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Back To The Grind
40

Back To The Grind

by The MoleJuly 5, 2017

I remember spending one hour each way in L.A. traffic commuting to and from my job as an engineer. That was about a decade ago or so shortly before I decided to ‘retire’ from the software industry and dedicate myself exclusively to my passion, which of course was trading. It’s been a very turbulent time since that day but as I’m sitting here now in my beautiful Valencia apartment overlooking two gorgeous 15th century buildings I don’t know how I survived that traffic ordeal back then.

I think one of the most important benefits of trading for a living is (relative) location independence. The European time zone (+ 6 hours from NY) serves my lifestyle pretty well and while most of you guys in the U.S. are still hitting the snooze button I’m already running on five cylinders. Another benefit is being able to structure your own working hours as I never was the nine to five type – I mean, who really is?

And finally not hating your job and dreading going back after a long weekend is usually a good sign that you are pursuing your true passion. Which is why one of the first questions I always ask anyone considering to trade for a living is: Are you prepared to work 50 hours plus, take few vacations, and work through holiday weekends? Because if that thought doesn’t appeal to you then I suggest you stick with your day job as you most likely are vastly underestimating the personal sacrifices and commitment it takes to do this for a living.

No Rest For The Wicked

Given the above you’re probably not surprised to hear that I spent most of the long weekend studying an extensive tutorial series on how to calculate the Kalman filter in a matrix. The Kalman filter, created by the brilliant Rudolf Kálmán, is over 50 years old but is still one of the most important and common data fusion algorithms in use today. Originally it found wide adoption for tracking of objects and industrial systems requiring the correlation of a computed state versus the actual measured state. So it is not surprising that it recently has gained popularity among quant traders who use it for things like portfolio optimization or pair trading. It’s a fascinating subject and the further I immerse myself into the subject matter the more excited I have become.

Murphy’s Law

Then of course late last night it turns out that my VPS hosting provider blew up one of my virtual machines and I had to copy several services to a backup. Since it was the 4th of July client support was rudimentary. And that’s how it goes, the fun never really stops and a week without something blowing up in your face is celebrated as a rare occurrence.

2017-07-05_spoos

Alright, back to work, steel-rats! The E-Mini has been coiling up over the past few sessions and we’ll need to see what happens in the first two hours or so to get a better read on the situation. Right now I see nothing but a sideways mess. Which of course is leading to a gradual contraction of the BBs on the daily panel.

2017-07-05_YM

The YM is still leading the pack and is the main reason why I’m not considering a short position on the E-Mini. Until I see weakness on all three indices I have a hard time justifying trading against the trend, even if it’s just a tiny position.

2017-07-05_NQ

The NQ has descended to my 100-day SMA which has absolutely zero meaning as that one hasn’t been touched for a long time. So again we’ll have to see if price for some reason actually concedes to using that one as a reason to build a floor.

2017-07-05_crude

Crude has my attention right now, given that fast drop overnight. However I’m not trusting this at all and at minimum I need to see a more pronounced retest of the 100-hour SMA, which in this case accumulated at least some context on the way down.

Campaign Updates

2017-07-05_silver_update

Precious metals got slapped big time over the past few sessions and fortunately I was able to eek out 0.7R in profits on the silver front.

2017-07-05_gold_update

I wasn’t as lucky on gold but at least got out at break even. The current price action suggests we may see more downside. What’s even worse is the fact that the 100-day BBs on both gold and silver are now starting to point down. Could get very very ugly here.

2017-07-05_USDJPY_update

The USD/JPY campaign however has continued its climb and I’m now tightening my stop to a few pips below 112.8.

More goodies below the fold, please join me in the lair:

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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.
  • ridingwaves

    fed minutes today…short week could be good for volatility with the drums of war beating…

  • Tomcat

    Covered Oil I had sold Monday, after learning that Gartman is also short. Didn’t feel comfortable being on the same side as him.

  • ridingwaves

    BAM…..that’s it, I’m calling up some big houses to see if they need a researcher…..Man on fire…called this move 45 days ago,
    this mornings tape….
    ORLY- 182.50 -37
    AZO 525.10 -46

    ridingwaves Gold_Gerb 14 days ago
    ORLY could see 157 if it doesn’t get some mojo on….
    AAP already close to the target I had above….113 seems plausible…
    Edit View in discussion
    ridingwaves 14 days ago
    RED ALERT -AZO loses 574 and 510 is target….
    ridingwaves 15 days prior to above
    The auto parts chain short trade ORLY, AZO, AAP looks to be active trade as pushes higher are now selling off….

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Careful what you wish for, you just might get it.

    or

    Don’t bight off more than you can chew.
    http://1.bp.blogspot.com/-cJ1QHY4ILRI/TkQrcpO__7I/AAAAAAAAIv4/ia1olz_4f_E/s640/dog+with+scrap.jpg

    or

    Every dog has it’s Day.
    😉

  • Mark Shinnick

    I’d rather be seeing you doing spiritually and physically well than to be eaten up by bloodsuckers. Short again miners this morning, short stocks.

  • Tomcat

    Great call RW on the autoparts. great fckin call. congrats.

  • http://evilspeculator.com Sir Mole III

    So how’s my crew? Not feeling it today? 😉

  • OJuice

    Everything looks like a blender today.

  • ridingwaves

    actually I think AZO is close enough to target to go long for rebound play….solid support for AZO…still think ORLY needs to find that 160 area

    since I came back from 3 week spirit quest in May this dog has been on fire….no politics, just trading…

    I’ll run with luck for now….

  • ridingwaves

    Thanks Tomcat…
    soon NG will be free to all, a natural gas jubilee…
    hard not to go long here…
    keep in eye on TTPH….options are very active…someone is seeing a big move coming…

  • http://evilspeculator.com Sir Mole III
  • Tomcat

    Hard for me not be long, got a fill @ 2.9

  • Mark Shinnick

    Re: “could get ugly”. Yes, the pent-up energy in metals appears significant….the busride bronco appears mean and chain-yanky rising local ATR befitting the opportunity. $ right here supports the thesis for short metals, and whatever other consequence we infer from exacerbation of $ strength….but all this remains at relative inflection; only the energy behind whatever is the ultimate direction appears real.

  • ridingwaves

    Original AC-DC was one great rock band…energy galore…

  • Yoda

    now that’s one happy dog

  • Mark Shinnick

    While this graphic has nothing to do with my models’ internal function, I’d just like to mention that I was a very “bugish” miners buyer 1997-1998. Yet, again, the graphic can be used only to imply that coiled energy may exist; direction in fact unpredictable. https://uploads.disquscdn.com/images/58a5b0a0f00139cac207bbd9d9f58e2d464ed5f694bc4ddb2dbacf668454e09a.jpg

  • OzarkHillBilly

    Lurking. Watching. Waiting. Plotting.

    I’m not reading much into the holiday tape, but I do find it interesting that the melt ups got slammed down at the end of the day.

  • Mark Shinnick

    Reversed to long miners…for time being.

  • OJuice

    Whatever Old Yeller has in her prepared statement today, I hope the market does the exact opposite of the guidance forcing her and the others to re-hash statements tomorrow morning. Because woodchipper.

  • http://evilspeculator.com Sir Mole III
  • ridingwaves

    factory orders this AM didn’t help the sept. .25 raise possibility…Auto sector slowing will not help either….whatever smoke screen she blows, it’s not enough to mask out the weakness beginning to materialize…

  • OJuice

    She will still find a way to say something along the lines of “Those issues are transitory. We at the FED remain optimistic about the overall economic picture.”

  • ridingwaves

    I wish she would say ” Us CB’s thru 18 trillion at deflation and all we got was 2% growth but the rich are happy”

  • OJuice

    I think they consider that a huge win. She wouldn’t want to gloat…

  • OzarkHillBilly

    Good job on this; I’ve been noting the moves since you first brought this up.

    On a related note, cheap and efficient shipping has somewhat enabled the return of small town auto repair. Twenty years ago, you might have had to wait over a week for a part, and now you can get it in two days in most parts of the USA, for relatively low cost. The rural areas in my region have relatively strong economies, but I’ve also noted this areas that have only seemed to decline since I was a child.

  • ridingwaves

    need XLF to go negative for a big red day to happen it seems, 15% SPX weight making up for all the blood in retail, oil, gold, commodities in general, hard to believe it can carry indexes thru a lot of negatives

  • ridingwaves

    thanks OHB, an important thing for me at least that I learned here was “there are 10K other trades out there meme: along with “no news meme”
    apply your lens to sector, see what part of trend it works best in….so to avoid the trends where it sucks…

    I hate to repeat it but the 3 wks of digital nothingness while out of country was best thing for my trading rhythm

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    AZO, what a beauty.

    so RW – going to buy some lucky lady choice jewelry? I can only imagine.
    😉

    507 would a place for interference.
    Given that this weekly knife catcher is hot with momentum, RSI 17 (ouch!) anything is possible.
    https://uploads.disquscdn.com/images/595328baa5cd3ac4d84f769089556dfaaeae17c98b9571273e4f5daa4b8a2ab5.png

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    ps. Maybe they can close that gap waaaay back up at 760.

  • https://scottphillipstrading.com/trade-setup Scott Phillips

    Very nice risk reward on offer there

  • Mark Shinnick

    That ring….whew….sort of BDSM.

  • http://evilspeculator.com Sir Mole III

    That’s what was called the ‘point of recognition’ back in the days:

    https://uploads.disquscdn.com/images/d22105a7810fe45c83e7e522040544f9d990a9bd9c93f268f25c902509ce1af6.png

  • OzarkHillBilly

    Just walk away …

  • ridingwaves

    this is the kind of news headline I do pay attention too….
    Now Fed Officials Are Starting to Wonder If the VIX Is Too Low
    https://www.bloomberg.com/news/articles/2017-07-05/now-fed-officials-are-starting-to-wonder-if-the-vix-is-too-low

  • ridingwaves

    I’m in AVEO, getting bought pretty hard this AM, could move to 3.50 to fill in empty candle target on weekly from 5-18-15, ultimately finding 5 in couple mos..

  • ridingwaves

    No jewelry but a Mexican getaway trip for the misses is now in play….
    I get
    Langosta, arroz y frijoles junto con una verdadera margarita

    these guys are a little late to the party…..
    10:02a
    Advance Auto Parts stock price target cut to $125 from $160 at Morgan Stanley
    10:02a
    O’Reilly Automotive stock price target cut to $200 at Morgan Stanley
    10:02a
    AutoZone stock price target cut to $540 at Morgan Stanley

  • Mark Shinnick

    That’s the perverse sheeple introductory conditioning to the new order of quantitative contraction. Ahhh…its all OK :), don’t worry….stay happy :)

  • ridingwaves

    seems like a lost leader for the big boys to go L VIX and fix that issue

  • Mark Shinnick
  • ridingwaves

    there is one more chance to push XLF down to low 24’s before a silver cross…lets see if they do it..