Pinned Down

Equities managed to surge higher in early trading but then got pinned down below their respective 25-day SMAs. A ramp & camp is not uncharacteristic in pre-holiday tape – thin participation will create spikes which then taper out as nobody is willing to bet against Bernanke ahead of a long weekend.

The RTV Buy was triggered earlier today and I’m long now with a stop below the previous candle’s low. However nothing much is going to happen here unless we clear that SMA – fortunately for the bulls the NLBL ahead at 1623 expires tonight. The NLSL below is situated right above the 100-day SMA – plus it’s a holiday week. We can guess where that probably takes us… range of pain anyone?

Similar situation on the NQ although no RTV Buy here – pinned below the SMA all the same though.

Platinum at its NLBL and I would be long here above it – short until then.

Inside period on cable tomorrow – that’s a nice setup, in particular as a low breach would qualify as an RTV Sell.


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This entry was posted on Monday, July 1st, 2013 at 1:55 pm. Both comments and pings are currently closed.


  • Skynard

    /ES at gap support, if this holds should bang higher.

  • Dyellowflash

    TP-ed shorts and going long a tracker. See if 2nd tracker gets filled later on. Its late here, and i gtg zzz…

  • Skynard

    Nice trading!

  • amokta

    Lets see how today closes

  • Schwerepunkt

    Seems with a whimper . . .

  • amokta

    Who is selling into strength, Kerberos? :-)

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

    Dust to Dust, ashes to to ashes.
    I’m going to stop drawing anti-gold T’s before this thing goes to infinity.
    http://s23.postimg.org/ffxpvvg8b/dust.png

    -DG

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

    you are a good troll.

  • amokta

    Well Kerberos was uber-bearish as i recall :-)

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

    Kerberos was a lot of things as I recall.

  • ridingwaves

    Vix still hugging that 360.. seems to have a tougher chin lately…

    http://s15.postimg.org/yth1xtoej/vix_glimpse.jpg

  • badflightrisk

    Don’t R.I.P. it yet
    Fearless hasn’t gotten his $85 hi ho silver yet

  • badflightrisk

    This has been a good area to pick up ARNA lately

  • ridingwaves

    thanks for reminding me…this is good area for trading it around my core…

  • Ronebadger

    Pilates is good for your core…as I understand…I need to work on MY core.

  • Darkthirty

    Chainsaw/splitting axe, best core workout there is

  • amokta

    If the cable should snap, then look out below.
    Of all the currencies in the world, the dollar bears the crown.

    And what of equities? – is there a downward price channel from the top. Channels are there until they are not. Rather than try to predict the future, better to take setups, aka Mole/CS/Ivan-style

  • convictscott

    There is an outstanding setup on $spx for tomorrow

  • convictscott

    Kerberos never traded – he was 100% troll

  • amokta

    Ok :-)

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

    I saw Fearless at the SanDiego zoo. (it wasn’t pretty)
    LOL.

  • amokta

    Careful, lets not have jovialities at the expense of absent compadres :-)

  • simonn1080

    What is the setup sir?

  • http://evilspeculator.com molecool

    I’ll post it tomorrow ;-)

  • amokta

    Give a man a pistol, he can shoot for a day, give a man a machine gun, he can shoot for a lifetime :-)

    http://evilspeculator.com/?page_id=24885
    (not sure if this helps!)

  • Th3_Acist

    That’s not true! As I remember he was a WW3 futures trader…right?!? ;-)

  • badflightrisk

    It would be nice to know what his thoughts on the metals are now. A lot has happened since his last post. Gerb needs to spring the bear loose or at least get him a internet connection.

  • convictscott

    Fakeout Sell, activated on a break of the daily index lows

  • convictscott

    I’m pretty sure that was him back on the blog yesterday as “littletrolly”

  • Skynard

    Really like those set-ups. Very simple and many times they are triggered on back tests.

  • amokta

    If it is not too much to ask of The Exalted One, could the fakeout sell set-up be added to the cheaters charter? :-)

    Anyway, looking at the last 6 spx daily candles, they all have very small bodies but long whiskers, and all are gap opens, this must mean something, surely.

  • convictscott

    Sky, I was talking with Mole about this yesterday. The greatest part of the edge contributor is that for the setup to trigger, price already has to be moving in your direction by breaking the daily low. This by itself is almost enough edge to trade off.

    The setups I trade work *best* where there is an obvious place for longs to be placing their stops. A week long rally after the recent decline has virtually every long being a new player (weak hand) so it is very probable that weakness will force them to jump ship. We have not got that weakness yet and it is entirely possible we have a second attempt at taking the trendline tomorrow.

    Bottom line is we have a WINDOW of opportunity for the bears to slay the bull. A bull failure right here would be a second lower high lower low, making it an official downtrend, and *should* cause the trend following bulls to jump ship, after enjoying an incredible trade.

    Tomorrow or the day after is crunch time for the bears. If they cannot set off an avalanche and the bulls retake the trendline, then new highs are a virtual certainty.

    A lot depends on whether the current rally is a big player distribution rally (selling off positions from instos to retail) or a genuine attempt by the big boys to retain momentum.

  • convictscott

    Fakeout sell works on a very simple principle. When price breaks an old spike high thats technically a “bullish breakout” and what should happen is that breakout buyers should pile in, pushing prices higher. However when this does NOT happen, and price actually falls it tells us there is no breakout buyers, ie the last sideline bull has bought and the underlying bullish pressure is weak.

  • convictscott

    “Anyway, looking at the last 6 spx daily candles, they all have very small bodies but long whiskers, and all are gap opens, this must mean something, surely”

    Yes it does mean something. It is price pushing into longer term resistance, causing cautious traders to bank long profits at the end of each trading day. In other words, evidence of distribution.

  • convictscott

    Note the volatility indicator on this, the high volatility gives an increased edge to Ivan’s setups.

  • ridingwaves

    I don’t know I had a 20 minute paddle out the other day that just plum wore me out…

  • convictscott

    Fearless was a good trader, with an extremely robust trend following method. His calls, like all calls, are garbage (one right, one wrong, one right, one wrong like everyone else)

    I saved his method when he posted it…

    Convictscott and others (except Mole ;p ),

    As per your request I am sharing a few things about the trend-trading methods I use that have helped my account to stay in the green. I only really started following my rules to the letters this year. In 2007 – 2009, I was using a timing based method to time the turning points, which allowed me to get out right before Lehman collapse and time my biggest short yet right before October 6 2008 crash, and also catching the February 10 2009 crash. Those are history now and the good time will not return for at least another year, so I’ve had to re-learn the best tools.

    When an average trader (and most E-Wavers I know) looks at an incredibly bullish/bearish chart, he/she immediately starts to pick the potential tops/bottoms to counter-trend trade it. DON’T DO THAT. Let’s be honest here, who has looked at the Ford (NYSE:F) chart and tried to short the heck out of it? Who has looked at the BIDU chart and tried to pick tops? Who has shorted AAPL a hundred times since March 2009? When you look at a chart and the moving averages are all aligned and pointing in one direction, the easiest way to make money is in the same direction. What I use are pretty standard set of moving averages – the 5, 20, 50, and 200. I have a set of custom MAs that help me better track them, but essentially they do the same things.

    Before I go further with my methods, let’s define one term – Acceleration line – the 5 day moving average of (open, high, low, close).

    A strong trend presents itself when the 200, 50, and 20 period MAs all point in the same direction. If the acceleration line points in the same direction, the trade is easy – buy on a weak (low volume) pullback to the acceleration line and close positions at the next resistance/support or hold until a confirmed two bar break of the acceleration line.

    A valid two bar break means an above-average volume break of the resistance/support, followed by a higher volume bar break of the same resistance/support and closing below (or above for bullish reversal) the low (or high for bullish reversal) of the first bar, provided that the bar does not close more than 47.2% off the lows/highs. A failed back-test means a low volume third bar (preferrably lower volume than the first breakout bar) whose high (or low for bullish reversal) does not exceed the high (or low) of the second breakout bar. Once all these conditions have been met, there is a high probability that the next bar will be a continuation in the direction of the first two bars until the next major support/resistance is met. This setup is exactly what tipped me off about Tuesday’s sell-off and my monster performance (two bar break of the SPX acceleration line followed by a weak back-test on Monday).

    In a strong trend, the first major pullback to the 20 period MA is to be bought/sold in the direction of the major trend. For example, those who bought XOM on Tuesday or yesterday near its 20 day SMA are doing really well now. I will certainly not look (or short and hope) for a break of the 20 day SMA on Ford; I would rather buy it at its 20 day SMA now. Remember – hope is not a valid setup. (Prechter has been ‘hoping’ for P3 for 17 goddamn months!)

    Once you have a confirmed break of the 20 day SMA, close all intermediate term positions in the primary trend and trade with the new short term trend, until such time when the 20 day SMA is broken again from the opposite side.

    A friend of mine who was a die-hard EWT trader finally gave up on EWT and started using the conventional TA methods and trend-trading methods last month (more than 18 months after I told him EWT is useless in Fed sponsored markets). I see merits in EWT for short term trading (as it lets you know at which point you’re wrong and must close positions), but the fundamental flaws in applying EWT is the trader’s bias and ignoring the supply/demand equation (hence why I always look to volume to confirm my setups). I use trend-trading methods and Fibonacci ratios for my trading in 2010, plus I started using the Zero in June. Mole has developed the best LONG-SIDE TIMING INDICATOR I have found. On the daily Zero, look for a spike below -3 (or better, -5) and if the next day the market makes a lower low (or better, close lower) while the daily Zero snaps back to 0, go long, no questions asked. Hold through the bullish reversal and hold until a confirmed two bar break of the acceleration line. If you did that in February, you would have racked up 170 SPX points, and if you did that in August, you would have racked up 170 SPX points. The time it takes is longer than the short-side, but 170 SPX points are still 170 SPX points. The money you win on the long side is worth the same as the money you win on the short side.

    Rule #1: When I trade with an established trend, volume really has no effect until it does.

    What I do is this – I use the daily Zero indicator to time the intermediate term bottom, and once I take my long position, I ride it through trend change. How do I know the trend changes from bearish to bullish? When I see a high volume bar break of the acceleration line (on A/D ratio > 10 and UVOL/DVOL > 9) followed by a higher close on the second bar on the daily chart (provided that the second bar does not close more than 47.2% off its high). Once this condition occurs, usually the third bar is a no-supply bar low volume back test of the acceleration line. During this time, it’s very easy to get faked out. BE STRONG, as long as the third bar does not break the acceleration line or retrace more than 61.8% of the gains from the previous two bars, you’re fine.

    Once all three bars are confirmed, the trend will be bullish. For how long? No one knows. All you do is you keep monitoring the daily bars. The first distribution bar (decliner/advancer ratio > 10 and DVOL/UVOL > 9) MUST break the acceleration line to signal a possible trend change. Once this occurs, you want to monitor to see if there is a second bar break of the acceleration line. If no, then don’t get faked out unless the third bar closes below the lows of the first distribution bar. Two scenarios here: 1) a confirmed two bar break of the acceleration line – dump most or all of your long positions (depending on your risk appetite) on the “no-demand” third bar back test; or 2) third bar closes below the low of the first bar after the second bar didn’t close lower – dump most or all of your long positions on the fourth “no-demand” back test of the acceleration line. Most importantly, pick your exit points right!

    Throughout the time you ride with the trend, volume will have minimal impact. Bears kept on complaining that the rally was running on fumes (decreasing volume) but the truth of the matter is – the MAs have already taken over after the initial short covering run. From that point on, MAs dictate the direction until several distribution bars within a short time window.

    Rule #2: Upon a break of the 20 day MA, GET OUT NO MATTER WIN OR LOSS

    This is stop-loss. Simple as that.

    Rule #3: Buy on the first touch of a rising 20 day MA and short on the first touch of a falling 20 day MA.

    Trade with the trend is 95% successful. Even for a three day hold. the reward/risk is pretty good.

  • Daron

    also Scott, today on the ES was an outside period, up-close.

  • amokta

    Thanks CS, you are our Moses, in the wilderness :-)

  • Skynard

    That is awesome! Think I’ll remain short the AUD for now. Currently long /ES from early morning (100 hourly test) Will pay close attention to the set-up here.

  • newbfxtrader

    Rate decision 12.30 am!

  • Schwerepunkt

    RBA rate decision and statement tonight at midnight and 12:30 am. Obviously there will be movement.

  • Skynard

    Yep, dam! That Bitch does move on RBA

  • Skynard

    Hehehe, Nice!

  • doublestepover

    It’s also one of Ivan’s Trend set-ups.

  • convictscott

    You can just call me “the exalted one” ;-)

  • convictscott

    All the setups I trade were invented by Ivan :)

  • doublestepover

    Yes, I was simply noting (per your chart) that in addition to the FO sell, it’s a combination of a Trend set-up (3S) and Reversal set-up (FO)

  • convictscott

    I prefer to take equities setups off the cash index (S&P 500 or DJIA) rather than es, because of the games often played out of hours with es.

    The volume discrepancy between Asian session and NYSE session is so large as to render the es out of hours as complete fraud. The opening 5 min candle of today traded 66 000 contracts and 5 min volume traded between 15000 and 50000 contracts for most of the day.

    In comparison the es traded 45 contracts on its most recent 5 min candle.

    When one candle has 1000 times the action of another candle on the same chart, then giving both candles equal weight is pure illusion. You can counter this to some extent by using tick charts if you *must* trade out of hours, but honestly there are better things to trade.

  • convictscott

    Correct :) I don’t trade 3-spike personally, it is a rare setup and most of the time you see one you also see another setup of some description (as is the case here)

    Subjectively I see no edge for the long side right now, as the long move is already somewhat extended and showing signs of weakness

    What would make me interested in the longside again is a short setup which will almost certainly get triggered in the next 2-3 days which FAILS, painting a bullish setup.

    IMO the market will find it difficult to rise from here without suckering shorts into a stop picking exercise first.

  • convictscott

    A gapncrap tomorrow would be a *delightful* setup, particularly if it fills this old gap.

  • Skynard

    Hehehe, been patiently waiting my friend:)

  • badflightrisk

    Thanks for sharing. The setups and the whole site is getting better by the day thanks to your combined efforts!

  • Daron

    That’s an interesting point, I never looked at it that way.

  • Daron

    Hey Mole, isn’t it also an IP on the EUR/USD daily chart?

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

    a toast, to the 20.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p28964907271

    it’s all mental M pre-holiday BS, but hey, that 20 has street cred.

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

    dam! a good post buried deep.
    this is like hunting for buried treasure.
    Fun!

  • Skynard

    That is what those 164 SPY calls were for, think we could see 1630-40 ramp. Can never tell:)

  • Ivan K

    From my perspective … there are two distinct types of buying in a market … namely, voluntary and involuntary … the former are buying to take on risk, ie opening a new long, whilst involuntary buying is buying because they ‘have to’ … shorts exiting.

    Both are involved in the creation of my FakeOut sell setup to a certain extent. The market provides clues as to whether, on balance, a break of a Spike High is caused by the former or the latter group … translation, not all FakeOut sells are created equal.

  • AmazingLarry

    There’s also that 50 and some crossing lines and stuff hovering above those stars falling from algo heaven…

  • Darkthirty

    Looks ripe for a T

  • convictscott

    AUD rate decision lots of whipsaw in a 20 tick range… attempting to break to downside. inconclusive

  • convictscott

    taking this if it triggers

  • convictscott

    hehe

  • newbfxtrader

    ah nice.

  • convictscott

    tick charts > 5 min charts for asian session FX trading

  • Skynard

    Flipped AUD, now long

  • newbfxtrader
  • Skynard

    15 min chart

  • newbfxtrader

    Looks good. Building an inside inside day. I will take the breach….

  • Skynard

    Double ID

  • Dyellowflash

    I was long aud/jap at 91.33 as well. Had a good fill, TP-ed most of it at 91.55 except for 2 trackers. Though down move not supported by 0fx, the momentum was quite strong.

  • Skynard

    Will be positioning long again /SB.

  • Skynard

    Nice, think AUD will be putting on the turbo boosters.

  • convictscott

    13 hours until you can call that an inside day…. also yesterday was not an inside day but a gap down below the low. FYI any lower close tomorrow that does not break .91065 is a retest variation buy.

  • Dyellowflash

    lol… not bad for banking in some quick coins. U stay in USA? How come able to trade during Asia hours?

  • convictscott

    Skynard doesn’t sleep – he waits

  • Dyellowflash

    haha… this looks like a profession tailored for the naturally insomnia pple =)

  • Skynard

    Lol, taking 100 pips a crack, staying long me thinks AUD. Next stop .9300

  • Skynard

    Double shifts:) Yes, live in the state of MI.

  • convictscott

    NEW POST!!!

  • Bun Dance Kid

    Mole – Zero FX is frozen. Time clock changes but chart not updating. See screen grab





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