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All Quiet On The Western Front
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All Quiet On The Western Front

by The MoleAugust 4, 2010

I can’t tell you anything you don’t know. We live in the trenches out there. We fight. We try not to be killed. Sometimes we are. That’s all.

Alright, that may sound a bit too fatalistic. After all we stainless steel rats did have a pretty good idea of what most likely awaited us this summer. So it’s no big surprise that we are close to pushing into Soylent Green territory. So, what lies ahead if the SPX pushes above its June highs? Here’s how I see it:

Soylent Blue is officially kaputt as soon as we breach 1131.23 – but quite frankly, it’s been almost academic since the last big gap and push up. My target range for Soylent Green remains the 1160 – 1170 cluster. There is a chance we may push higher, but if we do the ending diagonal theory ends if wave (v) extends beyond the length of wave {iii}. As we are most likely still in Minuette (3) we’ll have to wait it out. Similarly Minuette (3) cannot push beyond 1146, otherwise it would be longer than Minuette (1). Either occurrence would push us into option three I mentioned yesterday – meaning that we are not in an ED and instead are sub-dividing into a forceful third wave to the upside.

So, those are the levels you should be concerned about:

  • 1131.23: Soylent Green becomes our main scenario by sheer process of elimination.
  • 1146: Soylent Green is most likely a motive and we are in a third wave sub division. Which means the ED is dead and that a lot more upside is possible – there may be the chance that we’ll paint new highs for the year and even need to adjust our wave count.
  • 1088: Meaning we turned on a dime tomorrow and breach 1088 – which would breath new life into the Blue Plate Special.

Copper is still pointing up and we’re not going to argue the point. As I’ve said before – copper is calling the shots and when it turns equities will most likely follow suit. Wait until you see the white in their greedy little eyes.

The gold/silver ratio turned where I thought it would. That is a good start but let me caution you that we may see a little dance on the lower line before equities are ready to make a turn to the downside. As a prior precedence look at the April/May period before equities rolled over.

Before you run – after hearing rumors of Tim Knight converting to the dark side I decided to be a good fellow bear and put up a post over on the Slope. Nothing new really for any of your regulars but it does offer a summary of my long term picture plus it’s free, so go check it out!

Finally, something very disturbing occurred to me today and I have to announce with deep regret that Bob The Horse needs to die:

Of course I can’t let this stand, which is why I have already sent out my mutant ninja team to … ahem … ‘correct the situation’ if you will. So, if you have any parting words for Bob, now may be a good time – but better hurry…

Cheers,

Mole


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://evilspeculator.com molecool

    Sorry Bob – but you can console yourself with the knowledge that it's for a worthy cause.

  • doublethink

    Chart: NQ
    http://www.screencast.com/t/ZjA1YzE3

    Fuckin' A. I have got to get a life!
    Or a new screen name (he he).

  • Rayden

    The pop music indicator is saying we are ready for a big drop. Usually drops are preceded by songs about infidelity, breakups, or generally messed up relationships (by contrast, bull markets have songs about love, and bear market rallies songs about sex). The timing of this is not exact, it could be months or it could be immediate.

    Some background: Break Your Heart (Taio Cruz) was at the top of the charts in April, this is a song about infidelity with a nonchalant who-cares attitude, and which nicely pointed to the flash crash. In the past month or so the top song has been California Gurls (Katy Perry), which is sickly sweet (blech) and just right for a bear market rally.

    Now there's finally some *serious* negativity: Love the Way You Lie (Eminem/Rihanna) has been #1 for a few weeks. Just read the lyrics and think of it as being written about the market πŸ˜‰ or about the economy or about politics, and you'll get the mood of the moment.

    “If she ever tries to fucking leave again
    I'mma tie her to the bed
    And set the house on fire

    Just gonna stand there
    And watch me burn
    But that's alright
    Because I like
    The way it hurts
    Just gonna stand there
    And hear me cry
    But that's alright
    Because I love
    The way you lie
    I love the way you lie”

    Flashback to 2008: some of the top songs were…

    Hallelujah (Jeff Buckley): “Love is not a victory march / It's a cold and it's a broken Hallelujah”
    Take a Bow (Rihanna): “Don't tell me you're sorry 'cause you're not / And baby I know you're only sorry you got caught”
    Viva la Vida (Coldplay): “I used to rule the world / Seas would rise when I gave the word / Now in the morning I sleep alone / Sweep the streets I used to own”
    Disturbia (Rihanna): “No more gas, in the red, can't even get it started / Feels like I'm going insane”
    So What (Pink): “I guess I just lost my husband / I don't know where he went / I'm gonna get in trouble / I wanna start a fight”

    These are all very negative. You can pretty much *hear* that a drop is coming from that sequence. The timing is not very precise, since music started turning negative in March 2008.

  • http://evilspeculator.com molecool

    You're turning into a regular socionomist, Rayden! πŸ™‚

  • DudePlunger

    Hey rats, I've been gone for another week due to moving out of my parents house :). Living on your own is great, but unfortunately I have to wait another week for a hard line to internet. Looking forward to September :D.

  • mrBozo

    Let's take a walk down memory lane Aug 25th 1987 (Top of the market) 337

    No. 1 song Aug 1987 La Bamba which translates “To stomp”
    http://www.youtube.com/watch?v=PK2HANwsUWg&feat

    Now Oct 20th 1987 (216 loss of 36%)

    No. 1 song Oct 1987 (How ironic and it sure got BAD)
    http://www.youtube.com/watch?v=uG5NhkxQJQc

    BTW other noteable songs from 1987

    Shake you down (Bears)
    Jacob's Ladder (Bulls)
    Lean on me (FED for the Banksters)
    Shake down / Break down (Bears / Bulls)
    Nothin' going to stop us now (Bulls)
    Didn't we almost have it all (Pigs)
    Lost in Emotion (Bulls)
    Mony Mony (Pigs)
    Living on a prayer. (Everyone else)

  • mrBozo

    http://www.youtube.com/watch?v=q1ZV4Mx7tw8

    When Black Friday comes
    I'll stand down by the door
    And catch the grey men when they
    Dive from the fourteenth floor
    When Black Friday comes
    I'll collect everything I'm owed
    And before my friends find out
    I'll be on the road
    When Black Friday falls you know it's got to be
    Don't let it fall on me
    When Black Friday comes
    I'll fly down to Muswellbrook
    Gonna strike all the big red words
    From my little black book
    Gonna do just what I please
    Gonna wear no socks and shoes
    With nothing to do but feed
    All the kangaroos
    When Black Friday comes I'll be on that hill
    You know I will

    When Black Friday comes
    I'm gonna dig myself a hole
    Gonna lay down in it 'til
    I satisfy my soul
    Gonna let the world pass by me
    The Archbishop's gonna sanctify me
    And if he don't come across
    I'm gonna let it roll
    When Black Friday comes
    I'm gonna stake my claim
    I'll guess I'll change my name

    I'll be playing this on Black Friday Aug 13th

  • Guest
  • convictscott

    Its kinda too early to call it, but the 60 min copper (HG U0) is showing definite signs of topping. Unless it turns around and goes up right here right now this could be a top.

  • jigdaddy

    hack the iphone and tether it!!!

  • juju2

    Scott, RE: sugar: what have you targeted as the first major resistance?
    I have $17.56. Will likely extend a bit further.
    Would like another viewpoint, as I never believe I have all of the answers.
    Thanks much,

  • http://evilspeculator.com molecool

    Maybe I should keep posting on the Slope – got almost 400 comments over there… sigh…

  • UayBalam

    I'm not a big reader of the Slope but every once in a while ill pay a visit. And I like to think quality > quantity is where it's at, and IMHO evil > hope

  • Bob the Horse

    The truth hurts Mole. Not as much as shorts do right now but still hurts.

  • convictscott

    Juju,

    As we speak I'm doing my daily analysis on Sugar, so its a good time to lay down some science on this.

    Lets look at the evidence for both bull and bear case. IMO the best trades often happen when one set of market participants are trapped on the wrong side of a trade, and being forced to get out keep driving the impulse of the market in the opposite direction, creating a positive feedback loop that has a life of its own. The potential (not the prediction, predictions are for muppets) exists for that here.

    Yesterday SB V0 pulled back to the 20 EMA and stopped hard and started going up again. It generated a hammer candle for the day and closed above the 200 SMA.

    In other words thats a *textbook* long setup, on the surface of things. It should, all things being equal, be a moon shot tonight, to new highs. For a few reasons I'll outline below I suspect thats not the case, but lets leave that aside for now.

    Imagine 2 boxers, one is pummelling the other. Everyone is looking at the boxer doing the hitting, thinking he is the one to bet on. The smart guy is watching the boxer taking the best hits of the other guy, and not going down, he knows the fix is in.

    Sugar went up last night, thats good, right?

    We arent at that point yet but….

    Basically in this situation, if the price does NOT immediately start to go up and keep going up, its a sign that something has changed in the structure of the market. The bulls SHOULD be able to run it up tonight, as a pullback to moving average support (even stronger with hammer candle) is on EVERYBODYS textbook favorite trades. There is *always* dip buyers in an uptrend. Fuck it, if it had occurred a few weeks ago, I would be taking it long.

    If price were to break the LOW of yesterday tonight I would consider that very stong evidence that the bulls no longer have the power to keep the uptrend going, and the fix is in, and the buying power of the last few months is now exhausted and the longer term downmove to continue retracing (correcting) the multi-year bull market has resumed.

    More likely the bulls will have another go tonight and try to push to new highs. IF this push fails (AND I'M NOT IN THE PREDICTION BUSINESS, THATS FOR LOSING TRADERS AND I AM A WINNING TRADER) that would be a very nice short setup. IMO the most likely scenario is for the bulls to try and take it to new highs tonight. IF IF IF that push fails, thats a great setup for the short side as longs will be trapped and forced to cover. Other longs with profits on the table will sell to lock in a diminishing profit, and new shorts stalking an easy kill will pile onto the flabby sugar bloated long carcass, stabbing, kicking and biting sugar longs to death with their razor sharp bear claws and shit.

    In other words we are at a point in time, where, just a little weakness here could kick off a whole lotta bearishness.

    So whats the bearish evidence here, and why is it so compelling?

    Take a look at the big picture first. Last years uptrend is an elliot wave motive fractal that Robert Prechter got off redtube.com, its pure elliott porn. Everything is textbook there, including the classic commodity blow-off top.

    http://www.screencast.com/users/Scottpb/folders

    OK lets look a little closer, hey. Just like the dow theory non-confirmation between transports and industrials, one of the best signs that bull markets are ending is a discrepancy between different months of the same contract.

    So howsabout we take a looky at what sugar looked like at the top?

    See how October made a squeaker high while March 11 fell away?

    http://www.screencast.com/users/Scottpb/folders

    That, my friend, reeks of dodge for an uptrend. Particularly so at the end of that sort of move.

    Lets look a little more closely at the final days of sugars big adventure. Typically at the end of any move just before a final push we see a volume spike well over double normal, standing erect out on its own. This also works kickass on 5 min ES charts BTW, check it out. Anytime I have a position and I see massive volume, not a little bit more, but 3 times normal, I become suspicious and start to book profits.

    Take a look at Sugar near the top

    http://www.screencast.com/users/Scottpb/folders

    That, my friend is a picture of a stinky uptrend which looked primed to collapse, and did, in fact collapse.

    You also mentioned COT (commitment of traders) In Feb, the exact top, see how Commercials were net short (shortest for a while), and Non-Commercials were net long (and longest for a while) Basically Commercials are wrong for the whole move and then right at turning points, while non-commercials are right until they get massively fucked at turning points, which is precisely what happened here.
    http://www.screencast.com/users/Scottpb/folders

    OK Thats all ancient history, so what happened since then? It popped like bubbles do, traced a texbook 5 motive waves down, and an even more textbook 3 back up to 61%. Even painted a sexy as fuck shooting star at the 61% level, indicating REJECTION of the crucial 61% level. Fib levels arent magic, but when the market give you evidence that it is interested in a fib level, you pay attention.

    If I noticed it, others did too.

    Take a look
    http://www.screencast.com/users/Scottpb/folders

    OK the bearish evidence doesnt end there either. Take a look below, at Sugar right now.

    See how we have another tell-tale volume spike just before the latest push to new highs? Also take note that October has a down candle real body (red candle on my chart) and March next year has an up candle real body (green on my chart)? That is an intermonth non-confirmation (rare except at turning points), and a neat sell setup by itself when accompanied by a break of the daily lows. Its more compelling for weakness given that the near month is weaker, so its predicting weakness sooner rather than later.

    http://www.screencast.com/users/Scottpb/folders

    Basically we have a situation where the evidence is the ease of movement is now to the downside, once the current push exhausts itself.

    If the bulls cant push it to new highs tonight its a sell. So how to trade it?

    1) Leave an order on a sell stop 1 tick below the daily low today, with a stop loss 1 tick above the daily high. If it hasnt moved at least 1R in your favour within 3 periods, its not acting right and get out win lose or draw.
    2) If it paints an up candle tonight without making a new high, CHANGE the sell stop order tomorrow to sell 1 tick below the new low, with a stop 1 tick above the new daily high.

    IF it pushes to a new high here, watch and see HOW it gets there. Is it a squeaker double top, where it can barely get above the old high and can't hold it? If so, thats no longer consistent with an uptrend. If, however, it shoots up to new highs and behaves just right, keep watching it for signs of exhaustion.

    If you still have your bullish bias after all that, go long on the break of yesterdays high and watch it carefully.

  • http://evilspeculator.com molecool

    Expect to be relieved of your pain momentarily – mmmmwwwuuuaahaaahaaahaaa!

  • http://evilspeculator.com molecool

    Meh – I'm pretty happy with my meager existence over here – should not complain….

  • sloth_bear

    Party pooper for the bulls?:
    http://screencast.com/t/NGFjZjY2YWQ

    Not sure yet, that it will break but, good to keep an eye on it!

  • sloth_bear

    A longer term view on EUR/USD:
    http://screencast.com/t/YTdjNTBhMmU

    We are a few days (hours) to break down IMO

  • sloth_bear

    Broadening top on AUD/JPY?:
    http://screencast.com/t/N2M5ZTNmMz

  • chronographics

    Mole how about a variation on your soylent Green?
    If we are in an Ending Diagonal and it more and more looks like it – market internals also seem to point that way, then I have the 1121 high on the 27th July as 3 of C with 4 finished at 1088 and we now have just had A of 5 of C finish at 1127 with perhaps B already done. Which leaves us with just C of 5 of C to come and a target depending on multiples and where 4 ended of 1130 to 1160.
    The biggest difference is that a breach of 1146 would not necessarily mean a shot to the moon. I Like this count as it has a better timing scenario with my Euro outlook.
    Sorry chart problems today with posting πŸ™‚

  • chronographics

    It looks a bit grim when you chart the “comments” versus 'likes” ratio, not that i would be brave enough to say that… πŸ™‚

  • sloth_bear

    It is exactly Daneric's theory, here is his chart:
    http://4.bp.blogspot.com/_TwUS3GyHKsQ/TFnG-BskK

    Credits: http://danericselliottwaves.blogspot.com/

    I lean toward this one too.

  • chronographics

    So on, that looking like a 1136 top give or take. Although we may be still in the triangle, I always found counting the little ones hard – so many variations… so may be a slight adjustment needed if that is the case. It just all smells wrong here, and if it smells like it, and looks like, it then SELL IT!

  • chronographics

    Nice chart – yes break of the RSI up trend one would expect to see some fireworks so if that doesn't happen that is telling us something as well.
    I always found readjusting my trendlines on the price via the trendline points on the RSI very useful, do you use that as well?
    EG match the time of the RSI low and draw the trendline on the price graph based on that.

  • sloth_bear

    No, I will try!
    I usually use RSI to spot divergences and to see when it leaves the overbought/sold condition if it stay embeded one time frame higher, hard to explain…
    Eg: RSI start to curl up from an overbought condition in 5 min time frame, crosses the 50 mark, and still point up, to confirm a change in trend I go to the 15 min to look if it stays embedded in the oversold territory, in which case I don't buy the move…
    I don't know if it's clear :-/

  • SW6

    Mole, as a Zero Sub is their a real time ES chart available too? I'm trying to make sense of an old comment in the archives.

  • sloth_bear

    ST update for EUR/USD shorted @ the center of the light blue channel, stop above the center, we'll see:
    http://screencast.com/t/MzM4MzE3NTg

  • SW6

    Did you use a limit order to get in or just watch it like a hawk?

  • sloth_bear

    I got in with a market order (filled @ 1.3166) and placed my stop @ 1.3177, not sure about this trade, it already broke the center line, let's watch like a hawk where we are going…

  • chronographics

    yes understand that as I use similar – always pays to see what the time frames either side are doing πŸ™‚
    big bounce in EUR here, would like to see it hold below 1.3200 otherwise we may see one more new high before down.

  • sloth_bear

    Yes, looks more and more like a new high is in the cards…
    http://screencast.com/t/ZTUzMjYwN

  • sloth_bear

    Waouw what a post, I wonder why Mole prefers to have 400 cheerleaders comments than a few of this quality πŸ˜‰

  • Bob the Horse

    low volume squeeze in Europe this am, totally boring. Would just love it if Trichet comes out with a surprise rate hike! Chances = 1 in 1,000,000 sadly.

  • doublethink
  • sloth_bear

    We are still making lower highs on AUD/JPY:
    http://screencast.com/t/OGZiMzU4Yj

  • doublethink

    Thanks. That is the most informative chart I have ever seen; “chart by wire,” like that great European product putting Boeing to shame.

  • doublethink

    Chart: NQ
    Updated 4h chart.
    http://www.screencast.com/t/YmFlMGM2Y

  • sloth_bear

    More reasons to be bearish on EUR/USD (sorry for the quality, got my baby on my knees :-s):
    http://screencast.com/t/YTAwNmQ0

  • sloth_bear
  • doublethink

    61 to 39? Time for me to think about Greece but you my friend can't have no double tops; Baby On Board and the better half too.

  • sloth_bear

    Thanks! I like the way you draw the wedge.
    Are your red lines representing a pattern?

  • sloth_bear

    61 to 39? what does it mean?

  • http://thefxspeculator.blogspot.com Onorio

    Initial claims up 19k, prelude to tomorrow?

  • SW6

    Why is the FTSE slowly killing itself?

  • convictscott

    Heeey, ES U0 just dropped 5 handles in 5 minutes. Ideas?

  • Bob the Horse

    initial claims worse

  • convictscott

    Thanks mate πŸ™‚ Weird how EURUSD went up with it too.

  • juju2

    Scott: I learned several things from your in-depth analyses. For that, I thank you very much for taking the time.to in explaining in such detail.
    We both agree that there is an opportunity to short sugar.
    Obviously, once sugar hits a bottom, fundamentally (suppply/demand) along with Cot, that we have a potential for an explosive upside.
    Once that bottom has been confirmed, I am thinking in terms of a December contract.
    Thanks again, and let's stay in touch.
    jujubeez@comcast.net

  • sloth_bear

    And an overthrow? Ouch!:
    http://screencast.com/t/OGI3YzUx

  • SW6

    Dear Gold Market,

    please go back to killing yourself.

    Love, SW6

  • doublethink
  • doublethink

    Read Mole's post above: “Most Active Members.” When I saw that–without any “likes”–I just about crapped my shorts.

  • convictscott

    Hit me up on skype sometime if you want to discuss Sugar etc. I'm in Australia so I'm around weird hours, skype handle is scottphillipsau , email is sphillips at nologic dot com

  • doublethink

    I draw red lines to determine whether there's any symmetry somewhere. Don't know no rules…yet. Hate rules.

  • juju2

    I have a lot of family in Coffs Harbor, Sydney, and Melbourne.
    Agree, let's stay in touch.
    Best,

  • Moleasses

    opening bell;WELCOME TO P3!!!!! 5W MOTIVE DOWN…hope we get some retrace?

  • http://www.flickr.com/photos/dabasia/sets/ Croozer

    I think you're about to get a retrace to new highs….

  • gsavli

    let's see. TLT up, FXY up, USO down. Hmmm….

  • ricebowl

    Very sorry that things worked out this way. Good luck in your endeavors. I always had a lot of respect for you and your analysis.

  • doublethink
  • http://etfstocks.typepad.com/markets/ Serge
  • DarthTrader

    Yes, So now we know how to get rid of posters . . .

    Just click like on every post soon they will pass our Glorious Leader

    who will then Devour them for their Impudence

    Yar!

  • BullandBear

    I've noticed so many people here looking for P3 about to start, yet Prechter has been wrong for an ENTIRE year about that. Today, is the one year Anniversary of when he initially went short at SPX 1000 on August 5th, 2009. He went to 100% short at SPX 1038 for an “average” at 1019. ON November 23rd, he then went to 200% short, with the SPX at 1106. As a result, his followers have lost a ton of money.

    Duncan at Planet Yelnick feels that the top in 2000 was Wave 3 and that we are in a huge Wave 4 that could last out till 2016. If that is indeeed the case, then any “perma-bear” like Prechter and Hochberg are going to continue to be wrong, and lose out on making money in a big “sideways” trading range, from both sides of the market.

  • telacimr

    The market's down, yet energy, materials, industrials, discretionary sectors all outperforming. Not a good sign for the bears.

  • Bob the Horse

    no – he has been wrong since 1987. He thought the 1987 crash was the start of a total collapse and has been calling it down ever since. He is a muppet.

  • DarthTrader

    He called the Low in 2009 rather well and the high preceding it . . .

    That said I give it a 50 50 chance of market continuing to rally into October then a Rip Down after the 8th

    Either that or we push down hard within 10 trading days

  • Bob the Horse

    I'm not saying he has never had a good call, just that these are like an oasis in the desert.

    I used to subscribe to EWI and nothing will persuade me otherwise that he is, and remains, a cunt.

  • bshah

    Any reason or just “squeeze the bear” out campaign ? CAT is flying for no apparent reason.. From July 5th, it's been up 16 days including today vs down only 5 days…?

  • telacimr

    Normally when the market is down, the defensive sectors outperform and the higher beta sectors underperform. But today is twisted.

  • gsavli

    nothing is twisted. almost all the sectors (except for xly and xlb, which were trading marginally higher) were in red at the open. tlt and fxy considerably up, uso down. what does this setup look like?

  • Tooncez

    RBW,

    Here's the original again from the first post:http://screencast.com/t/NmNiYjQ1Y

    Since you asked about different time frames how about the hourly (green leads yello) http://screencast.com/t/Mjk5MDAyYT
    And here's the 5 min. http://screencast.com/t/NWQwYWZkN
    I suspect the smaller impulses are getting washed out by the bigger ones nearby on this timeframe. red is a fail.
    The 1 min is a little tough to interpret because the data keeps blinking in and out, but there's still a little there:
    http://screencast.com/t/Yzk3MzNi

  • telacimr

    When I say outperforming, I mean outperforming the market, i.e., down less than S&P. Even now as the market is falling hard, the higher beta sectors are still outperforming. That's not normally the case when the market makes a meaningful fall.

  • gsavli

    oh, that. well, i think we are in topping process and we may see some wild swings and weird stuff, before we finally go down.

  • telacimr

    Yeah, it's August. How many people are actually paying attention to things right now? Come the Tuesday after Labor Day, things should start making more sense.

  • ricebowl

    Closed Aug 46 QQQQ puts at a small profit. The other puts are so far OTM at this point that it's not even funny. Am thinking about buying calls, but I don't really like the risk/reward here.

  • amokta

    Ok, are we there yet, and more importantly, where are we going?

  • SW6

    IMHO there is no meaningful fall until the spx declines to ~1060. We are still in distribution mode. And that means gather as many bag holders as possible. Not taking any pleasure in that, mind you; people will be hurt.

  • Wave_Surfer

    Ya. It also takes too much time to read 2,000 posts a day.
    I would rather read a couple hundred and use the time I would have spent reading the other 1,800 posts studying charts.
    Plus, the posts here are more likely to have content in them, so they take more time to read than a few hundred posts other places.

  • http://evilspeculator.com molecool

    LMAO!!

  • skynard

    This market is being chased at, we are near that inflection point. All in at 1150 if we get there.

  • Bob the Horse

    Possibly, though August 2007 was when the reality finally hit. All seems a bit similar.

  • http://evilspeculator.com molecool

    Can't argue with you on that. But for me personally it was the genesis of various momentum indicators we successfully employ now. Which kept us expecting Soylent Green (i.e.summer of pain) when most bearish pundits were betting on a big slide.

    Long term however I agree with Prechter that this market is going down – yes. I have however learned to not solely rely on wave counts as doing so leaves you at risk of painful lessons in being too early.

  • telacimr

    Don't get me wrong, I'm all for the market falling off a cliff. But my systematic strategies have flatlined lately in terms of daily volatility. They move +/- 10 bps each day it seems. So that suggests to me that we're in a lazy summer period with not much sense going on in terms of relative movements across markets.

  • telacimr

    It also feels like the market wants to front-run QE2, but then realizes if the market goes up too much, QE2 won't materialize. (You yourself have mentioned that you think we need to go lower first.) So we seem to have settled into some back and forth choppiness. The jobs report tomorrow will likely shake things up a bit.

  • Bob the Horse

    Things I look at tell me we are going to fall off that cliff. It's never 100% crystal but I am not a natural bear and you could not pay me to buy an equity with your money right now.

  • telacimr

    Well, I am glad to hear that both because I am short ES from 1125 this morning (shorted 1121 yesterday got stopped out) and because I respect your analytical framework.

  • doublethink

    Chart: NQ
    Catching this bus folks?
    http://www.screencast.com/t/ODVhYzdhY

  • Bob the Horse

    mkt has actually gone through my mental stops (1125 and 2830 estoxx) but I ignored it.

  • sloth_bear

    Just came back, thanks for your answers (I will “like” your posts ;-))…
    Not sure about your count, would be great if it materialize, because… … I have the same… LOL!
    Here he is (I'm in the EUR/USD bus):
    http://screencast.com/t/NmQzNDQ3MmE

  • telacimr

    Another bitch to deal with is this culture of equity that we have–epitomized by Greenspan's comment this weekend about “the marketing going up would be the best stimulus” coupled with an enormous long-only money management industry that exploded during the secular bull market from 1982-2000. So many vested interests in not letting this market fall to a reasonable fair value (just like what they're trying to do with housing). It's insanity-inducing.

  • Bob the Horse

    Social democracy is founded on rising asset prices. Because debt has replaced religion as the primary means of controlling the proletariat, rising asset prices are essential to social order.

  • telacimr

    Given how ill the system is, a break down of social order may ultimately be beneficial (if ugly in the interim).

  • skynard

    Europe fell hard today, it would seem US markets shall follow. She's loosing her grip now it seems. IMO

  • kokoro33
  • DarthTrader

    If the Below were to happen, then I would Expect the Fed to Advise the timing for release to be on August 19th or 20th as they love to set up the Shorts and Skewer them on Option Expiration day as has happened 3 or 4 times during Times during Bernanke's Tenure. That would also presuppose a strong bearish before hand . . . if not then maybe the release would happen in Sept . .. which is also closer to elections . . ..

    James Pethokoukis hears rumors of an August surprise coming from the White House, one that will attempt to win backs the hearts and minds of voters dismayed at the failing economic policies of the Obama administration. With the government fully in control of Fannie Mae and Freddie Mac, Barack Obama may issue an order to forgive portions of underwater mortgages processed through the GSEs, where negative equity approaches $800 billion overall. Some financial houses have begun quietly preparing for the possibility: Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011. […]

    http://blogs.reuters.com/drudge.html

  • Moleasses

    Remember when ronald reagan was president,we had bob hope and johnny cash,now we have no hope and no cash!

  • sloth_bear

    Can't wait for this to work!

  • DarthTrader

    Yes, Ironic that Reagan icon of conservatism started this Washington Wall Street Corporate Socialist movement that grown and grown ever since.

  • Tronacate

    Reagan put the middle class on the road to destruction with his regression of the tax code…….old fool

  • Tronacate

    ES painting a pennant on the 60min…….”usually” resolves in the original direction of the pole…..well see

  • fisheggs

    test

  • Tronacate

    Fuck the responsible people again…….this could cause a major uprising of the people paying extra on their mortgages to get debt free……..

  • ricebowl

    ^VIX looks horrifically ominous for bears. All this sideways action has relieved some time pressure. While I'd love to be shorting this, this has played out completely differently from my expectations a couple of days ago, and the only thing I am considering doing here is averaging down Sept puts that I already held.

  • Tronacate

    RIMM might be putting in a leading diagonal…..down

  • ricebowl

    BTW, to clarify, ^VIX looks similar to back at SPX 1120 ~ 1140 in March.

  • http://evilspeculator.com molecool

    I don't see a clear edge on RIMM right now.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    You look vaguely familiar…. but where's BOB?

  • http://evilspeculator.com molecool

    I think the death knell to the working class was when he ordered PATCO to return to work. This set a precedence – before that event stocks of affected companies usually dropped when there were layoffs. After that event the attitude changed considerably – these days when companies announce layoffs the stock usually goes up.

    Reagan set a precedence which was one first step toward the destruction of the middle class and worker's rights. Oh, and he tripled the deficit among other things.

  • http://evilspeculator.com molecool

    I guess my mutant ninja team caught up with him πŸ™‚

  • Tronacate

    maybe bullish wedge on the 5min…….

  • Tronacate

    Exactly……..and all the repubs think he's such a hero……..phucktard imho

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    as your countryman once said “we should forgive our enemies, but not until they're hanged”

    BTW, does zero confirm this hamster's view that we might start droping soon?

  • doublethink

    Chart?
    Nah…let's do a video to welcome the a-b-c up to (ii). And no, it's not Paris.
    To set the mood as Mole likes to say.
    http://www.youtube.com/watch?v=Zmzv5xJ4wE4&feat

  • DarthTrader

    Real Funny, Bob

    For that Smart Alleck Comment you are now in Trouble. I just added to your Like Total

    Can you feel the Eyes of the our Glorious Leader

    who will then Devour you for your Impudence

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    nahhh… me? just the janitor …

  • http://evilspeculator.com molecool

    Actually I would not be so sure. It's also possible that this is basically sideways consolidation. The longer we cling to this level the higher the odds we push higher.

  • moslof
  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    yes… another 3 days basicaly sideways would consolidate this sucker for a rise… we need a drop or we'll be wasting correction time

  • BobbyLow

    Just another exciting day in the hood. About 10:45 AM things seemed kid of flat so I went out and mowed about one half my lawn until 11:45. I came in to see that we were about 4 points down so I went out and finished mowing my lawn. Finished at 1:30 and we were still about 4 points down. So now it's about 2:22 and we are now 3 points down.

    BTW, at 2:22 PM, we are at 35% of average daily SPY Volume.

    Either this thing is going to fail in a never before seen apocalistic like manner or they will have been able to pull the most amazing Con Job in the history of mankind.

  • Tooncez

    Ridiculous gld/slv fractal. Maybe it will tell us how this thing plays out…
    http://screencast.com/t/ZDRhOWRiYz

  • bshah

    wow… keep forgiving those who committed crimes and hang the ones who abide by the law of this fucking land… here i am trying utmost to be regular on payments starve my kids once in a while, wife working night shift and possibly she may be loosing job in recent job cuts annoucements and dick heads are giving everything back to those bastards who didn't even contribute a dime to the economy.. .we came here to study, paid, got work visa, paid, got green card paid, every time/ year paid tax and yet getting back … well you can afford so get 2% more on rate..

    those madoff's are watching TV in an exclusive jail cell and we are working in scorching heat…

    wow….

  • doublethink

    Chart: NQ
    http://www.screencast.com/t/M2RmZTFjN
    Okay…I'm going back to lurking for awhile. Being “most active” just behind the blogger is too much. Good luck to all!

  • Tronacate

    It's really disturbing to see the destruction of people who really work…….sad sad sad

  • Tronacate

    Market has a hard time believeing we are heading for a full blown depression…….the only way out is a major military conflict…….look out Iran

  • Tronacate

    over a million shares of RIMM traded on the last 5 min bar…….ran it up a little and dumped like crazy

  • Gary_UK

    http://a.imageshack.us/img683/4879/dow1930todow

    Not my work, but let's see what happens in next week or two….

  • bshah

    May be you follks have come across this & so many other stories..
    http://www.nytimes.com/2010/08/03/us/03unemploy

    People are even running out of their unemployment benefit… For the person in the story, what she did wrong is worked .. Instead had she been on a food stamp, no worries…. macho govt will send you money/food/ hack.. even home and car… for free.. who is paying.. Me Shah…

    god help those souls..

  • http://evilspeculator.com molecool

    LOL – you guys of course realize that all these analogs basically come down to Elliott waves? πŸ˜‰

  • http://evilspeculator.com molecool

    Indeed… I saw a report on ZH that indicates Israel may make a move on Iran as soon as this month: http://www.zerohedge.com/article/vips-sends-mem

    Scary – but I would not be surprised.

  • http://evilspeculator.com molecool

    You couldn't find any Rammstein? I almost fell asleep… this tape is boring enough!

  • http://evilspeculator.com molecool

    My thoughts exactly.

  • http://evilspeculator.com molecool

    Well – he was a good actor πŸ˜‰

  • BigIslandLife

    Great chart work Mole, you do some great work as usual and expected shame I had to see it at Tim ay's place
    Oh and Bob saw the little “like” skirmish going down so I stopped by to help you out Muwahaha

  • finansreven

    While I have just finished a 13 hour work shift here in Europe, the market decided to stop my long out. I'm trying another one, with not only the risk of giving back my 5 point profit, but put the stop at 1114,5 so I risk another 5 points.

  • http://evilspeculator.com molecool

    How could you get stopped out in such a tight range?

  • http://evilspeculator.com molecool

    All that stuff has been posted here and then some! You just need to swing by more often! πŸ˜‰

  • http://evilspeculator.com molecool

    I hope Bob realizes that it's a joke!

  • http://evilspeculator.com molecool

    BTW, if you like or dislike a post you can actually vote right above the comment box.

  • finansreven

    I put in the stop yesterday at 1121 (5 points profit). Got stopped out today while I was working and just bought again at 1124.5. Placed a stop now at 1114.5. Hope it is wide enough to survive potential swings tomorrow while I am working.

  • bshah

    if i can read it.. right ? what's in for tomorrow… I say move up to 1150… and i get screwed hurrreee…. now i don't see any of your posts mole…

  • bshah

    what a close.. now tomorrow jobs report is so wide range in expectation that “market has already counted the 9.6 or 9.7% unemployment”.. so.. what… hey… when it's already priced in.. only one way to go.. is to UP… Apparently there is no governing body on government.. he he..

  • BigIslandLife

    thanks, try to get by once a day and catch your main post, must have missed it, I am sure Bob does and if not wait till he see's today's total LOL

  • http://evilspeculator.com molecool

    Do you ever read my Sunday updates? They are quite prolific and I focus on the long term.

  • doublethink
  • BigIslandLife

    every weekend great road maps with scenarios to watch out for, also the Friday options stuff that is still over my pay grade but is starting to sink into my thick skull

  • BobbyLow

    I don't know if I can stand the pressure as I lost another $4.00 today.

    But on a positive note, at least I did get to finish mowing my lawn.

    In the mean time, the Boyz keep waiting for someone, anyone, to take the “bargain of a lifetime” stock off their hands.

    Tick, tick tick. . .

  • amokta

    Ok, who's responsible, why are we being shown re-runs of ground hogday – please change the vhs tape

  • Graphite

    Don't look now, but did copper just put in the top on a right shoulder today?

  • Graphite

    This analog looks so much better than 1937/38 it's not even funny.

  • rangefinder

    The Roman empire lasted 1500 yrs before it finally collapsed – Prechter may have a very long wait to be proved right.

  • kokoro33

    only SemiTard knows for certain

    he's using “Quality Volume”

    impressive stuff indeed

  • rangefinder

    Until people can long afford food.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    BTW, I was often wrong on my timmings, but maybe there is something I hadn't quite noticed for some short term (couple of days moves)

    Please check my LAZY HAMSTER (slow stochastics, 208, 168 on 2 min chart)

    then DO let me know what you think (I cant back test it enough)

    best regards

  • convictscott

    Disagree πŸ™‚ VIX came within .04 of touching the bottom bollinger band on 3/8 and has been retesting that bottom.

    To me its clear that what we have in VIX is similat to what happened in April, a basing period causing enough complacency (which is what should occur at the top of a wave 2) to enable a volatility explosion.

    Keep in mind that one extreme volatility spike (we had 2 in the last few months) is historically the canary in the cage for a period of crazy, way outside the bell curve moves. There is NEVER just one cockroach when vix starts spiking off the chart.

    As much as I dont really want to give any credence to the Primary 3 fairy tale, the VIX is setting up for it… not too hot, not too cold… just right.

  • doublethink

    Try this version on for Paris size.
    http://www.youtube.com/watch?v=2UIptI2rcjg
    Thanks, Mole, for permitting me so much fun with your site; best TA blog ever!

  • convictscott

    I agree. IMO the longer this goes on the more the odds go to the upside, and a decent move at that. Yesterday I thought the highest probability move was up to complete the wedge then fail, and I was planning on finessing an exit then.

    Today I'm suspecting that the strongest probability lies with a stronger thrust up to the 1131 SPX level not to touch it, but to push through it.

    To me it all depends on HOW the market reacts to this level. If we get to 1131 and reject it, IMO thats a good chance of a top (sentiment, market internals are aligned, I'd like better zero readings, but can't have everything one way at turning points)

    If we get to 1131 and hold it easily, 1150 is a lock, and depending on how fast N hard we get there, positive feedback may push it higher.

    To me the longer we are trapped in trading range, the stronger the thrust out of it is, simply because bears are getting itchy trigger fingers again, and if we break out to the upside after another day, bears will have to cover again.

    Especially since this trading range crud is giving enough bearish evidence (5 waves down on dubious squiggle counts) to embolden bears to give it another crack. Also, the market internals (tick, adv/dec and vold) were not getting better with the rising price in the afternoon trading, making an internal divergence.

    The longer the trading range bullshit goes on the more likely we have a STRONG push in either direction. And for me, fed day is a zero on the wheel.

    Things are lined nicely on the short side from a number of perspectives. Euro and Copper would look ok as a straight shot down from here.

    I'm not quite feeling the downside yet, but its certainly plausible.

  • yudhisthira

    You talking about the daily chart?
    http://screencast.com/t/ZDFiY2M2NjIt

  • Graphite

    That's the one, thanks πŸ™‚ Could get nutty if we finally break that stupid $2.70 level.

  • convictscott

    And can anyone actually remember a time when one of those analogs actually worked?

    The last year analog after analog has been touted and failed.

    Perhaps the markets are million-variable quadratic equations, and “solving for x” isnt as easy as tracing lines on a chart.

    IMO markets rhyme but dont repeat exactly, and analogues belong firmly in the sunspots/lunar calendar/tarot category of TA, ie laughable bullshit (although I know successful traders who swear by them all). You can learn heaps from looking at analogues, but whats going to happen next today isnt one of them πŸ˜‰

  • ricebowl

    I suppose it's all a matter of perspective. In the short-term that complacency lures some bears into buying the top, and those who short steadfastly get their accounts wrecked for a while. Long-term, though, you're right. This time ^VIX isn't going to stop at 41.

    What I was really driving at with my comment is that 1130 isn't likely to be the top, and as the market wafts upward, it's going to be painful for bears.

  • http://evilspeculator.com molecool

    Good eye – if we drop from here we are looking at falling through an air pocket in late fall.

  • http://evilspeculator.com molecool

    It's free right now! Just reload after the end of the NYSE session.

  • http://evilspeculator.com molecool

    Kind of my point – I for one have been seduced by some good looking ones which eventually screwed me. I'm very skeptical about any analogs at this point as they can break at any time.

  • doublethink

    Chart: YM
    Space Holder
    Bulkowski's Rectangular Top
    http://thepatternsite.com/recttops.html

  • Thespookyone

    Nice take, but why would it be completed there? Wave-wise, as well-I think it will put in an even shoulder.

  • Thespookyone

    Drop to 1115 cash on the jobs report, rally to 1152=then draw your weapons.

  • yudhisthira

    Sounds about right.
    I'm short already. We'll see.

  • standard_and_poor

    All longs were closed out today.
    s.t. acct: 50% short.
    intermed. acct: 100% cash.
    long term acct: 100% cash.

  • standard_and_poor

    p.s.
    BTW, where is Bob/Horse?
    Just kidding.

  • http://profiles.yahoo.com/u/6NFOSGRXKB4LMGOAXV3ZY6IWZA Grainman

    Ok… I am going to be really pissed if this thing gaps up huge tomorrow.

    I had 50 SPY $110 calls over the weekend and now slightly short with 20 SPY $114 puts overnight on ECONOMIC release.

    All economic reports have sold off somwhat just like today, nothing deep but still sells off some and rally on other stuff.

    Just had to say.

    Still believe $117.50 is fair value but trading “the mkt” overnight.

  • http://profiles.yahoo.com/u/6NFOSGRXKB4LMGOAXV3ZY6IWZA Grainman

    Oh how I wish it happens… as stated above, SPY $117.50 at least. But a little sell off will be great on ECON report.

  • Tooncez

    RBW,
    Thanks for having me look at the other timeframes. I know hindsight is 20/20, but here's 1min for today: http://screencast.com/t/ZGEyZmIw

  • Vimax Import