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An Orgy Of Retest Setups
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An Orgy Of Retest Setups

by ScottFebruary 13, 2012

We have POTENTIAL setups across the board today.

Don’t be an idiot and jump the gun, wait for a break of the low to get short. If you are still long IMO you should raise your stop to the entry point for the short setup. Clever traders will want to switch out long to short on a break of the lows.

Don’t take all of these, they are all super highly-correlated. One of my key things to look for at turning points is that everything is running in the same direction, meaning that if we change direction, the exits get blocked when everyone rushes to get out of longs. In this situation you want to make sure you are first to jump from your long trades.

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Remember how we don’t follow the news like AMATEURS, but fade the news like PROFESSIONALS?

The Greek bailout gets approved, boosting the euro. But if we look under the hood, the BEST euro news in a while cannot push it to fresh highs. What that tells us is that the euro bull’s best punches are not doing enough damage. A drop here should trigger a rush to the exit of long positions.

And AUD/JPY as well

For educational purposes, last night we had a 60 min large outside bar in AUD/USD. I posted that outside bars typically occur within 3 bars of a turning point. This is because an outside bar represents both LONGS AND SHORTS getting screwed by having their stops triggered. What this means is that we have fresh participants in the market, who are by definition WEAK HANDS, who run at the first sign of trouble.

If I am trading the 60 min charts I will become HYPER VIGILANT, waiting for the next retest of the following high.

Lets see what happened, eh?

The bond market is still trapped in the longer term trading range (cyling between flat bollinger bands). A break to the upside here could set off capitulation to the upside, which has profound implications for the inverse correlated equities and risk currencies.

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Scott


About The Author
Scott
  • Anonymous

    About time. Thanks Scott.Got shafted last week. Lets see if this week is better.

  • Anonymous

    Second time’s the charm (I heard that somewhere?)

  • Anonymous

    Minor nitpick. On the Aud chart the sell and stop is reversed.

  • Anonymous

    I don’t post when I don’t have anything to say :-) 

  • http://evilspeculator.com molecool

    you are such a nitpick… 

  • http://evilspeculator.com molecool

    he just likes to bitch.

  • Anonymous

    hahaha. I just follow orders. Cant think too much. I need the sell and buy signals on the right side!

  • Galazkiewicz

    Scott- great post.  Thank you.

    I copied a question here that I posted in the comment section of Mole’s previous post to which I didn’t get any responses.  Can you check it out below and let me know if you have any feedback (ie, am I way off base on the FOIP Sell set-ups the last two yrs?  Thanks in advance.

    “Anyone backtest Fakeout Inside Period Sell set-ups on the SPX?  I’ve done a very cursory test going back two yrs on the daily, using Fakeouts from 1-4 days after the initial spike high. I will expand this using more history and fakeouts past 4 days soon.  However, I was surprised that out of the 9 FOIP Sells that triggered, only 3 made 1R in three bars (33%).
    Most of these appear to have occured at the top BB and possibly in a short squeeze.  If you’ve tested this and have thoughts (or even if you haven’t and have some insight), I’d appreciate any feedback you have.
    In the past, CS has said his real world trades using this set-up was 75%, much higher than my very short test.  Thanks”

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

    and I thought it was just a time zone thing!

  • http://evilspeculator.com molecool

    Today’s NYSE volume hit a new (non-holiday) low for the past decade.

  • http://evilspeculator.com molecool

    ????????????????????????????????­??????????????

    D   A   I    L   Y      Z   E   R   O     H   A   S      B   E    E   N      U   P   D   A   T   E   D

    ????????????????????????????????­???????????????

  • Anonymous

     Should be a fun evening:)

  • Anonymous

    fx side? right? equities are bulletproof!

  • Anonymous

     FX & Commodities, looking for short entries on /CL & /HG. Dollar is showing good strength:) Missed that set-up on AUDJPY. Big Dummy!

  • Anonymous

     sounds exciting, huh?   SOUNDS like the last buyer is in

  • Anonymous

    Bit of a mixed bag. copper down silver up, oil up dollar up, euro down etc

  • Anonymous

    I heard congress is working on a new law that prevents stocks from going down ever. Put forward by bald monkey.

  • Anonymous

     LOL! Would not put it past them, they want eliminate short selling. How would that work?

  • Anonymous

    I was just kidding. In Europe they do have some ban on short selling I think. Here they had a “uptick” rule.

  • Anonymous

    /HG sounds better. /CL goes crazy everytime some idiot from Iran says something.Seen Gasoline consumption in the US lately?

    http://charleshughsmith.blogspot.com/2012/02/why-is-gasoline-consumption-tanking.html

  • Anonymous

    My 5 year backrest showed 75% non-losing trades, consistent across all markets. Typically about half of those will be small winners or break even. The losing percentage is lower in spx and other index markets than fx, because of the back and fill nature of equities. I’ll do a post on this stuff when I get a chance

  • Anonymous

     /CL will test 101.29 tonight. Will not miss this one if it triggers.

  • Anonymous

     LOL! Maybe that’s why Europe tanked last year………

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

    that’s what I said.
    Dr. Doom is on the train. all abooooard.

    what’s that sucking sound?

    oh, wait a minute!
    “Fourth time’s a charm”?

    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=2&dy=0&id=p94764641367

  • Anonymous

    AUDJPY getting off to a good start:)

  • Anonymous

    Moody’s just bitch-slapped Europe…downgrades everywhere.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok
  • Anonymous

    Moodys – who are these goons?

  • Anonymous

     Here to protect us all from misplaced punctuation, spelling errors and the eevvvill General Syntax, he’s…. Captain Grammar!!

  • Anonymous

    Deliberate :-)
    Anyway, my serious point is when have these ratings agencies releases helped with timing trades. Maybe all this ‘bad’ news means a continuation of bull market for a while longer, not withstanding the ‘too bullish’ sentiment indicators.
    I wont go short until Prechter goes long, or goes bankrupt

  • Anonymous

     Maybe he’s right for a change. Never knew anyone that was wrong 100% of the time:)

  • Anonymous

    Lets give him the benefit of doubt – ok how many otm puts should i get :-)

  • Anonymous

    I think so. Every bad news is followed by markets surging higher.

  • Anonymous

    He will be right in like 2016 or so when US interest rates will rise despite the Fed manipulations.

  • http://evilspeculator.com molecool

    First up you need to differentiate between profit margin and profit potential. Read up on ‘expectancy’ and you will find ample material on the subject.

    Also, a 9 signal backtest is almost meaningless. You need at least a year, preferably 3 to 5 for daily charts.

  • Anonymous

    Yes this euro-crap is known baked-in, old-crap
    Yes, the stockmarkets, and even the financial system may go porkbelly-up at some point, (maybe even tomorrow), but not because of Moody’s downgrades.

  • Anonymous

    To be fair, Prechter operates on a very large time scale (years or even decades). He has been right in calling the bull market of the 80s and the crash of ’87. He went bearish to early in the 90s, but was ultimately proven right in calling for a major top. He called the top of 2007 and the bottom in 2009. So far he obviously has been top early in calling for the next top, but I certainly wouldn’t dismiss the possibility out of hand that he will be right about a new leg lower. 
    In the end it all comes down to what time frame you operate in. If you think about it very long term, buying LEAPS may actually make sense. Start with a small a position and add more every 50 or 100 handles on the the ES until you reach your maximum position size or the market actually starts tanking.
    This may turn out to be a smart play if we see something like the Flash Crash or last summer again when the market crashed and burned in an instant and it became hard or even impossible to get into a new position due to the massive spike in volatility. Or it may not work out at all and we will see a new all-time high. At that point Prechter’s big picture analysis would actually be proven wrong and I would be out of a long-term play like that.
    Another major problem would be that a position like that locks up quite some capital for an extended period.

  • Anonymous

    I’m looking at Corn as a RVS.  Big outside day three days ago as well – and it followed an inside day.  Observations welcome.

  • Anonymous

     I agree that it doesn’t mean anything for the Market, I just think it’s brutal that after all the Greek BS the European “leaders” get a single day of rest and then they have to deal with a wave of downgrades…I find it pretty humorous.

  • Galazkiewicz

    Thanks, Mole.  It actually is 2 yrs, but I plan to add another 5 (at min) to the spreadsheet.  If you have any thoughts on the number of signals for a meaningful backtest, that would be helpful.  I’m currently working on expectancy on each set-up, but have yet to finalize a portfolio mgmt system.  I’ve figured out that’s much harder than the entry:)

  • Anonymous

    Yes, no sooner than one leak is plugged, another one spirngs up in the olde van dike.

  • Galazkiewicz

    Much appreciated, Scott.  I misunderstood the 75% you mentioned in previous posts, but it’s now very clear.  I look forward to any post on the subject you might have time to put together.

  • Anonymous

    True. But in calling the bottom 2009 (there is some debate as to initally if he was calling even lower), but he then stated to ‘stay safe’ aka bear market rally, and be i cash, which i think was wrong, in that the market has carried on up for ‘years’ since 2009, with cash being killed by inflation. Plus he keeps calling ‘wolf’ every 6 months – which is no use to man or pig :-)
    They do tend to ‘retro-fit’ their ‘i told you so’ calls in their promo speil to lure in folks (i was one, even CS may have been !)

  • Anonymous

    /DX nice gapper, let’s not see it crapper:)

  • Anonymous

    Short /CL, does not look to vicious:)

  • Anonymous

    famous last words….

  • EvilTrader

    LoL.

    This market and this whole crisis stuff is pure nonsense…a comedy reality-show….and the clowns are the tax-payers, i mean, the spectators, of course … :)

  • Anonymous

    Been bouncing off the 61.8 (103.55) retrace of the entire move since 2008 for a long time now. Just saying…. for 4 months.

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

    LOL! Yikes, now that does. Those little guys are the worst:)

  • Anonymous

     Hum, interesting…..

  • Schwerepunkt

    Skynet . . . 

  • Anonymous

    Kind of like a soap opera on TV. Ridiculous.

  • Galazkiewicz

    Looks like a nice Retest set-up, esp w/ the outside day.  One note that there does appear to be a small downtrend line that was broken from the Jan. highs and then retested today.  It could just be a back test of the trendline.  I’d still take it, but something to be aware of.

  • http://evilspeculator.com molecool

    I don’t even know where to begin. Even a stopped clock is once twice a day, my friend. He made some good calls in the past but he also made a LOT of bad calls. Take a look here:

    http://www.cxoadvisory.com/gurus/

    Sort by ‘accuracy’ and see who comes in LAST. Yes, it’s Prechter.

  • Anonymous

    Hey, CSI’m re-evaluating my position sizing – trying to put some real math behind the rules of thumb. Is your technique based on Thorp(e) (which I think is based on Kelly)? I’m trying to extend Kelly to simultaneous position sizing and wanted to make sure I’m somewhat on the right track.

    TIA

  • Anonymous

    There was an RTV sell that was developing in Indian equity mkts too. It was also after an NR4 Inside Bar. Well, the highs were just taken out.

  • tradem4alpha

    Correction over?

  • Anonymous

    More bad news, must be:)

  • http://iberianviews.blogspot.com/ catracho

    that was just the fake one!  Probably rally, suck in more people , then you get the proper correction..
    Look at NDX 100 leader in the rally, we could get a 5% correction and continue higher as in the red shaded area..
    OR a final move up and proper fall (bear wish)

  • Anonymous

    VIX looks to have back tested the falling wedge. Should be an interesting week regardless:)

  • Schwerepunkt

    Here comes more BS data; retail sales.

  • http://iberianviews.blogspot.com/ catracho

    equity markets still don’t feel overly bearish, more backfilling and weeding out…I guess if € can be sold below 1.30 then it may change the scenario..but this action just resets a lot of overbought indicators..

  • Anonymous

    Obligatory retest of yest. lows of 1334 to entice dip buyers.  If there is enough to push up to VWAP at open then I look to sell  if its a weak push and starts to roll over.

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

    RSI divergences on the daily and hourly and a rejection at the high of a few days ago at the upper hourly Bollingers.

  • Anonymous

    ZL trying to diverge.

  • Anonymous

    Hey Mole,

    NG looks like its waking up, was looking a bit shaky yesterday.

    Good call!

  • Anonymous

    I didn’t get the trend day alert yet today. I usually have it by 10:18 at the latest. Anyone else?

  • Anonymous

    Added TZA @ VWAP

  • Anonymous

    I see TICK negative first 44/45 minutes..And bears can only get 5 SPX points so far?…

  • Joe_Jones

    I got the alert at 10.21 am EST (yahoo mail)

  • Joe_Jones

    patience grasshoper

  • Anonymous

    You got mail.

  • Anonymous

    Well good, something needs to end this rally,
    daily RTV sell stopped out

  • Schwerepunkt

    1.3128 yesterday’s low on Euro is the next test. 1.3028 is the next support below.

    Listening to “Up and Down and Back Again” and other selections by Powderfinger, a really good Aussie band that nobody’s ever heard of in North America. 

  • Anonymous

    CCI also divergent, range is contracting on the multiday chart,
    maybe an intraday only short if the hourly dependent on the action  
    at the high (new NLBL) this morning

  • Fibz

    got rid of my GS MAR12 105 puts for 20% gain… feeling skittish here.

  • Anonymous

    cocoa a gogo
    got everybody’s stops from the past 5 days
    now at Daily mid BB

  • Joe_Jones

    uh oh, we are getting some action

  • Anonymous

    A thing of beauty! Great trend day alert so far:)

  • Anonymous

    sfsg, nice backfilling to add at

  • Anonymous

    Been getting my Dollar Rally but rest of market being very Coy.

    Silver working somewhat Dipped a toe in AAPL ( I love parabolas)

    Others maintaining

  • Anonymous

    Dumped puts here to reload on another VWAP test:)

  • Anonymous

     Nice

  • Anonymous

    Pos div on SPX 15 min

  • Anonymous

    Dollar broke above upper up channel line (10 min chart) just before 1 o’clock and is now coming back down to test the break out . . . . 

    Also dollar hit top of a different steep intraday up channel

  • Anonymous

    Target /ES 1347 for reload:)

  • Anonymous

    Careful bears, if we don’t drop here an IHS looks to be developing on the 5 min. Just saying….. Possible gap fill maybe.

  • Anonymous

    agreed. bearish action unconvincing at this stage…

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

    if the dollar was going to create max pain..
    a little higher tomorrow, then reverse

    http://i40.tinypic.com/2cmn2qh.png

  • Anonymous

    Hum, I like it!

  • Anonymous

    Mole, 3 points touch on 5 min zl smoothed?

  • Anonymous

    Damn!

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

    SPY 5m plunge?

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    The trend e-mail might have save you from the wipsaw.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    watch the 3.80 level on copper. 

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

    I wonder how that BPSPX will call out after close…. Hmmm.

  • Anonymous

    Dollar back at the upper trend line of the sharp upward intraday channel.

    Just pierced it . .  we’ll see if get move on up then maybe another retrace to test this upper trend line.  

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

    nothing can save Skynny, he’s beyond hope!
    😉

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

    SDS key level (IMHO)

  • Anonymous

    Where the heck is TM anyway? She’s been AWOL with no excuse.

  • Anonymous

    Let those puts go to early is all. Need to rely more on that sweet trend day indicator. Looking for another short entry:)

  • Anonymous

    Paging Mole..I hope your nose is healing ok. I have a question, by any chance would you know if Eine Mohre fur Zwei is available for purchase in Germany on dvd? I have searched the internet with no luck for this show. NDR.de will be re airing it again this month. I know it is a strange question. My son loves that show and NDR is not airing the old seasons anymore.

  • Anonymous

    Maybe get short again on the retrace:) Bring in those Marines!

    Still holding TZA.

  • Anonymous

    Right about that:)

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok
  • Anonymous

    well hourly short worked, but now nearing nlsl, mid BB and vwap 

  • http://evilspeculator.com molecool

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    ¸„ø¤º°¨ P O S T “°º¤ø„¸
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  • http://evilspeculator.com molecool

    I think you can find it online here: 
    http://www.onlinetvplanet.com/kika/

    You would have to figure out how to tape it somehow…