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Bears Need Food – Not News
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Bears Need Food – Not News

by MoleOctober 6, 2011

Well you already know my anti-news disposition…

Let’s examine the tape here – not the economy – not Europe – not politics. They are and always will be utterly irrelevant.

Example:

Volar’s friend (not a trader, but in “business”): Volar did you hear about Greece? I mean, the Euro finished? What about the double dip?

I say what about X & X & X & X & X fill in your blissful news filled line of ignorance here folks____________________. Well it is not ignorance- stuff matters. I am just saying playing old news and betting on it to matter makes no sense IMO.

The honey badger does not and will never give a LINK about news. He cares about who is short and how much.

Yes I heard about Greece the last 3 times I bought the stupid Euro and make a killing!!!  They have defaulted many times BTW. Panic must breed, if it stops breeding it dies. I am specifically speaking to equities, and now the Euro. It is not that I don’t think the market can go lower, but betting on ‘what if’ is a retarded idea. Markets are about human emotion, supply and demand of that emotion, and party interest.  If everybody is already short (per my last post on short interest and Euro COT data) and Greece defaults what happens? Who is to add shorts? And why would they not cover on the fruition of the event?

Ok now on to sentiment data. As usual, a hat tip must be given to Jason at SentimenTrader. He is one of very few I take seriously.

Now let’s look at volume. Why 99% of traders ignore this is beyond me – it is imperative to understanding the tape. For EVERY seller there is a buyer. When markets fall on high volume what do you think happens? Very simple to me – panic sellers hand over discounted prices (vis-a-vis market orders) to patient prudent limit order buyers. This is exactly why short selling the S&P can be very difficult to time.

Here are 4 measures of volume on one chart.

Do you see it now? After a panic day cover short! Once the market stops falling and volume reaches capitulation levels, the next move lower (especially on broken support with ZERO VOLUME) is to be bought.  Not sure if we are there yet, but we are freaking close. Price ALONE means NOTHING to me- volume AND price means everything.

Consider put volume and the VIX. Who sold the VIX north of 40? Me and the banks. The vega is so utterly high P3 wont even make a put owner money! Even if the VIX spiked to 80 (utterly unlikely given that Fearless and I have shown you that once it spikes the move is done), I get what? I get long at 900 and I sell my calls for a profit? Cool beans.

Here is the OCC total put Volume Chart.

Now for the subs – the premium stuff.

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More of Volar’s charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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Here is the VXV Index.

I would not bet on the 2008 extreme. When we bottom, it will likely be a major low IMO.

Here is more on Rydex assets:

That ratio, again, has gotten really low. How much lower can it go?

Moreover look at the Implied correlation index.

A bit much eh?

Now on to sentiment surveys. I know many don’t believe in them, but the data works if one uses it as a tool (though I am not fond of the AAII data).

Here is the 4 survey index since 1998.

Clearly betting on the 3/120 even may be a bad idea. It is worth mentioning the survey with less data NAAIM was record low today. NAAIM is a survey of allocation, not sentiment.

Clearly we are extreme.

Now let’s look at Copper and the US$.

Copper:

Speaks for itself.

Now US$:

Speaks for itself. This may be early, but it is also a week old.

Finally I leave you with another indicator to watch- the AD Line.

If we make new lows we may have more to go, but otherwise get ready for the tape you are about to get… which will be a big… huge… massive.. steep… VIX collapsing…retail raping… bull rally.

Why? Well look at bonds…

A weekly hammer here would be telling IMO… we just filled the 2008 gap and tested the 2008 low. All of that money has to go somewhere….

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Best of luck unbiased trading,

-Volar

*** look not even 1 seasonality chart 😛


About The Author
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.
  • jigdaddy

    amazing stuff volar!

  • Anonymous

    Liking the bond chart.  Great info!

  • Anonymous

    Volar awesome post!!! Do you see a retest of the lows then off to the races say around 1250 spx?

  • http://evilspeculator.com molecool

    Well, I guess I’m off the hook for today – would not want to post over this! 😉

  • Anonymous

    Common some more airplane trashing….hehe

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

    A like for the Rydex chart.  
    (GG nibbles on leech crumbs).

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

    I’ll tell you why they keep it cold on the planes, just zoom in on this picture.
    😉

    http://seerpress.com/wp-content/uploads/2010/06/Southwest-Airlines.jpg

  • Anonymous

    LMAO!

  • volar

    i wish i could tell you, but I can not predict the future.  We had a retest on a daily and weekly basis (barely) on the 60 min.

    In any case i got what I was looking for- a trap at new lows on pathetic volume. 

    I have considered the 1946 option, but that may be mental masturbation

    http://content.screencast.com/users/wprosser/folders/Jing/media/b0aeaab0-206b-4e33-8a11-84d1c72bc19f/2011-10-06_1223.png

    The bears needed more panic and we did not get that IMO… maybe it is to come, but looking at my data, i would give that a low probability

    I dont know what will happen and if i get stopped out- well that is part of the game IMO

  • Anonymous

    This post combined with the Pres cycle makes for an Interesting October 🙂

  • Anonymous

    This bit of comedy was on ZH yesterday: 
    Mutual Fund Outflows Surge As NYSE Short Interest Back To March 2009 Levels… Yet Stocks Refuse To Plunge. Why?
    There actually is graph showing short int. spiking right at the LOWS of 2009.  Are they not answering their own question:
    Nobody left to get short and ‘last seller has sold’.

  • volar

    ya and the SI data is 4 weeks old LOL

  • Anonymous

    I was on that plane, seat 10E, whatta spot!  😉

  • Schwerepunkt

    Nice. I’ll even overlook the stretch-marks.

  • Ted Gresch

     If everybody is already short (per my last post on short interest and Euro COT data) and Greece defaults what happens? Who is to add shorts? And why would they not cover on the fruition of the event?That is a fabulous point. Thanks for the substantial crumbs. The meal must be really good. LOL 

  • Ted Gresch

     If everybody is already short (per my last post on short interest and Euro COT data) and Greece defaults what happens? Who is to add shorts? And why would they not cover on the fruition of the event?That is a fabulous point. Thanks for the substantial crumbs. The meal must be really good. LOL 

  • Anonymous

    5minZL  …..  interesting…. something is rocking (or going to roll)

  • Anonymous

    5minZL  …..  interesting…. something is rocking (or going to roll)

  • Anonymous

    don’t really see how we can push through all that resistance on so little volume. may have seen the lows, but wouldn’t be buying here…

  • Anonymous

    don’t really see how we can push through all that resistance on so little volume. may have seen the lows, but wouldn’t be buying here…

  • Anonymous

    agree rone…you are talking the lower left panel correct? Only 4th day using zl

  • Anonymous

    agree rone…you are talking the lower left panel correct? Only 4th day using zl

  • Marcus Troyka

     Lol. Perma-bulls calling a bull market on a 3 day rally in a bear market is funny. The one month chart on SPX says we were probably due for a bounce (or a crash) and we got a bounce. Still in line with descending peaks at the ~1160 level. The mid-long term H&S has definitely not played out.

  • Anonymous

    5min, bottom right

    big move and then right back the other way, all in a half hour or so

  • Anonymous

    Yes I see that…trying to understand correlations of charts still

  • Anonymous

    Yes I see that…trying to understand correlations of charts still

  • volar

    Please tell me you are not calling me a perma bull

    if you are see my BEARISH POSTs near the TOP:

    http://evilspeculator.com/?p=21108

    http://evilspeculator.com/?p=21236

  • Ted Gresch

    Oil up market up. Dollar down market up. Bonds down market up, and then you have the inverse. Today the bears are getting stair stepped to death. Every ray of hope gets halted by the 50 sma on the five min. chart.

  • Anonymous

    20 sma on the daily SPX should be a good short-term resistance. 

  • Anonymous

    Where are the perma bulls?

  • Marcus Troyka

     Well perma or not, this ain’t no bull market. Period.

  • 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„¸

    (whenever you guys absorbed all this)

  • http://evilspeculator.com molecool

    Does it matter? Bull/bear – that’s all mental masturbation. What matters is that you banked coin today. Did you?

  • Anonymous

    Ok here is a much longer term non- philosopher stone charting, simply a
    standard deviation probability. The candle is trying to close below the
    lower band of the bb. It could not, so base on the charts I just do not
    see a strong enough bearish case. Besides of course the whole ponzi
    scheme debate. life itself is a ponzi scheme
    http://hyperphysics.phy-astr.gsu.edu/hbase/thermo/seclaw.html.

  • http://evilspeculator.com molecool

    Don’t even start this shit – who cares if a squirrel farts in the woods? Let’s be focused on banking coin. It’s not a bull or bear market – most of the time it’s simply a pig’s slaughter.

  • http://evilspeculator.com molecool

    Yes, they are very funny and sarcastic over there – which they need to as they mostly are on the wrong side of the trade.

  • Anonymous

    Amen.