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Bait & Switch Monday Wrap Up
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Bait & Switch Monday Wrap Up

by The MoleDecember 5, 2011

Hello ratlings – this time we’ll cover the concept of a bait & switch. You can skip this lesson if you happen to live in the United States.

And there you have it. That divergence in the late session plus the one in the AUD/JPY (5-min chart) was more than enough reasons to head for the exits or to consider a short position. As you can see the ZL however didn’t buy that fast drop either and with good reason as evidenced by the final ramp. Classic woodchipper tape and although I recommend you stand by the sidelines during Mr. Miyaki’s monkey business (i.e. risk on / risk off) if you insist on playing the swings the Zero has you covered.

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,


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://practicalt.blogspot.com/ Gold_Gerb

    how can they downgrade 17 nations?

    oh wait, news don’t matter.  it’s priced in GG.

  • http://evilspeculator.com molecool

    Wrong question. How can they NOT downgrade all of Europe and the United States?

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

    very nice red line on descent. (video)

  • http://www.facebook.com/people/Walt-Kowalski/100002706283065 Walt Kowalski

    There is a new plan afoot to deal with the European insolvency issues. This one was leaked to the media mid-week, and it involved the IMF providing huge loans to the {badly underfunded} EFSF, Europe’s yet to be born rescue fund. But on Friday, US Senator Tom Coburn {R-OK} got whiff of this plan and promptly announced that he was going to introduce legislation into the defense appropriations bill that required US Congressional approval before allowing US participation in an IMF bailout of Europe. If this passes in the defense appropriations bill, it will be the kiss of death for any large scale IMF participation in European bailouts. 
    http://themeanoldinvestor.blogspot.com/2011/12/us-cavalry-arrives.html

  • http://twitter.com/law6 law

    bond vulture funds making a killing

  • Fibz

    credit quality doesn’t matter when everyone’s sucks.

  • Anonymous

    Mole thanks for the wrap.
    I took the short intraday, also used the 5 minute NLSL. ZL gave those clues you show which helped my exit, was watching the price action and a couple of other things for the exact point I wanted out. but I used /TF today as I have my /ES shorts in place for a multiday trade

  • Fibz

    from 6/11 to 12/11 looks like an inverse H&S on AUD/CHF.

  • Anonymous

    really bad numbers coming out of china. its not a good time to be long the Aussie or copper or commodities in general.

  • Anonymous

    Thats what I mean. Triple dog dare them..http://www.youtube.com/watch?v=_RgCbcT8eEU&feature=related. They are getting closer to jumping off stool with rope wrapped around neck with todays warning.

  • Anonymous

    Remember Australia has a housing bubble bigger than the US (as % of GDP) and its beginning to crack.

  • Anonymous

    @skynard:disqus I think copper has the cold. U got any vitaminC?!

  • Fibz

    i don’t like buying when things are good.

  • Anonymous

    Extra strength! That high volatility options trade was even better;) Next suspect is /CL!

  • Anonymous

    The Aussie is above parity now which is ridiculous. You should be short Aussie not long.

  • Anonymous

    audjpy too

  • Anonymous

    For sure. I think they are betting on some middle east unrest or something. GDPs and PMIs are falling across the globe. Its not based on demand for sure.

  • Anonymous

    I wish I was home to short that rally.

  • Anonymous

    Cumming up this week:
    Will have to see, failed to make a new high. Could already be primed;)
    http://biz.yahoo.com/c/e.html

  • Anonymous

    Aren’t you already short?

  • Anonymous

    http://globaleconomicanalysis.blogspot.com/2011/12/crude-futures-have-risen-significantly.html
    Check gasoline usage charts there.

    Yes I am short kiwi, aussie , cad, mostly. Also using the new OFF etn. But when I cant be at home I trade smaller. Gotta be careful.  I was off last week and was able to make use of it.

  • Anonymous

    I trade minilots. I can add shorts on spikes. Overall its better than entering one big position. 10 minilots make one regular lot.

  • Anonymous

    Good catch! Ironic that demand is slowing in North America and gaining in Asia;)

  • Fibz

    AUD/USD SSI is net short @ -1.85.

  • Anonymous

    Things could get interesting tonight:)

  • Anonymous

    Where do you get that?

  • Fibz

    most AUD pairs i’m looking at are showing inverse H&S on the daily chart. see how they resolve after the RBA rate decision later this evening.

  • Fibz
  • Anonymous

    25 bps cut is priced in most likely. Aussie could spike if no rate cut. That would give you a better entry to short.

  • Anonymous

    Thx

  • Anonymous

    By the looks of it AUD/JYP could crater!

  • Anonymous

    probably pricing in 25 bps rate cut. aussie could spike if rba holds. if that happens i will just add to shorts.

  • Anonymous

    What is that time frame?

  • Anonymous

    1030 pm eastern time RBA announces rates. http://www.forexfactory.com/ 25 bps  cut is expected.

  • Anonymous

    Thank you!

  • Anonymous

    Np. China will drag the Aussie under water no matter what the RBA does. Its just better if you get plenty of spikes as you can slowly build up positions while waiting for the waterfall. Probably 2012 fall could be waterfall time.
    http://www.zerohedge.com/news/china-services-pmi-crashes-us-lags-not-decouples

    November levels are much lower than 2009, 2010 levels. After the nov low there is a bounce into the new year and then a crash later. But since this nov is already so low the crash next year could be spectacular.

  • Fibz

    i wish i could see some reduced gasoline usage in my area. have noticed a big increase in traffic over the past year and it’s driving me crazy. every day i’m wishing for the economy to tank just so there’s not so many damn cars on the road.

  • Anonymous

    free falling

  • Anonymous

    Its a potential retest variation sell and fakeout inside day sell on break of the daily low.

  • Anonymous

    Housing in Australia is a disaster waiting to happen

  • Fibz

    got stopped out of my AUD/JPY, but not seeing any follow through.

  • Anonymous

    OK, Great! Thanks for that. Still holding short.

  • Anonymous

    Have no patience for it.

  • Anonymous

    Is ZFX showing divergence in AUD/JPY 5min?

  • Anonymous

    AUD has now broken daily low, triggering sell signal. If the real trend is down we should see capitulation to the downside, anything else is stinky

  • Anonymous

    The assumption that we MUST have a waterfall decline at some point is very poor logic and will burn you at some point. Having such a strong view (rallys are just a better shorting opportunity) will blind you to the truth.

    Objectively the AUD could go either way at this point.

  • rhae

    tis the season… Fund Managers, they’re between a rock and a hard spot… people don’t want their 401k at high risk and they also don’t want it in cash doing nothing – especially year-end.

    Heggies are more like us… they leverage and move more like a flock of geese which can really move markets.   Their fee structure is largely based on performance, so it is in their best interest to push the market up – especially for year-end reporting. 

    Even tho World news may be horrible… Greed is a powerful emotion…

    The question??? what trumps what?

  • Anonymous

    nice fireworks

    :-)

  • Fibz

    “Even though tho World news may be horrible…”

    bad news creates value. bad news makes people read zerohedge which causes them to sell their stocks to bankers at low prices.

  • Anonymous

    Looks like we may have something here;)

  • Anonymous

    agree, smells right so far

  • spicestory

    /ES also break daily low but is in a much milder magnitude

  • rhae

    honestly I really do not know… tomorrow I may get a sell signal for my longs… just the plan, nothing else really matters

  • Anonymous

    LOL – that comment was the EXACT bottom! typical

  • Skates

    Don’t worry, 53 should hold this back…

  • Tronacate

    Nice stop run on the NQ swing high…….now we should get rollin to the downside…….audjpy

  • Tronacate

    Nice stop run on the NQ swing high…….now we should get rollin to the downside…….audjpy

  • Tronacate

    ES backtest of lower TL complete……..see if currencies take this lower….

  • http://evilspeculator.com molecool

    I think you put that very nicely :-)

  • Tronacate

    Ol’ bucky is showing some teeth……

  • Tronacate

    Bucky getting his dentures knocked out again

  • Anonymous

    yes I know. I have to take weekly trade setups. If the data turns bullish I will hedge my shorts or cover. Big positions I only take using moles setups and only when I can keep an eye.

  • Anonymous

    The party is on as long as debt is rising. Thats how our fiat ponzi scheme works. I am not brave to fight that. But every month the data has been deteriorating. I geniune feel thus that Aussie (chine, commodities in general) have a tough time ahead. RBA cutting rates only confirms the validity of data. Rates are cut going into a recesssion not out of it. Its not just Australia. Brazil, China, Indonesia etc cutting rates. Take a look at usd/inr, usd/brl etc

  • Anonymous

    Looking for a reversal here.

  • Anonymous

    Took that /CL short;)

  • Anonymous

    Here´s something for you to wonder with GG, have you noticed it´s relation & correlation has came to be allmost the same as DAX / SPX have ie. it tends to go down when market goes down and it goes up only when market goes up.

    Who holds and own the world biggest gold resouches exist ? If you thought that´s FortKnox, FED or China – Wrong.

    Portugal and Italy owns the most of the gold exist and everytime there is failure risk exist in Europe, market comes nervous that they might dump it to pay their gigantic debts off, there is risk exist someone will realize and will require their to sell it. Market knows this allready.

  • Anonymous

    ZFX showed the reversal point as well!

  • Anonymous

    Guys chill out there isnt anything to be had here that has any real substantive gain.

  • Anonymous

    Except gold short 😉

  • Anonymous

    ?????

  • Anonymous

    The moves are jerky. Well at least in the world of forex. Spx is looking pretty straight forward.  But the EUR/GBP is holding tight so far which tells me the spx will hold tight. Of course this is all true till it is not. EUR/GBP is so coiled up that an aggressive break out is well over due.

  • Anonymous

    Will be watching your 1240;)

  • Anonymous

    Moves of this nature are common at significant juncture points.

  • Anonymous

    Well done dude, it´s 61.8% daily chart resistance is made from hard and rock.

  • Anonymous

    Leading indicator and a failed retest of the high. Should do well;)

  • Anonymous

    How’s that gold trade?:)

  • Anonymous

    Mole..Been following Cocoa and was looking at charts to see where this can fall.  Came across this 5 year chart that looks like some support is at 2,160 in July 2007.  Guess where Cocoa “bounced” today.  Could this be the bottom you are looking for??

    http://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=60

  • rhae

    I am not trading cocoa, and I know news doesn’t count… but I still keep my eye on it… so fwiw and just trade the chart…
    9:30 AM The price of cocoa continues to fall back as chocolate manufacturers see demand in Europe wane with all the financial unrest. After hitting a 33-year high last year due to a supply disruption from political unrest in the Ivory Coast, prices have now retreated back 42% and look set to stay low with forecasts projecting that supplies will outpace demand for the next season. Cocoa futures -1.2%

  • Anonymous

    Keeps landing from Hourly bearish butterly.

  • Anonymous

    Nice!

  • Anonymous

    reverse H&S on 5min?

  • Anonymous

    Textbook down sloping signal on ZL. Very nice!

  • Fibz

    inverse H&S still there on AUD/JPY.

  • Fibz

    metallica thinks the euro is going to lose value. you know it’s time to go long when…

    http://online.wsj.com/article/SB10001424052970204630904577056123331660042.html

    edit: damn disqus posting the chart twice

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

    XLF hourly.  stalled pattern.

    Zzzzzzz.

  • Anonymous

    Dec9th summit meeting must not have anything good to BEAR! Bought back the puts;)

  • rhae

    SPY 5m C&H or inv H&S  for this to work for bulls they need strong or sustained volume…
    http://screencast.com/t/cGAuAwC5

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

    Have I mentioned lately that I love the Zero? Between that, ZFX, the AUD/JPY correlation, and some patience. It’s nice to bank coin trading /ES with these tools.

  • Anonymous

    RTV Buy on the hourly,
    could get another lower close or trigger this hour 

  • rhae

    Geez GG… gimme a break

  • Anonymous

    Yes brother, keep it simple!

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

    :-)
    only after all the bulls load up.
    then price slides down to 125 trapping them.
    AND THEN little children.
    a gap down to 121, creating an entire reverse island top.
    Muwahahaha.

  • Anonymous

    GBP/USD, new low for the week on this fast drop
    yesterday’s pop and hourly Zero FX clue was the trade
    look where the price rose to today relative to that clue 

  • Anonymous

    neither. new low, by one point, 
    snort

  • Anonymous

    I want to share this. Financial crises have always existed. Of all the history books I’ve read there was always one. It has to be like that. Finance is not a game for the weak minded. Be strong and laugh at the abyss, because if we were to fall into it, well it will not matter anyways.

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

    ..assuming Dec 5th was max lift, then today is a waiting game.
    /ES is sitting on a support line.

    http://tinypic.com/r/m7vyqc/5

  • rhae

    You know you are getting bored when you do this kind of stuff…
    SPY 5m volume fickle finger… http://screencast.com/t/sc0wlW17

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

    Preach it.
    hey, did you guys know about 1920 WS bombing?
    OWS is nothing new.

    http://en.wikipedia.org/wiki/Wall_Street_bombing

  • Anonymous

    Imagine if a place like the place of ill repute existed during the height of the Cold War and Cuban missile crisis. 

  • Fibz

    yet the market rallied over 500% from 1921 to 1929…

  • Anonymous

    Not like this one….The depression was close but no china and brazil input at that time..the currency part of this disaster is just getting started…Got popcorn….plates only spin so long..sometimes longer than expected…UK case in point…

    this is the whopper and it was planned…for what we will soon know….

  • Schwerepunkt

    Speaking of bait&switch, wtf fuck is an MBS Dollar Roll transaction? Fed announced they are doing this.

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

    silver and gold, 
    sneaky little buggers, go away for an hour and….whoosh!

  • http://evilspeculator.com molecool

    Whatever it is – somewhere down the line it means potholes on your street won’t be fixed and there’s no money for educating our kids.

  • Anonymous

    The Federal Reserve uses agency MBS dollar rolls as a supplemental tool to address temporary imbalances in market supply and demand.  A dollar roll is a transaction conducted at market prices that generally involves the purchase or sale of agency MBS for delivery in the current month, with the simultaneous agreement to resell or repurchase substantially similar (although not necessarily the same) securities on a specified future date.  A coupon swap is a transaction conducted at market prices that involves the sale of one agency MBS with the simultaneous agreement to purchase a different agency MBS. Coupon swaps are transactions that allow the Federal Reserve to sell agency MBS that are not readily available for settlement, and purchase different agency MBS that are more readily available for settlement. Although purchases were completed at the end of March 2010, the Federal Reserve continues to use both dollar roll and coupon swap transactions to facilitate an orderly settlement of the agency MBS program’s remaining forward purchase commitment

  • http://evilspeculator.com molecool

    Nothing new under the sun. Did you guys know that Greece defaulted five times in the past 100 years alone? 

    http://www.forbes.com/sites/investor/2011/09/28/debt-defaults-have-greek-history/

    Why anyone would even think about buying greek bonds is beyond me.

  • Anonymous

    simultaneous agreement to resell or repurchase substantially similar (although not necessarily the same) securities on a specified future date

    this opens them up to buying junk mbs and cdo’s along with foreign junk…

  • Anonymous

    aka: Another way carve to up and distribute free money to the people that least deserve it.

  • Fibz

    exponential increase in bank suspensions from 1920 to 1930, yet the market still rallied over 500% during this period.

    disqus still posting that aud/jpy chart… lol.

  • Anonymous

    for /SI that appears to be the DeMark down trend exhaustion (on the hourly) from the high at Friday’s job’s number
    held the at the Lower BB’s and popped out of a double inside  bar
    let’s see if there is follow thru to start a new uptrend

  • Anonymous

    bear market rallies, gotta love ’em 
    versus a flat tape for months and months
    there are often more up than down days in a downtrend , 
    just the downs have larger range thereby yielding a downtrend 

  • Tronacate

    Ain’t that the fucking truth……

  • Anonymous

    Yep, all kinds of stuff pointing up a couple of hours ago on /SI. I see the DeMark buy countdown at 13, the positive divergence in MACD Histogram and Force Index, and the support from the intersection of Mole’s 25 and 100 period BB’s. The candle colors are Alex Elder’s Impulse system, which he uses as a filter. The change from red to blue means buying is allowed, so that also made the case for a possible buy.

  • Anonymous

    I’m going long EUR/JPY one lot. I want to play today.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    See my next post please.

  • http://evilspeculator.com molecool

    People like drama.

  • http://evilspeculator.com molecool

    Bottom line is they won’t EVER stop until we make them. Every year the banksters get more and more opportunities to rip off taxpayers and their own clients. Trust me – this is an end game strategy – which is why it is so blatant now. In other words – the rats are leaving the sinking ship. They know what’s next and they are simply grabbing whatever isn’t nailed down. Why do you think they are not fixing freeways and bridges? 

  • rhae

    sure you real traders and scalpers are raking in the dough… But I am stuck trail stopping the 60m slug. I thought I might get stopped out today but the slug has resisted that so far… it is generally volume related… a big red volume pooper scooper… could kill it, but not yet…

    SPY 5m with 60m slug bait  yellow lines…
    http://screencast.com/t/AFiTb3Z6io