for the Hamptons. And that’s how the game is played, folks – there was no panic selling – this was market theater at its very finest. I hope you didn’t play the part of the pawn.

Now what I’m seeing on the setup side does not really matter as I wouldn’t want to touch equities with a ten foot pole right now. Taking on positions before Tuesday is tantamount to fishing in the dark. You’ll be trapped during Memorial Day weekend and there’s no telling what may seep out Sunday or Monday night causing your positions to blow up in your face.

If you decide to test your luck right now then I suggest you keep an eye on that 25-hour SMA which was were the spoos ran into a wall. The fact that we’ll most likely be closing right near the 1648.25 inflection point leaves the gates open for all kinds of creative shenanigans.

Here’s the YM which managed to tickle its 100-hour SMA but didn’t find her very receptive to allow a jump over the fence. Similar situation on the daily panel – we are stuck in limbo and I would be rather surprised if we see clarification ahead of the long weekend. Call me cynical but that’s usually not how the game is played.

Crude is at an interesting stage across several timeframes right now. Short term still pinned below that 25-hour SMA and now also below its 25-day SMA and a NLSL. The weekly has it scraping some long term support – the 25-week and 100-week are colliding and prices are sitting right on top. This could be good!

Quick update on soybeans – I doubt many of you took that early morning entry the other day. But if you did and managed to hold all the way to here than I probably don’t have to tell you that now would be a fantabulous time to call it a trade and count your blessings ;-)

 

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

This entry was posted on Thursday, May 23rd, 2013 at 1:53 pm. Both comments and pings are currently closed.



  • Joe_Jones

    Big boys are really champions at shaking the tree in PMs. A bunch of monkeys fell on their face in the last few days, but this gorilla hung tight to his branch ;-)

    After a failed retest of the low, HL looks like it’s ready to take off Sputnik style
    http://stockcharts.com/h-sc/ui?s=HL&p=D&b=5&g=0&id=p41298869661

  • strider

    The chart on beans shows the best spot to exit. There was a drop of over 50 pts the last hour of trade to finish up 1/2 pt for the day.

  • amokta

    Lets see if the market flicks green today, or will it be Niagra Falls mk2

  • Schwerepunkt

    going green

  • http://ibergamot.blogspot.com/ i Bergamot

    HL is one of best looking ones. That 3.50 gap needs to be taken tho.
    Another nice one is FNV. Also higher low

  • amokta

    red again!

  • Skynard

    Last hour should be fun, if the dollar can squeek aboke 80 it could run.

  • http://ibergamot.blogspot.com/ i Bergamot

    I see you are using shorter settings. Nice

    Here is another one for you: try 6,12,9 MACD (or PPO) –

    an “Oscillator Man” would love it…lol

  • Ronebadger

    It today just a big bear flag? Looks like it…

  • tradingmom

    But look at the daily chart — hammer w/ 20 dma at base

  • Joe_Jones

    Thanks Bergamot. I’ll try it out.

  • amokta

    Ok, looks like the Camel is broken.

  • badflightrisk

    I think the theme of the day is flushing the late to the party shorts OUT
    Pavlov’s dog do it often enough and its automatic behavior

  • mothwhoflysbackwards

    Hey guys, long time no comment. Been long since last comments about financials breaking resistance. I normally don’t hold this long and it seems to be messing with my mind … I keep thinking this is too easy and look for articles that make me worry, articles that claim a flash crash is just around corner or claim we will have a spike type top (as opposed to a retested top) thus trapping me. Then I am up so much it would take a flash crash times two before I would come close to loosing me pretty pretty profits. So I just sit on my hands.

    I did take a small counter trend trade and got out of uvxy with 10% + this morning, yeah trailing stops!

    What I think is going on is that I am used to devoting X amount of time, thought and worry to trading. Since the long position requires no thinking i best devote mental energy to smaller stuff and thus expend mental energy on that instead of thinking about ways to screw up the long position. My thinking (now) is just hold long until a failed retest of a high.

    P.S. what happened to the article list on the right? Would love to see long term outlook from mole (i guess just scroll back-won’t be so bad because i need most recent) normally long term doesn’t interest me that much, then i normally don’t hold this long. Also scott/ivan set ups are something i could devote energy to learning now can anybody point me to ES articles dealing with those? Will check back to see if anybody helps — or if you bastards just leave me hanging ;-)

    Have a great holiday everybody … and go Blackhawks Detroit sucks!

  • mothwhoflysbackwards

    hey moth you idiot! two of the set ups are on the cheat sheet! ya got these two things on each side of your nose — they are called eyes — try opening them every now and again!

  • convictscott

    I checked every major top in equities and major markets back to the 70′s. Only 10% of tops are not retested on either a daily or weekly timeframe.

  • convictscott

    The retest variation buy inside period on gold today is an outstanding setup

  • http://dartht.blogspot.com/ Darth_Gerb
  • newbfxtrader

    only 90. We can do better….

  • Schwerepunkt

    Hmmm . . . the black cocks or dead wings. I’m an Avalanche fan. Poor me. Maybe next year with Roy as coach! Nice seeing you moth…

  • http://dartht.blogspot.com/ Darth_Gerb

    yeah that QQQ 74.95 was a crock.
    75 or bust! (/sarc)

  • saltwaterdog

    Great… apologize if this is painful, so normally an RTV Buy would trigger here at 1413.30, but due to the IP we can move that trigger down to 1397.10?

  • newbfxtrader

    Hmm so buy the first plunge and then short on the retest?

  • Kerberos

    Gaps near the top of some indexes suggests retest to me. Sometimes I wish I traded futures, just so could trade those gaps.

  • Ivan

    Are you sure your comment is made without bias? Agreed that RTVIP has a ‘good’ reputation … point to bear in mind is that it is an IP … with its own implications … and naturally by ‘outstanding’ you do not mean bet the house on it!

  • Ivan

    If you are quoting June 2013 futures prices, I suggest you are too close to FND … August or Dec are better candidates

  • mothwhoflysbackwards

    well that makes me feel better about my plans for this longer term trade (oh man have a become an investor and not a trader?) it’s just I normally ask myself whats the worst that can happen. Now I ask what the hell could possibly go wrong, and when i ask that I often find out the hard way! Then it’s nice to know 90% chance of retest. Fails then out, breaks on through to the other side and let ‘er ride.

  • mothwhoflysbackwards

    Hello to you too! To bad about your team….better fire up some legal. ;-) . Now gotta get ready for the game:translation buy some booze!

  • convictscott

    Nope not biased and not suggesting anyone bet the farm on it. You and I agree that the RTVIP is objectively a higher performing setup that RTV or IP. For me the 3D discrepancy with Silver takes short trades off the table, especially with 2 spike lows under 1R away. If it breaks to the downside there is appreciable risk it will fakeout on either of those spike lows and reverse, reducing the shortside edge to a negative expectancy trade. It *may* work, but to me it does not represent betting odds. Also, if one was inclined to short, Silver is a better idea, but contextually the big hammer rejection of the lows is worrying for silver shorts.

    Viewing the smaller timeframe action we have 3 trading days of very clear trading range. A breakout from that range is likely to be a good trade.

    A good trade is NOT one that wins, it is one with a good risk/reward ratio, which, yes, I know you do not believe in ;-)

  • convictscott

    Ivan is right, August is where the action is. Beware the spreads are OUTFUCKINGRAGEOUS in Asian session. StopLimit order time

  • convictscott

    That is generally optimal. Any long running bull trend will attract dip buyers. Think about it, for the last year you made bank buying every dip. What does it matter to the bulls if they are wrong once when right overall? We are in a bull market, and dip buying is trend trading 101.

    A *failure* of bulls to buy the dip indicates something very different happening under the surface, that the structure of the market has changed.

    It is not a case of predicting what is going to happen, but observing what is happening in context with what *should* be

  • convictscott

    yes you move the trigger down saltwaterdog

  • newbfxtrader

    Does the size of the initial plunge matter? For example was the /nkd a buy after yesterdays plunge for a retest of the top or stay away?

  • saltwaterdog

    Thanks guys, appreciate the quick feedback. 20yrs in the futures game but these setups are new ground for me (although I should know better than to still be looking at GCM).

  • Ivan

    Agreed re S3D between GC and SI … basis daily view … weekly view also attractive … even more telling is the number of unbroken weekly highs in a row in SI … well outside the bell curve … however I believe it is pudding time for GC to perform on the upside as there has been enough passage of time since the daily S3D actually occurred.

    My definition of a ‘good’ trade is one that provides zero angst and hence does not offer a second bite of the pudding … in other words, the entry level, once triggered, is not revisited.

  • convictscott

    Agree with second bite of the pudding :)

  • Ivan

    This is a great example of what I call playing chess … a series of if then scenarios:

    1) Break to the topside = Full size long with ISL in place and no further action
    2) Break to the topside = Full size long > ISL’d on Period of Entry = Full size short (on the back of a whip scenario)
    3) Break to the downside = 1/2 size short with a more aggressive campaign management than for the long > ISL’d on Period of Entry = Full size long (with normal campaign management.

    This also illustrates why I use the term ‘campaign’ as opposed to a ‘trade’. The markets really can be viewed as the ultimate game of chess.

  • Skynard

    Will take that trade on a break of 97, daily NLBL.

  • Skynard

    Market turned tail but so has the dollar. Damn!

  • http://www.facebook.com/profile.php?id=100001131611045 Exar Kun

    Love the 0FX – Banged 100+ pips in Aud/Jap this morning – No participation during all 3 retracements from 99.02 – 97.98 so short it to hell all the way down.
    Oh.. just realise I didnt see the Xmas lights at the hourly near 99.5… should have entered there instead…

  • convictscott

    Could someone please check this suspect data print with their data. Kinetic is telling me the high is 1397.1, whereas esignal and barchart are saying 1398

  • Ivan

    GC Q at 98

  • AMCabrera

    clearing eur long from yesterday. have a good weekend…well nm I will take a low tolerant short in the usd/jpy.

  • Skynard

    TOS 97.1

  • Careus

    97.1 @ Bloomberg and IB

  • Careus

    and what happened on that 10%? Market didn’t loocked back? What is duration of such continuation? Shape of bars?

  • Skynard

    Dollar catching a bid now as futes getting hit.

  • http://evilspeculator.com molecool

    What contract do you have mapped?

  • 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„¸

  • Daron

    get ready for a bounce today. I’m sure it will be impressive.

  • http://evilspeculator.com molecool

    May I also point out that there is a NLBL that lines up with the RTV buy trigger. So a push higher has higher odds of launching an outlyer.

  • http://evilspeculator.com molecool

    Hehe – dumb if you pay them free coin.

  • http://evilspeculator.com molecool

    Why worry about the 10% ;-)

  • Careus

    1% owns 99% in US..so..10% is like mountain….of gold or whatewer :)

  • Skynard

    Whats that, in equities?

  • Daron

    no dip buying yet. I’d like to see more divergence.

  • Skynard

    LOL, would not encourage that. This could be a W3 down. Dont could them but love to ride them:)

  • http://www.yepiclip.com/ yepi

    Thanks for giving me the useful information. I think I need it. Thank you

  • http://www.ebog.me/ ebog

    Thanks for giving me the useful information. I think I need
    it. Thank you





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