Now Reading
Bit of the old in out, in out
383

Bit of the old in out, in out

by ScottOctober 19, 2011

After the outside day, I posted that the odds (not my stupid opinion, but the odds) favored an inside day. Also, because there is a natural cycle of range expansion to range contraction (per Larry Williams), and the well noted effect towards range days AFTER trend days.

Someone asked on the board how I know the odds favored it? Funny story. I was serving a 5 year sentence for torture, kidnapping, GBH, and armed robbery, and rather than get busy every night with Mrs Palm and her 5 sexy daughters, I had people send me letters with charts. Years and years and years of candlestick charts. I spent every night with a pencil and paper looking for edges.

Now this is NOT a very common pattern. 4 times on the $spx in the last 2 years. Its easy to filter for, search for days with HIGHER HIGH AND LOWER LOW than the previous day, but I prefer to look by eye, with pencil and paper.

What I would like people to be alert to is the psychology of the weak hands now in the market. I noted yesterday that after an outside day we have NEW PARTICIPANTS in the market (since both longs and shorts got whipsawed out). What is happening when a NEW PARTICIPANT has a day where nothing happens?

He starts to get nervous! He wanted it to go UP/DOWN and it did not do what he thought it would. Therefore he becomes on high alert for jumping out. That is the psychology behind this trade and its inherent edge.

We have a high probability pattern today, with a small range, meaning small risk.

Now, both Volar and Fearless are bullish here… with good reason. Why would I not take that trade long (inside days are both long and short signals) ? Is that not BIAS? Which I am always screaming about.

No, and let me explain. In this case there is a SPIKE HIGH just above the entry point of the long trade. There is no telling how it will react to this old high, so there is a significant chance of hitting that old high and then rejecting it. If we took the trade long that would mean risking 23 points to gain 4 (with a further chance of the trade continuing) By my reckoning that is a sucker bet.

Put another way…. I have no idea if the resistance just above will hold. I dont want to get long until either the market has cleared the resistance and tipped it’s hand, or from lower down where the odds give me a higher reward for the same risk.

That does NOT mean there is not a significant chance of the market going straight up from here. I rate it as about 30%

I rate the possibility of it going straight down from here in a new leg causing downside capitulation as being also about 30%

I rate the highest probability of about 40% being we attempt to go down, and paint a buy signal from lower down.

With that in mind, what should my profit taking strategy be? I should obviously be more agressive than normal in banking downside profits, unless we have evidence that a new motive leg to the downside is underway.

Scott


About The Author
Scott
  • http://practicalt.blogspot.com/ Gold_Gerb

    Woohoo! – a Scott post.

    (now GG will go read it…threee times…..slowly)

  • Anonymous

    Well. Good post Scott.  I was watching the tape today, remembering what you said.  Kudos!

    In my flawed experience, many bullish candles ‘can’ also be reversal candles, depending upon where they are in the journey. 

    I think the tape went up too fast, along with Euro’s short squeeze. Psychologically, we are also in a cross-road since: major news-moving earnings (appl, good, intc, gs, ms, bac, c, jpm) are out, Merkel said no fast deal, Sarkozy is afraid of credit downgrade, demonstration every where… 

    This being OPEX, anything can happen. no?

  • Anonymous

    Some new setups (well extra details) over 2x posts to add to collection!

  • Anonymous

    You do not need to read my posts slowly. My stuff is so simple anyone can understand it, and 9/10 times I come to the same conclusion as my smarter and trickier co-contributors.

  • Anonymous

    I find your ‘style’ of describing & understanding the market much more suited to my brain than Volars or F’less posts!

    But your setups have to be used within the context of the discipline of your overall trading method, and that is no ‘simple’ task, both in detail and psychologically 🙂

  • Anonymous

    A few pertinent things to take away…

    A guy who bought yesterday has a different timeline, and a different expectancy than someone who bought a month ago. This is why trends persist, because a buyer in at the start of a long trend is not easily forced out of his position by a little whipsaw. The guy who bought yesterday is DIFFERENT, looking for upside or downside action in a hurry. If he does not see it inside a few days he is going to get nervous and look to jump. That is actionable intelligence.

    The longer an upmove goes on, the more psychological pressure there is on bulls to bank profits (and drive the market down when doing so) Think musical chairs. The gap down at the open of the outside day TRICKED nervous bulls into banking profits. Immediately dip buyers on the sidelines jumped in and ramped it back up.

    So there is a significant population of people who bought @ just above or just below the round number level of 1200.

    Those people are in profit, but a tiny profit. Thats an AWFUL POSITION FOR A TRADER TO BE IN. Not enough profit that you can set your stop to break even and be ice cold about it. Not enough evidence that you are wrong to jump out. Most traders turn into screenwatchers at this juncture (what do YOU do in this situation Amotka?)

    The big question is….. what do those people who bought around 1200 do? If the market hovers around this level for a few days they will probably get nervous and jump. If the market falls to below their buy in point they will probably be tempted to jump for breakeven.

    Remember “buy in cost” is a critical psychological level for LOSING TRADERS.

    For winning traders, THE PRICE I PAID MEANS NOTHING. What matters is “would I take this trade today”

  • Anonymous

    Not true. The psychology is endlessly fascinating to me, but it is really not that necessary.

    Just like you do not need to understand the physics of a car to drive it to work, you just need to understand where there is an edge and where there is not.

    All successful trading is based around long term positive expectancy of an edge. 

    This is consistent across Fearless, Volar, Mole and myself. Mole’s reversion to the mean trades after multiple outside bollinger moves are statistically verifiable and consistent. Volar’s extremes of put/call statistics, and Fearless’s ideas on trend trading are all obvious positive expectancy concepts.

    On the outside it may seem I am in conflict with Fearless at this juncture but I am not. 

    I only look a few days ahead, Fearless looks to the medium term trend. He has evidence that we are in a new uptrend, and I tentatively agree. To me I rate the possibility of us going straight up from here @ 30% and going down, then going up @ 40%… therefore my views are consistent with Fearless even though in the short term I see the possibility of a successful short trade.

    Now something to think about.

    If the lower probability outcome (falling straight from here) should eventuate, it SHOULD result in a bigger than expected move, since it would catch bulls by surprise.

  • Anonymous

    Thanks CS. Yes there have been times when a losing position becomes a ‘longterm’ investment!
    Lot to digest there. Hopefully others benefit from this insight too!

  • Anonymous

    The psychology of this is interesting. When a losing position mysteriously becomes an “investment” (i.e. your silver expedition) The phemonenon is an UNWILLINGNESS TO FEEL THE PSYCHOGICAL PAIN OF LOSS.

    The brain actually blocks evidence of your losing trade, its like an illusion you stare at the chart again and again, and cannot see the bearish evidence. Holding on for one more day seems sensible, yet it is an illusion.There is a Taoist line from the tai chi classics “embrace loss and let the mind be free”. To successfully trade, you must be ABSOLUTELY WILLING TO TAKE THE LOSS. You must expect it. The best edges are only 70%, therefore approximately one in three times you will lose. 

  • Anonymous

    Thanks again CS, and Mole, F’less, Volar, (and GG!) 

  • Anonymous

     this place is evil.  the same person with different personalities, pure evil.

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

    I took a painful loss once last year.
    it was the best learning experience. 
    BECAUSE,
    the next several days that same loss would have been 3X worse.

  • Anonymous

    Yes, its easy to see in hindsight, but at the time holding long silver seemed the things to do! I was up $11k after a few days of the expo-silver move, and, then fell back to to b/even, then i said i would let it drift lower as i wasnt concerned about a little bit of whipsaw. I would call it greed, as i didnt want to miss out on further big gains. But the warning was there c/o margin hikes, distributiion top, parabolic look, MOles/your warnings. Instead of profit, i came away with a loss!

  • Anonymous

    That sounds very familiar!
    I’m learning to love my losses as they are smaller than my winners. The losses keep me in the game and are part and parcel of trading. I accept this now, but has been a gut wrenching experience.

     

  • Anonymous

    Anyone know Opex max pain for SPX or SPY?

  • http://evilspeculator.com molecool

    Naughty day at ES 🙂

  • nyse

    How is everyone feeling about a crash by next Wednesday-ish?

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

    Great read here tonight and very insightful!

  • http://twitter.com/ActiveTrader ActiveTrader

    Great, post Scott. I also think a short-term shakeout is in order. After the shakeout, the rally is likely to continue to higher highs unless we breakdown hard and fast like you said.

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

    so that’s next Wednesday the 26th Mr. NYSE?
    and what size party will be attending?

    Tea for ten then.  very good.
    😉

    http://practicalt.blogspot.com/2011/10/month-end-in-sight.html

  • http://evilspeculator.com molecool

    Freeloader!

  • http://evilspeculator.com molecool

    I actually sing your posts out loud – in German and with Wagner’s Ritt der Wilkühre playing in the background.

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

    Youre nuts! 😉

  • http://evilspeculator.com molecool

    “I find your ‘style’ of describing & understanding the market much more suited to my brain than Volars or F’less posts!”

    Oh jeezzzz – how can you even say something like that? Volar is a pure bred math boy statistician (i.e. quant guy) which is a very rare skill as most people aren’t wired that way. But believe it or not, statistical methods represent more than 60% of all institutional trading. Did you really think those guys down at the prop desks at Goldman are using moving averages? LOL – that’s what they may be selling the retail schmucks – yes.

    Look – I was pretty decent in math as a kid – but I wasn’t a math genius. Volar obviously is and he lives and breathes his stats. You should enjoy the benefits of being able to stand on the shoulders of giants – at least that’s how I feel when I read stuff by Van Tharp for instance – or Volar’s posts. Force your brain to understand what he’s trying to tell you – perhaps it’s more difficult to absorb but it serves a very important purpose and that’s why I always look forward to his next post.

    BTW, doing stuff that is mentally challenging is a good remedy against Alzheimer syndrome. You’d be surprised how you can rewire your brain and embrace things you never thought you would dare thinking about.

    Now, the convict is an ‘old school’ type hands on trader. He would have gone along just famously with the Boy Plunger (JL) and you will simply not find anyone out there anymore who has drawn charts manually or listened to a ticker tape. It’s a completely different caliber of trader and they do very well as they are ‘street smart’ and develop keen instincts about the direction/state of the tape. 

    Then we have the Fearless types – very technical type and a good example of a seasoned 21st century trader who leverages a variety of tools previously unavailable to retail traders. He embodies discipline and a thorough understanding of what represents a trading edge and what doesn’t.

    And finally, we have the Mole types – evil, mentally retarded, tinkering megalomaniac, bent on market domination. No idea what he’s doing but he’s willing to drag everyone into the abyss with him. Stay away if you can 😉

    What differentiates ES is that it caters to every type of trader. You can take away simply what you understand/want and improve your edge. OR you can challenge yourself and become a different type or better trader. You can expose yourself to various trading styles, trading windows, instruments, perspectives, etc. And somehow it seems that the people who stick it out wouldn’t want to face the tape without getting their daily dose of ES – myself included.

    I think you get my drift – the whole is greater than the sum of its parts. 

  • http://evilspeculator.com molecool

    You should see my head spin at night.

  • http://evilspeculator.com molecool

    NO, because you were too cheap to subscribe 😛

  • http://evilspeculator.com molecool

    But I will get you in the end. Next time, Inspector Gadget – next time….

  • http://evilspeculator.com molecool

    My psychiatrist endorses this comment.

  • http://evilspeculator.com molecool

    Well…… funny you should mention next Wednesday….

    New moon scheduled for that day – so, some downside – yes, maybe. A crash? Well, I’m not the crash monkey anymore, refer to Prechter on that end.

  • http://evilspeculator.com molecool

    Always remember that what we ‘think’ does not matter. As the old saying goes – opinions are like assholes – everyone’s got one!

    My point is that we always need to remain mentally nimble – ready to consider new evidence at a moment’s notice and then being able to reverse positions if necessary (with an emphasis on the latter).

  • Anonymous

    Great Synopsis/Summary Mole ! (must be longest comment here for a while!)
    Yes, you all add something, and also for different time horizons also too.

    You seem on a roll today – CC even said your sugar trade (hidden to leeches) went the right way!

  • http://evilspeculator.com molecool

    Read up on ‘cognitive biases’ – Curtis Faith covered it pretty nicely in Way Of The Turtle.

  • Anonymous

    If you look at the intra-day chart, the drop today is more panicky than it was on Monday. VIX responded as well.

    One thing I thought strange if anyone can chime in. All morning the VIX and $TRIN were elevated, but the price movement was a lot back-forth. Gold slipped overnight, ES rallied while ES stayed put. I think the market is trying to break the lock-step correlation. Let’s see if this cha-cha turns into Tango.

  • Anonymous

    There is a practical way to do this. 

    Think of training your psyche like training a dog.

    You get more of the behavior you reward. Less of the behavior you punish. 

    REWARD the good behaviour of losing correctly. When I lose, but lose well, I take myself out to a magnificent lunch, take the afternoon off and see a movie, get a massage, buy something small I really want, etc.

    When I win or lose badly (ie not following my rules, taking premature profits) I acknowledge the mistake, mark it down in a “mistake journal”

    At the end of the month I spend time on each and every mistake I made that month, dissecting its causes and effect.

    Because I love the markets so much, I cannot trade until I have finished with my mistake journal. Sometimes I take all day to do it, and I cannot trade that day.

    Therefore the childish part of my psyche that gets its fun from playing in the market cannot play until we face the reality of our poor choices.

    I make a point of never judging a day by how much money I made. That is a subtle indicator for my psyche to like profits and hate losses.

    To be the 1% of market winners, I need to LOVE TRADING WELL, AND HATE TRADING BADLY.

  • Anonymous

    Thanks GG

  • Anonymous

    LMAO! “And finally, we have the Mole types – evil, mentally retarded, tinkering megalomaniac, bent on market domination. No idea what he’s doing but he’s willing to drag everyone into the abyss with him. Stay away if you can ;-)” Mole I can safely say Im very glad you dragged me to the abyss. I love this place.  http://upload.wikimedia.org/wikipedia/commons/2/25/Cerberus-Blake.jpeg. Three headed dog is the best way to describe the three of you.

  • http://evilspeculator.com molecool

    I’m the handsome one on the right.

  • http://evilspeculator.com molecool

    Down boy! Sitzen!!!

  • http://evilspeculator.com molecool

    “To be the 1% of market winners, I need to LOVE TRADING WELL, AND HATE TRADING BADLY.”

    Seriously now – this is going to be my quote of the month. Spot on.

  • http://evilspeculator.com molecool

    Of course it went the right way – because I didn’t care about the direction. As soon as it breached that NLSL on the Bollinger it did what the odds suggested it would do.

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

    As a new sub I want to say that there is no other place like this that I know of, the experience and backup detail is fucking sweet I thank all of you as this last 2 weeks has been kick ass…and kudos the the zero…my new best friend!!!!!

  • Anonymous

    Mole is that John Lansing JL?

  • Anonymous

    I think Mole is on Speed+caffeine+melatonin today 🙂
    Anyway, Guten Nacht!
     

  • Anonymous

    Interesting that the most important thing I have posted in months did not get a single like ;-(

    REPOST – embrace this and your trading will be transformed. It is literally the keys to the kingdom.

    Everyone talks the talk, of embracing loss. But losses hurt. For me the pain (psychological but manifested as physical) feels like being stabbed. It HURTS, not in a metaphysical sense, but a real knife in the guts way. We naturally shy away from pain, and a lifetime of conditioning teaches us to NOT TOUCH THE STOVE – IT IS HOT! We develop strategies for dealing with emotional pain.

    They include

    – drinking to excess, getting stoned
    – obsessively collecting evidence (charts and blogs) that back our view (loading zeroedge.com, or slurpofdope.com)
    – mentally blocking out evidence contrary to our position
    – rationalizing (I’m willing to give back some profits, I’m not going to get shaken out of this big move)
    – blaming other people for my own poor choices (Prechter hating)
    – getting into codependent relationships for safety (hanging out with the perma bears on slope)

    A little objective thinking. 99% of people lose. They lose not because of their opinions (like assholes as Mole says) but because of the way they think. They are conditioned to not touch the stove. The stove is hot. Ergo, do not lose.

    The only way to become one of the long term winners is to retrain yourself that even though the stove is hot, it will not kill you, and in the long term touching the stove when required will make you rich.

    The only way to retrain yourself of very ingrained (since childhood) behaviours is through HARDCORE MENTAL CONDITIONING.

    Your mind and psyche, out of the box, as developed by your DNA, are COMPLETELY UNSUITABLE FOR TRADING. Unless you are a Buffet or a Tudor Jones, you will need to be trained to think like a winner, and not like a loser. 

    You can read evil speculator every day, but as long as you are a losing trader deep down, under pressure, you will revert to type. 

    Amotka was showing real promise and diligent study, but under pressure blew up (reverted to old thinking). What you need to do, to be successful in markets, is to under pressure, revert to good trading.

    *************

    There is a practical way to do this. 

    Think of training your psyche like training a dog.

    You get more of the behavior you reward. Less of the behavior you punish. 

    REWARD the good behaviour of losing correctly. When I lose, but lose well, I take myself out to a magnificent lunch, take the afternoon off and see a movie, get a massage, buy something small I really want, etc.

    When I win or lose badly (ie not following my rules, taking premature profits) I acknowledge the mistake, mark it down in a “mistake journal”

    At the end of the month I spend time on each and every mistake I made that month, dissecting its causes and effect.

    Because I love the markets so much, I cannot trade until I have finished with my mistake journal. Sometimes I take all day to do it, and I cannot trade that day.

    Therefore the childish part of my psyche that gets its fun from playing in the market cannot play until we face the reality of our poor choices.

    I make a point of never judging a day by how much money I made. That is a subtle indicator for my psyche to like profits and hate losses.

    To be the 1% of market winners, I need to LOVE TRADING WELL, AND HATE TRADING BADLY.

  • Anonymous

    Scott I like to look at a losing position and if I can honestly say I would buy this right here I will stay in…if I can’t answer or hesitate I bail…I can also say the the zero has helped in this regard so far but only into it two weeks. My biggest problem is selling to quick but I guess hard to go broke if you are pretty consistent banking coin. Thanks for the post

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

    What GG freely receives, GG freely gives.

    SPY Love – read it and weep.  gnash your teeth.  but there it is.

    http://i55.tinypic.com/2v0n1oy.png

  • nyse

    http://goo.gl/6VNhv ends on Sunday, so…

    You already know about it GG 😉 (never saw this site before today – http://goo.gl/CQWcw)
    Not sure if it will hold up again. Here is a Reinhardt evidence from 2008: http://goo.gl/R9Rri

  • Anonymous

    “I was serving a 5 year sentence for torture, kidnapping, GBH, and armed robbery, and rather than get busy every night with Mrs Palm and her 5 sexy daughters, I had people send me letters with charts.”

    EPIC line!

  • Anonymous
  • Fearless

    I don’t want to post over Scott, so I’ll just make a quick comment here.

    Like I posted last night, I don’t see any advantage going long during the final three days of OPEX week.  I closed all naked long calls yesterday.  I think that a better place to go long might be a fakeout low above 1173, and this may be the last time we see 1180 for the next year.  I think we’ll clear 1260 within the next few weeks, and we may actually reach 1380 by EOY.

    My posts over the next couple of months are going to be sporadic as I just don’t have the time to commit to posting regularly.  Rest assured though that whenever I post, the contents will be worth your subscription fees:)

  • nyse

    This is excellent. I feel like you were talking directly to me. What would an entry in your mistake journal look like? Trying to incorporate some of your suggestions/tactics. Thanks, Scott.

  • nyse

    Its like four blind men touching different parts of an elephant (e.g., trunk, tail, ear, dong, etc.), but each knowing its an elephant.

  • Skates

    convictscott: what was the book you recommended a while ago?  I tried searching but am unable to find the post now…

  • Anonymous

    GG! GG!

  • http://thebhbgroup.com TheBHBgroup

    Not sure where you get your info from but I like your conviction although I highly disagree that 1180 will be the low for the rest of the year.  I have never seen so many bulls with very little fear than what I am seeing now in the professional asset management world that I live in.  It’s A SCARY time to be in the markets unless you are a very quick trader.  That’s my thought about the mkts now.  Trade and don’t believe anything right now.

  • http://twitter.com/ActiveTrader ActiveTrader

    I agree.

  • nyse

    You are sick with the fans, kid.

  • Anonymous

    Mole,

    Made an attempt to subscribe and would like to chat. Do you mind giving me your email. Thanks!  

  • Anonymous

    Never mind got it! Silly me;)

  • volar

    Scott.

    Sometimes you make my week/year.

    I would go as far as to say this is why most need a black box/ or system. emotion kills.

    and this is why i love evilspeculator

  • volar

    ya if you read my post the edge is the monday after opex 🙂

  • Anonymous

    EUR/USD testing the lower channel boundary and watching with an evil eye;) Additionally, /ES is doing the same from 1068 low.

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

    amokta,
    learn from the past..but let’s focus on the now.
    where’s the silver bottom?
    😉
    http://i52.tinypic.com/29wolqw.png

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

    Scott & Mole are working on a book.
    blog trading in the 21st century.  something like that.

  • Anonymous

    Any moment now!……………..

  • http://twitter.com/nogreedorfear nogreedorfear

    any moment up or down? 🙂

  • Anonymous

    I’d say down, Euro just dropped and tagged the lower channel as I type. Good place for a trade IMO;)

  • http://twitter.com/nogreedorfear nogreedorfear

    my guess is we should get another buying climax before a big correction/fall..

  • Anonymous

    Done! New sub! Finally! Hehehehe!

  • Anonymous
  • Anonymous

    Definitely room for that to happen;)

  • Anonymous

    Speaking of, Anybody know what the stats are on the “trend day indicator”? I assume it’s done in Ninja, so backtesting almost comes for free, right?

  • Anonymous

    Ya, taking a bath right now. Geeeez!

  • http://twitter.com/nogreedorfear nogreedorfear

    anyone has a chart of SPX and copper together to see correlation? Last 5 years maybe. thanks

  • Anonymous

    BTW, Get ready for headaches. Correlation is weird because the result (amount correlated) changes as you change the window over which you perform the correlation calculation. 

    And correlation can change at times too. Some people have written papers about in times of large volatility, lots of things start to become more correlated (usually to the downside).

  • Anonymous

    I’m not proficient at loading up images.  Here is a five year chart of copper with SPX in the background.  http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=5&mn=0&dy=0&id=p64401501925

    The co-relation is not necessarily in magnitude but in direction.  Someone else may be able to tell you how many days copper up = spx up and vice versa.  However, the co-relation since 2009 is quite visually plain.

  • Anonymous

    Euro just broke down;)

  • Anonymous

    Well, IMO the odds right now are not really favoring one move against another. We haven’t had a proper ABC retracement yet from the 1074 low . So that is bullish once the current correction we’re in completes.

    OTOH, we have already retraced 53% of the drop from May. So, that could be it as far as the bounce from 1074 is concerned.

    Add to that a stop of the rally at the 5 sma (acceleration line) on the monthly: http://stockcharts.com/h-sc/ui?s=$SPX&p=M&b=5&g=0&id=p65510470195  which isn’t really bullish (The month is not done though)

    Personally I am short now and I’ll start to cover once I see strong positive divergences on the hourly zero.

    I am not excluding a flat ABC correction as well (i.e revisit of the low at 1074, then re-bounce towards 1235)

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

    This may get me banned for a week.
    Then again, I may get 10 likes!!!

    http://i52.tinypic.com/dfycrm.png

  • http://twitter.com/nogreedorfear nogreedorfear

    spx copper move together. cu leads or lags sometimes. so copper falling means – spx likely to fall too. that’s what i get from the charts..Thanks!!

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

    I see it.
    you think it’s going to 1.366?

  • Anonymous

    If it goes lower than 3.00 in the next couple of days , watch out below  

  • Anonymous
  • Anonymous

    ST 1.368 area;)

  • Anonymous

    LMAO!!!!! I’m in stitches. 

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

    bad link..

  • http://twitter.com/nogreedorfear nogreedorfear

    short trade seems too crowded at the moment – so i think opposite should happen..

  • Anonymous

    Ya, wish it was that easy Bro!

  • http://twitter.com/nogreedorfear nogreedorfear

    agree..thanks.

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

    if I drew my channel right, you may get some bouncing about now..

    http://i54.tinypic.com/2li7qsz.png

  • Anonymous

    Yep!

  • Ted Gresch

    Hourly chart

  • Anonymous

    30 min from 1.31 low, just back tested

  • Anonymous

    Sorry, that original chart was hourly but either way.

  • http://twitter.com/nogreedorfear nogreedorfear

    dollar looking angry. breakout “whenever” should spook equity markets…

  • Anonymous

    Glad you pointed that out! 

  • Anonymous

    Is FX still available? If so, how is it accessed?

  • Ted Gresch

    Ran into the 10 sma on the 15 min. chart

  • Anonymous

    Yes, have to say that it is beginning to look ill;)

  • Ted Gresch

    AUD/JPY H&S pattern, hourly chart, could fall to 75 

  • http://evilspeculator.com molecool

    Menu bar.

  • http://evilspeculator.com molecool

    Tutorial?

  • http://evilspeculator.com molecool
  • Anonymous

    still waiting for 750-775 Russell, but that Q chart sure looks bullish as all git out. Maybe that means I should just short now… Nah, will probably just keep waiting

  • Zero % forever

    Miners any one !

  • Anonymous

    I personally LOVE your stuff and save all your posts

  • Anonymous

    I go away for months come back to a Post Titled “Bit of the old in out, in out”

    and yet no vidy of Alex and his droogs. A bit cold and pointless isn’t it?

    http://www.youtube.com/watch?v=mfPyTiUi_Uk&feature=related      Record Store scene

    http://www.youtube.com/watch?v=F-anJ9wzuZc&feature=related  Ultra Violence and sex

  • tradem4alpha

    This is exactly what Marty “Pit Bull” Schwartz said in his book (“Pit Bull: Lessons from Wall Street’s Champion Trader”), great analogy with changing gears:

    “You can never shift from reverse to first gear
    without first

    going through neutral. YOU MUST CHANGE THE
    DIRECTION OF

    BAD TRADING BY FIRST SHIFTING TO NEUTRAL. YOU MUST

    STOP. What happens is that as your fear of losing
    rises, your emotions

    start to short-circuit your intellect and you no
    longer have confidence

    in what you’re doing. Stopping lets your emotions
    calm down and lets

    you reestablish your momentum with your intellect.
    Remember, time

    is always your ally. Use it to relax, clear your
    head, and regain your

    energies.

    Once you’ve stopped, digested your losses, gone
    through a period

    of preparation, and feel comfortable with your work
    habits and methodology,

    you’re ready to start trading again. The best way
    to do that is

    to trade small and to concentrate on being
    profitable. DON’T START

    BY TRYING TO MAKE A KILLING.

    When I came back, I’d see a trade I liked and I’d
    do it small with a

    very tight stop, so if I was wrong, I’d get right
    out. All the time I kept

    telling myself, make little profits, make little
    profits, make little profits.

    Black ink, black ink, black ink. It’s all
    psychological. I felt sick and I

    wanted to make myself feel good again. I wanted to
    regain my confidence

    because CONFIDENCE IS ESSENTIAL TO A SUCCESSFUL

    TRADER. I had three contracts the other day, which
    is a tiny position

    for me, but I ended up making $15,000 on them.
    Fifteen thousand dollars

    is real money, and I took that and built it into
    $40,000 the next day, and

    all of a sudden, I’m hot again, and I feel great.”

  • Anonymous

    I just got home and read the comment section for today… we were ON FIRE! 

    This is the best trading blog ever, I’m so privileged to be a part of it.

  • Anonymous

    I have done my own stats on it.

    My take is that it does not guarantee that its a trend day, although the odds are very high, approx 90% in a statistically small sample (20 trend days)

    What it does guarantee is that trades in the opposite direction should be taken OFF THE TABLE immediately. Taking all trades WITH TREND becomes paramount.

    Once I notice a trend day, the market is “in gear”… everything works. Therefore I take EVERY SINGLE TRADE on the 5 min, 15 min, 30 min, and 60 min charts.

    You can make a month worth of profits on a single day.

  • Anonymous

    Market Wizards, new market wizards, reminiscences of a stock operator. For beginners Alex Elder’s enter my trading room is good.

  • Anonymous

    Yes Great Stuff today. 

    I am printing out your post on training yourself to lose in a profitable fashion!

    Prime Stuff to be sure

  • Anonymous

    Yes. This is indeed a terrific blog. And CS, your posts are always eagerly awaited. Please post more often.

  • Anonymous

    Scott some nice postings.  I really agree with your posts on the emotional/psychology sides.  Thats been partly why I’ve been posting the rationale for some of my trades here; it serves as a “mistake log” for me.  Its an area that used to be my greatest downfall and I still suffer from it but am gettin better, and so is my account as a result.  Keep it up.

    However, a few questions on this setup if you don’t mind.  I may have asked these before.

    1) Is this setup only valid if the low of yesterday is penetrated in the cash market?  I’ve just arrived at my screen and see that it effectively did go below in the overnight.  Does this qualify as a signal?

    2) At what point do you instigate a trade?  I know, “duh! see above” but bear with me.  Lets take yesterday’s low of 1,206.31.  Do you mean this needs to get broken by a certain amount before its a valid signal?  Or does even a squeaker count, like  a single print of 1,206.29 followed by a rally back above?  Or do you use certain rules like, eg, for example, 2 consecutive closes below on a 5 minute chart or something like that?

    3) Do you look at other indicators at the time?  Like lets say we go below but volume is weak do you pull the trade as it doesn’t look convincing?

    Apologies if these seem like dumb questions.  It has always been anathema to sell low to me on these types of setups and I’ve always been more of a person who has attempted to pick turning points but I have done this successfully a few times of late and want to improve my execution.  I’m just afraid I’ll balls it up and pick a bad entry due to not fully understanding your plan for these setups.

    Thanks for your help.

  • Anonymous

    great that you are looking for answers to the same questions I have!

  • Anonymous

    Curtis Faith summarizes the system the turtles used with 4 simple precepts: Trade with an edge, manage risk, be consistent, and keep it simple.There are several key emotional weaknesses (cognitive biases) that cause the markets to trade the way they do.Loss aversion: people feel the pain of a $100 loss more than the joy of a $100 gain. This causes people to hold losers and cut winners to quickly, the exact opposite of what a successful trader must do.
    Sunk cost effect: makes it hard for traders to sell losing positions because it makes the loss “permanent.”
    Disposition effect: people like to “lock in profits” which makes it very hard to make up for losses when they don’t let them run.
    Outcome bias: the propensity to judge a decision by its outcome rather than by the quality of the decision making process at the time. 
    Recency bias: recent trades, especially losses can cause traders to lose faith in their trading.
    Anchoring: recent prices make it hard to sell losing stocks; traders anchor or certain prices.
    Herd effect: it’s very hard to trade a certain way when everyone else is saying you’re wrong.“Good trading is not about being right, it is about trading right.  If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades.”   Think in probabilities, not about being right.  It’s possible to produce amazing performance even with less than 50% winning trades (but you have to let winners run and cut losers fast.)

  • Anonymous

    Thank you Scott. 

    That is a great explanation and measurable.

  • Anonymous

    Thanks Mole.

  • Anonymous

    Chaps I’ve gone long spx at various prices between 1,209.x and 1,212.x on what looks to me like a reversal pattern in EURUSD.  I think the plunge through 1.3680 was capitulation that was immediately and ferociously bought.  Betting on new uptrend in EurUSD on shorter timeframes.  Longer term the level looks like significant support.  Very tight stops here below 1.209.15.

  • Anonymous

    Adding on breakout of rectangle that has bound the SPX on the 15 minute at 1.215.33.  Stops adjusted on average position to 1.214.50 (just below breakout).

  • Anonymous

    Adding more at 1.216.02 at restest of breakout area.  Adjusting stops to 1,212.0 as we may reprobe the area and less than a point below is asking to be taken out by a stop run.

  • Anonymous

    OK I think that qualifies as 3 succesful retests of the breakout area.  Adjusting stops to slight profit at 1,214.00 (b/e on weighted average position at 1,213.63).  We either move higher from here or my thesis is wrong so will take profits and move on.

  • Anonymous

    Coffee in check, work out in check, AND time to eat breakfast now. Btw guys beautiful post out here. Im in tears. be back.

  • Anonymous

    now where were we..ahh yes kicking ass.

  • Anonymous

    Morning mate, where are you based?  You’re often the only one keeping me company at this time 🙂

  • Anonymous

    SPX breaking out of bullish pennant consolidation pattern.  May go back for retest of breakout area at 1,217.50 ish.  Stop adjusted to low point of pennant below breakout area at 1,216.00.

    I wonder chaps is this a continuation of that bullish divergence that was exhibited yesterday on the Zero lite but didn’t play out in cash hours?

  • Y KW

    Hi dude … nice post … 2 comments … this is an IPOPIP sell setup as per L.I.V.E. … additionally, I noticed how you went from personal speak (use of I word) to safe speak (we word) in the last para … maybe insightful or fanciful.

    YKW

  • Anonymous

    haha i know Im on the other side of the pond south carolina.

  • Anonymous

    My old friend ! I do not think its an IPOPIP on $spx…. but it IS a fakeout inside period AND an Outside period inside period AND a spike 3d with es futures and $spx.

    For those who do not know who YKW is…. he literally taught me everything I know about price action, and still has forgotten more than I know.

    A bona fide GIANT of price action.

  • Anonymous

    how are you friend? and most importantly how are you seeing this market?

  • Anonymous

    Quick query – some folks have mentioned Max Pain
    Now i dont know him personally, but is Max Pain a ‘sure’ thing – if it were, then all we need to is go long or short accordingly, for  100% expectancy!

  • Anonymous

    Answering questions

    1) Each person needs to do his own back testing. I have traded it both ways, taking entries in the es after hours market, and also trading es futures (but only in market hours ). One thing I will say is that if you are short from the overnight, and the cash market fails to break the low, that says something very bad about the bearish case.

    2) What do I take to instigate the trade?…. Oh my apologies I thought you knew how I trade. I take the signals on $spx and then take the equivalent daily high and low off es futures. In this instance short @ 1201.25 stop 1227.50

    I do this because I backtested these signals across markets and I found the edge was dramatically more effective taking the signals from the cash market (most of the volume happens in nyse hours)

    3) I NEVER LOOK AT ANY INDICATORS AT ALL to follow these candlestick patterns. A zero reading confirming, a pullback to a significant moving average, a position at the top of a bollinger band… these things all give me confidence, but at the end of the day I JUST FOLLOW THE PLAN. If I see a short setup, I short the market. If I see a long setup, I get long.

    Its not rocket surgery 😉

    Now this method is not perfect. By definition you get poor entries by waiting for the low or high of a bar to get in. The idea, which is statistically testable, is that you trade a few points to get a higher reliability trade and a place where you are certain you are wrong.

  • Anonymous

    Amotka – I do not think maxpain is an edge. I am not an options trader, but options traders I respect think its an illusion.

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/b3cf4513-6724-4259-9bbd-3cb6c78cd4f1/2011-10-20_0728.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/cbf7d8cd-d692-4e70-9196-85a83efcbe07/2011-10-20_0729.png
    not much difference between those two. and dang it would have been a better idea to hold the late game eur/gbp yesterday. But better to stick to plan than lottery it. Anyhow Im feeling risky and will load AFTER data release. but considering what i want, fast move up, the load may have to be taken before the data release 12:30 GMT. Ah ill take a half lot here.

  • Fearless

    It’s useless. It’s just a myth.

  • Anonymous

    Thanks Fearless/CS
    Theres no point me spending time on something that isnt going to provide an edge!

  • Anonymous

    Thanks Scott appreciate it.

  • Ted Gresch

    What is a IPOPIP sell setup? Does it matter which kind of setup it is? Does one or the other have a larger degree of success? 

  • Ted Gresch

    YKW, can you please share with us a suggested reading list.

  • Anonymous

    Great thanks, playing it cautious.  Got stopped out earlier at 1,216.00 for some profits.  Think this is a big retest of breakout from a long rectangle that spanned from the lows to 1,215ish after the Euro exploded and went back to digest gains, so I’ve gone back long at 1,214.44 but ready to get out at a moments notice tbh.  I think if the Euro can get back above 1.38 it could set a bullish tone for the day.

    Its hard to know what to do with Volar/Fearless bullish, Scott prepared to get bearish 🙂

  • Anonymous

    Hopefully the molecode follows your ruleset! 🙂

  • wengue

    Echo that. Would like to know what an “IPOPIP sell setup as per L.I.V.E.”  is, please.

  • Anonymous

    if gaddafi is really dead risk on rally I believe. oh well i just turn on libya tv and says he is alive, it reminds me why I dont watch the news anymore.

  • Ted Gresch

    30 min. chart. Potential H&S pattern. Currently in a wedge. 

  • Anonymous

    I assume thats sarcasm or you are in for a slapping when Mole wakes up 🙂

    Even I, who believes that news does matter sometimes, don’t believe anyone gives a rats ass about Gaddafi

  • Anonymous

    lol! shhhhh dont tell anyone! yea I watch the news not on tv. Reuters, FT, and my fxtrade news is what i normally use for news.

  • Anonymous

    banned!!!!! 😀

  • Schwerepunkt

    Personally, I’m glad he’s history. Realized I actually know the current Libyan Information Minister Mahmoud Chammam from my days as a journalist. 

    Not sure it will affect the markets, apart from certain small oil/gas companies that have concessions off Libya and/or Tunisia that I’m aware of. If Libyan oil production comes back on in a meaningful way sooner than expected that could depress oil a bit.

  • volar

    I disagree (Only Slightly however)

    IF the VIX is >30 (3.5 years tracking this), Max Pain is not that far off… but it must be near 30 for some time.

    AND there must be TONS of option volume.

    SO in general, useless. But under certain conditions when LOTS of players with a big stake in the game have a reason for it to work, then i think it is highly relevant.

    Now relevant does not mean it has an edge IMO. So i only use it under particular circumstances as a gauge- NOT and EDGE.

  • volar

    if the VIX 30 and tons of put volume.. worth watching.. but still no edge IMO

  • Anonymous

    That’s what I’m talking about;)

  • Anonymous

    Divergence here between equities and the dollar.  EurUSD falling, equities not responding.  Normally in this case you would say currency will win, so booking profits on 50% of the position. 

  • Anonymous

    Claims still over 400K, Can not seem to break that trend.

  • Anonymous

    Ever feel like no matter what you do every trade is essentially the same trade?  I could pick out tons of charts that are essentially all the same pattern.  Its a lesson I learned from “When Genius Failed”.  In a crisis all your correlations go to one.

  • Anonymous

    Banned along with AMC 😀

  • Anonymous

    Hehehehe! Had to look;)

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

    what about pinning to a strike price?

    I’ve seen it happen.  but hey, maybe I forget the times is DOESN’T!

  • Anonymous

    You feel this is going to bust one way or the other soon.  We are getting right to the point of the wedge.  Which way will it be?   

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

    Skynard,
    did you make the 1.368 trade?
    looks like my channel danced with price.

    http://i54.tinypic.com/2hwcy8.png

  • Schwerepunkt

    Euro just shit itself . . . Good call Corporal taking profit.

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

    1.374 – Timberrrrrr

  • Schwerepunkt

    OF course, as CS says, we’re in no man’s land until 1216 ES or 1201 ES are breached. Only good for scalping for now.

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

    OMG, I just looked at /ES..

    1213.50 to 1205.50

  • Ted Gresch

    DAX dumped as well.

  • Anonymous

    I feel like it is 9 am and as you said before futures and cash screwing around. Drinking coffee and relaxing. 

  • Anonymous

    guys there are rounding up gaddafi boys. Im telling you risk on rally

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

    Don’t drink too much coffee.
    guys here have lost big taking a small ‘biological break’ during OpX Thursdays.
    🙂

  • Anonymous

    biological break?

  • Anonymous

    Yes, stopped me out with some gains and reloaded this morning before leaving.

  • Anonymous

    The way the Euro is reacting to each idiotic slip of the tongue by some german politician or other is truly retarded.    Whats interesting here is we haven’t made new lows on the move.  Someone who had not watched all of the premarket or read any news would come in and see SPX and Euro pretty much exactly where they were 5 hours ago.  I’m going speculatively long the Dow here on bottom fishing exercise at 11,489 with a stop just below yesterday’s LOD.  The Europeans will get this done in the end. 

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

    make rain.
    drain the lizard.

  • Anonymous

    I mean seriously guys?

    “NEW YORK, Oct 20 (Reuters) – The euro fell against the dollar on Thursday after a report that the German government had not ruled out a postponement of the EU summit planned for this Sunday to grapple with the euro zone debt crisis.”

    I could be wrong but I’m fuckign buying this.  The big boys are gonna laugh this all the way to the bank and I want to ride on their coattails.  Stop 11,468.

  • Anonymous

    more like komodo dragon! ping pong! haha

  • Anonymous

    Yes! Zero Baby! Looking at the 5m chart it looks to de developing a pos div if reading it properly. Would need to see a move above Zero for confirmation right?

  • Y KW

    Hi Ted … the best teacher is The Market … I am of the PC (Pre Computers) era having started by drawing historical daily, weekly and monthly charts for about 6 hours a day by hand for about a year without trading, complete with a bunch of indicators crunch on a calculator … hence getting a real understanding/feel of the message from the market.  John Hill’s book, Scientific Analysis of Bar Charts had a positive influence on my journey as it confirmed many of my own ‘discoveries’ regarding raw price action.

    Hi dude … nice post … 2 comments … this is an IPOPIP sell setup as per L.I.V.E. … additionally, I noticed how you went from personal speak (use of “I” word) to safe speak (“we” word) in the last para … maybe insightful or fanciful.
    YKW

  • Anonymous

    2 early for me to tell Skynard

  • Anonymous

    It will be interesting to see how yesterday’s divergence plays out today on the 5min.

  • Anonymous

    SPX tagged the 50 and turned tail;)

  • Y KW

    Yes it certainly does matter what setup it is as there is a natural sequence of the 12 setups that I use and are present at turning points … yes there is order in chaos.

  • Anonymous

    Ok lads it looks like I could be wrong here, but IMO it was a bet worth taking with small risk.  Adding some at 11,500 but it could go either way.   

  • Anonymous

    I wait for confirmation then enter on a pullback to 21 EMA

  • Anonymous
  • Anonymous

    Trimming here takign 40 points off the table. 

  • Schwerepunkt

    Some news items at 10am, not important by themselves but likely to cause some volatility short term.

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

    SPY 10m  – bear flag forming?

  • Anonymous

    Got it! Thanks!

  • Anonymous

    Third time is a charm!

  • Anonymous

    Sure we will break it … to the upside expect 500k plus by next year.

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

    TICK pattern avgs below zero.

  • Anonymous

    the 5min has not been 100% reliable lately…that is, what looks like a budding divergence ends up not panning out…so wait for confirmation…plus, the 5min divergences are usually only good for the day

    Does that sound right guys? (and T-Mom?…where’s T-Mom?)

  • Schwerepunkt

    Bullish news? Edit: Philly Fed yadayadayadayadayada . . .

  • Anonymous

    Zero not confirming this drop?

  • Y KW

    Mea Culpa … my comment regarding IPOPIP was based solely on your chart above … I do not follow or trade this market (no excuse for my not checking on my charts).

    Thank you for other!

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

    nope.

  • Anonymous

    Er wtf just happened?

  • Anonymous

    Zero not confirming?

  • Schwerepunkt

    So, seems 1201 held? Could wait til 1216 is broken to the upside or take an early lark long with tight stop?

  • Schwerepunkt

    Philly Fed +8 v. -8 expectations; at least that is what the talking heads say explains the bump up.

  • Schwerepunkt

    I am a leach . . . no clue. 

  • Y KW

    Just noticed your chart … seems you are in a room of 1000+ people all singing their own song … a real trap when wanting to Listen to the Market … translation from my side … far toooooooo many bars on the chart … I view no more than 30 odd per chart so I can more clearly see the message from the last bar (candle actually)

  • Anonymous

    Liking this action today with a new tool;)

  • Ted Gresch

    Thanks for responding. Can you elaborate just a little, please. 

  • volar

    Y KW

    love your thoughts.

  • Anonymous

    That could get faded just as hard as the other german crap so doing a bit more hedge trimmming here at 11,534.  I’m leaving stop on remainder at 11,468 but its now a free trade with the profits taken. 

  • Anonymous
  • Anonymous

    Is this going to be an inside, inside day?

  • Anonymous

    OK, Bull Div+flatline=up?

  • Anonymous

    Chaps I think I got lucky earlier.  I’m well up on the day, closing remainder here for 60 points profit at 11,550.  Too many hanging men candles on the 1 minute charts and I don’t think the zero is confirming this positive move either.  I don’t think the drama is over for the day, but I feel in no-mans land for a short also.  Going to the sidelines until I see an edge.

  • Anonymous
  • Anonymous

    Maybe not!

  • Ted Gresch

    Thank you. I will hunt it down. 

  • Anonymous

    Scary or reality? I am not sure where the liquidity is going to come from for the rally Fearless is expecting.

  • Schwerepunkt

    Talking about November now before more money for Greeks. LOL. Those Eurocrats are something else . . . 

  • Anonymous

    Long again bottom fishing, 11,510.  stop below LOD.  I have a feeling we are going to oscillate around flatline today.

  • Kudos

    The trillions that piled into bonds? 10 year yields going to 1.7% means a lot of money flowing into them. Short covering

  • Anonymous

    the liquidity will come once it comes. ConvictScott nails it best when he says different type of trader is in. so caution curves ahead. 

  • Anonymous

    Looking at the frequency of your trades, you must be paying a fortune in fees and commissions

  • Anonymous

    Copper getting another backhand today

  • Anonymous

    I dont see it. Liquidity needs QE or loans. Dont see either. So I am sceptical.

  • Anonymous

    Listen chaps, not that it matters to trading, and you should be on whatever side is trending (I made this mistake fatally in 2009/10)……….but Europe has no solution other than to fix this problem.  They will get it done in the end.  The only solutions are breakup of the Eurozone and catastrophe or leverage/money printing via the EFSF and inflation.  The former solution requires politicians of vision, integrity and courage who are prepared to take painful decisions in the short term for the longer term good.  These are in short supply.  The highest probability trade is for them to do what politicians do which is prevaricate and try to push the problem down the road so that crunch time arrives on someone elses watch.

    This means, on balance, the EFSF will get done (although there could be many twists and turns before then), it will be inflationary and stocks will soar.  I’m not saying this will solve any of the worlds problems and in fact may be a continuation of the last 2 years where the average man in the street watches wall street get fatter while they find it harder and harder to spread their paychecks around. 

    But as a former frequenter of this board was wont to say, zimbabwe was one of  the best performing stock markets in the world last year in notional terms……it didn’t mean any real wealth was created, but it was very expensive to bet against.

  • nyse

    Glad you’re here dude.

  • Anonymous

    U beat me to it. Was about to say that.

  • Anonymous

    OK, now that we lost VWAP a break of the lower BB will cause Zero to go negative. Make sense?

  • Anonymous

    I trade technicals, not news.

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

    yes, zimbabwe.
    I always use that example to crush the argument “it’s CAN’T go higher!
    so I cling to CS ideas.

  • Anonymous

    Indeed!

  • Anonymous

    looking like 1180…

  • Anonymous

    I see a pretty strong divergence on the min EURUSD

  • Anonymous

    …and solving this crisis will inevitably lead to higher taxes, ergo less spending and less motivation for work. Not really bullish. Solving this crisis does not necessarily mean everything is bullish then.

  • Anonymous

    Germany wont go the path of Zimbabwe and neither will the US. So stop dreaming about hyperinflation. Think more like Japan. Long term pain.

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

    SPX daily low.

    they keep us guessing.
    http://i54.tinypic.com/2vxpow2.png

  • Anonymous

    Sorry buddy. Our monetary system is based on credit, fraud and ponzi but not printing money. So when that changes I will get on the hyperinflation train. If they dont change the monetary system whatever you are saying cannot happen.

  • Anonymous

    Thank you Scott for the set-up.

    🙂  ==> Bank

  • Anonymous

    Relax. We wont have that here. yet…

  • Anonymous

    Thing of beauty it is!

  • Anonymous

    yawn at this move lower. sds have reset.

  • Anonymous

    if we reach SPX 1174 (20 SMA D) with positive divergence, I’ll go 100% cash, then wait for the bounce to the 5 SMA D and then reassess the situation for weakness or strength before committing to  any position.

  • Anonymous

    Nope, spreadbets have none.  Spread on Dow is less than 0.7 of a single Dow point.

  • http://evilspeculator.com molecool

    Everyone got the Alert this morning? 🙂

    BTW, check out the EUR/USD – it’s scraping the hourly NLSL on the hourly AND it’s below a NLSL on the daily.

  • nyse

    Inflation = implicit tax

  • nyse

    OFF TOPIC: Best verbal cover letter/resume I have ever heard. A little comedic relief for you rats (FOR RATS ONLY!)
    http://soundcloud.com/nicknyse-1/voice-mail-resume-blow-your

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

    so SPX is 1202, and is lower than yesterdays low.

    With that in mind, what should my profit taking strategy be? I should obviously be more agressive than normal in banking downside profits, unless we have evidence that a new motive leg to the downside is underway.

    so if you were short, take profits?
    and if you weren’t short, cautiously sell?

  • Anonymous

    thx mole. I prefer this “simple” stuff.

  • Anonymous

    Yes and thanks for that. This alert will be very helpful for future trades.

  • Anonymous

    I never said hyperinflation?  Where did I say that?  I only used zim as an example of where markets can rise while fundamentals apparently get worse.  And I’m not dreaming of anything, only looking for the next trade.  The only reason I responded to your post was you sound a lot like I did 2 years ago. 

    My view on the fundamentals hasn’t really changed in the meantime, but it no longer impacts my trading and I’m a lot better for it. 

    Maybe you’re immune but I found that having this “oh the world is fucked, and I just can’t see how things can keep going up while everything is so obviously bad” mentality in the back of my mind prevented me from taking good trades that were contrary to this view. 

  • Anonymous

    well, we’re at S1 and would expect to retest the rising trendline at the 1206 area.

  • Anonymous

    Now I understand…

  • Anonymous

    None of my co-related securities are showing signs of breaking from the pack at this point.  UUP moving up (bearish for equity), TLT moving up (also bearish – but potential double top on 15 min bars), CU and commodity currencies moving down (esp. C$), USO soft.  Zero soft but not enthusiastically so and a positive divergence possibly developing.  In short, Scott’s post last night looks like it could have been written about now with the benefit of hindsight and not changed a word!

  • http://evilspeculator.com molecool

    🙂

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

    sounds good.
    do you guys have a gap?  I’m showing one at 11AM.

  • http://evilspeculator.com molecool

    I don’t care how much gasoline costs – I always just put $10 in the tank.

  • Anonymous

    whether you are right or wrong, I don’t see that the fact says much about short term trading and trends.  I can’t remember who said it, but it remains true:  the market can remain wrong longer than any of us can remain solvent.  Ponzi scheme or not, it’s what we have.  Short of buying cases of spam and digging fall out shelters, I think we have to trade the tape we see. 

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

    what a bullshitter.
    he should sell annuities.

  • Anonymous

    yea, i see a gap too.

  • http://evilspeculator.com molecool

    Trading the news? Ouch…

  • Anonymous

    You mean 10 gallons? You will be surprised how fat the US jumps off a cliff when gsoline will hit 10$ a gallon!

  • Anonymous

    Yes I agree. Its a ponzi scheme. But even in ponzi scheme you need fresh money coming in. All I am saying is I dont see the money. Show me QE3 and I will go long any crap.

  • Anonymous

    now for the VWAP retest

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

    the Western states will shutdown at that level.
    it’s a 100KM just to cross Phoenix Metro area.

  • Anonymous

    Mole you should coment on how much the Germans like Hyperinflation. Maybe you can calm down some lost souls here.

  • http://evilspeculator.com molecool

    Welcome! A friend of the Convict is mine as well.

  • Anonymous

    I wasn’t.  Was fading the initial reaction to it 🙂

  • http://evilspeculator.com molecool

    Write me to admin@ so that I can hook you up with some goodies.

  • Anonymous

    where can we see the daily FX pairs? thank you

  • Anonymous

    yes Mole thank you….took every dime of that down move!!!!

  • Anonymous

    Thanks mate. I understand and know exactly what you are trying to say. All I am saying is we need fresh money to make big rallies and higher highs. I dont see it coming. The Fed has said no to QE3. So I suggest caution. I dont agree with Fearless here. I could be wrong.
    No I am not immune. I did lose money trading bearish when I should have gone long a year ago. But I do understand things better. Risk is off ans any rallies should be shorted than going long. Thats my take.

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

    SPX 1206 area (retest)

  • Anonymous

    The div is better defined although could not make it to VWAP. Yet!

  • Anonymous

    Guys I don’t have live SPX pricing but on my Dow chart here on the 1 minute I am seeing an awful lot of islands…….earlier I thought we had a classic island reversal with also a classic head and shoulders bottom actually (not that I really trade those).  Not sure if my feed is broken or what.  Anyone else seeing it?

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

    I see the gap, and the rest looks like an IHS.
    maybe 2 right shoulders.

  • Anonymous

    This is a mini version of past three freaking months. Im taking a nap ill be back later.

  • Anonymous

    Copper is getting raped just now.

  • Anonymous

    or maybe straight to 1180/1185…

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

    Mole said buy the dip…and here it is again….so I’m buyin..1296

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

    now that it’s at 1200, tempting to just say 1192, 18th low.

  • http://evilspeculator.com molecool

    When did I say that again?

  • http://evilspeculator.com molecool

    Menu bar.

  • Anonymous

    Looking to go long on a touch of that thendline on Zero to hedge my short positions:) May be early though! Wave looks complete.

  • http://evilspeculator.com molecool

    No, I mean $10 😉

    It was actually supposed to be a joke. But then I thought about it and should gasoline really rise to ten bucks then I would simply drive less. My little contribution to supply/demand.

  • http://evilspeculator.com molecool

    That would be fucking awesome 🙂

  • Tronacate

    Maybe another trend day down…….sticking with my shorts in FOSL LULU FSLR……..

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

    my ticks trend says trend day.

  • Tronacate

    Missed WFM……

  • Anonymous

    Positive divervences abound out there.  Zero is positively divergent on the 5 min chart from 11am and just now it is also divergent considering it has failed to take out yesterday’s low despite SPX moving considerably lower.  As a relative newbie, I wouldn’t mind hearing from a vet or two as to when that observation might be considered actionable:  when zero crosses into positive territory?  when VWAP is breached?  Sooner?  I tend to be a bit quick on the trigger finger in both directions so would be happy to hear any comments. 

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

    I thought last thurs before the run up…now we back….so….im buyin.  at least thats what i took from the post..we have had a 35 pt drop….so that’s good for me…..taking spec position long 🙂

  • Anonymous

    when this happens ammo, water and food will finally become important..

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

    TICK -1300 just now.

    too hot!

  • Anonymous

    RSI (5) on 5 min SPX shows a positive div, but it is not the case on zero  (5 min). Interesting…

  • Anonymous

    OK, so next time I wait till the five minute candle is finished before hitting “send”.  Still happy to receive comments though.  Clearly it’s too early to be jumping in.

  • Anonymous

    Tagged it! Went long just for the time being;)

  • Anonymous

    Could you explain what that means?

  • Anonymous

    I did that a few days ago 🙂

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

    sometimes an extreme tick reading will signal a scare the children moment before reversal.
    and sometimes it just means, an oh sh!t some big guy just dumped a large order.

  • Tronacate

    What divergence????

  • Anonymous

    SPARTAAAAAA!

  • Anonymous

    Dude just subscribe. You will get your money back in a single trade and then some.  

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

    glad to see the tradition lives.
    ;-D

  • Tronacate

    Mole……..said all divergences on a trend day are to taken with a grain of salt……….why are we all (including myself) looking to pick reversals?

  • Anonymous

    gone now

  • Anonymous

    I don’t recall Mole saying that this is a trend day

  • Anonymous

    For zero’s divergence, I should have waited for the five minute candle to finish.  It turned south after I hit send so it’s not there now.  There are plenty out there if you look at RSI or MACD on 15 min candles (my setting).  However, I clearly jumped the gun in calling that for zero which is why I corrected myself pretty quickly.  Sorry – I’ll wait till the five min candles are finished before hitting send next time. 

  • Anonymous

    uh oh… descending green trendline is being breached as I write this

  • Tronacate

    Just applying the other days lecture is all…….

  • Anonymous

    Fakeout IMO:)

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

    i’ll be watching the cumulative ticks.
    oh, 535!

  • Anonymous
  • Anonymous

    A lot a newcomers probably got scared today and are liquidating longs.

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

    I don’t get the yolk.

  • Anonymous

    I really like this here for a long at 11,400.  Todays retained profits setting my position size.  Having a go with stop 11,350. 

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

    i took a 15 minute nap and woke up and was looking at what I came up with earlier. Yea the drop came hence why i put red oval BUT i forgot to cut my eggs in half. so good that way. put salt and pepper. mmmmh good stuff.

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

    have you tried pickling in pickle juice overnight?
    my dad love’sm.

  • Anonymous

    looks like it

  • Anonymous

    damn GG that looks like a steel rod of support.

  • Anonymous

    no i havent.

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

    it would explain the extreme tick reading, eh?

    hey, how do you pick the tops of your ovals?
      I could always use another technique.

  • Anonymous

    overnite?!?!?  try a few months for a real pickled egg

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

    looks gross, but pickle juice is basically brine.
    so if you like salt on boiled eggs, you can skip the salting step.

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

    TICK 870,  it’s mirroring the white candles I see on the SPX.
    currently 1201

  • Anonymous

    Now was CS right, or was he right!
    NOw the issue is money management, e.g. setting stops at b/even when at 1R unbanked profit etc
    Folks might have some other techniques maybe – like once in profit (even if not yet at 1R), then not to let go back into loss, c/o trailing stops, or stops at preceding spike hi/lows, etc

  • Anonymous

    normally when the  30 sma starts to smash up against the bb 20, 1.0 on the opposite side.

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

    1192 was too far down, even for a trend day.
    today is OpX Thursday.  never trust’m.
    so I went looking for some kind of mid-support.
    was a few minutes late.

  • http://evilspeculator.com molecool
  • Anonymous

    OK, so I waited for my five minute candle to finish!  It may not be a divergence, but zero has charged enthusiastically positive here. 

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

    well, he was right.
    so my pretend short, under yeterdays low is looking nice.
    and like you said, many many ways to slice/dice it.

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

    just got a print of 1200 TICK.
    and now 1206 area.
    so let’s say my pretend short was just stopped out at ~breakeven.
    CS did say EXPECT for not all trades to works out.

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

    FAS 12.23 – it may be the bulls turn.

    let’s see if they stick it.

  • Anonymous

    down looks like it could be done

  • Tronacate

    VWAP tap….then ?

  • Anonymous

    Dropping my long hedge @ backtest (1210)

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

    FAS was 12.50 – 30m before open.
    now 12.35
    Scoundrels!!

  • Schwerepunkt

    Every utterance in Europe is jerking the pony around the stables, into a pile of shit, then over to the water trough, then the pile of hay, back through the pile of shit, etc. I think there’s a pattern there . . . 

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

    FAS 12.42
    TICK 1337

    OpX Thursdaaaaay.

  • Anonymous

    Done!

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

    12.55 – rocket ride.

  • Anonymous

    Chaps the most extraordinary thing has happened.  When I set that last order, I was on my way to the car to come home.  During the journey I opened up my bloomberg mobile and saw 11,340 on the Dow.  The refresh time was correct so I didn’t doubt it.  Bollox I thought.  I refresh it again in case theres a mistake.  Nope.  Shit.  A few minutes later I check again and see 11,363.  Oh no, I have virtually perfectly bottom picked with my stop have I?  this always happens to me.  How many times have I told myself whatever my stop is add some more.  Come into my house and turn on Bloomberg TV and see 11,463.  Ah no for fucks sake I don’t believe it I stop watching for 20 minutes and this happens.  

    Log on to my flatform and amazingly, my positions are still open.   Eh?  Has there been a mistake? Check the charts and it seems I did pick the bottom.  My bloomberg mobile was reporting bum prices.  It’s still away from the market right now. 

    Incidentally lads, looking at Scotts postings, this trade, does this now represent “the fakeout sell”?  i.e. is it a failed sell signal and therefore a genuine long signal?

  • Anonymous

    Day is not over yet.  It is a daily bar and right now the SPX is slightly positive BUT the zero is but buying it

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

    swapped my 1 ES for 2 naz contracts earlier…effectively out at 1207 on ES….

  • Anonymous

    Makes for a nice W2;)

  • http://wetorp.blogspot.com/ Wetorp

    zZz

  • Anonymous

    now it is

  • Tronacate

    CC…….you need to get off the meth dude……lol

  • Tronacate

    It’s bad for your teeth 😉

  • nyse

    Libya confirms Gaddafi killed

  • Anonymous

    Good

  • Anonymous

    nope not true until Europeans dismiss it.

  • Tronacate

    VWAP cross on a flat ZL…….heard that lecture before

  • Anonymous

    another one hour market wonder.

  • Tronacate

    Intersting volume and move on RIMM……..

  • Anonymous

    Remaining short for the ride now;)

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

    I’m worn out.
    and there’s another 2 hours plus!

  • Tronacate

    1.1 million on a 5 min bar

  • nyse

    More likely him and Tim Osman are chilling out with some daiquiris at the Sandals resort in Montego Bay

  • Anonymous

    Yes, you can do it! You will want to see what happens next don’t you?

  • Anonymous

    All I know is when my eur/gbp pops woo wee it is going to violent upside movement.

  • Anonymous

    madhouse. wtf is going on?

  • Anonymous

    Chaps I see another island, potentially reversal pattern here on Dow 1 minute.  Stop in to 11,495.  Not giving these profits up now as they are like lazarus to me.  

    Am I the only one who sees lots of little gaps today, like lots of indecision, this could turn again on a dime.

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

    I’d turn that 1m crap off.  fade the noise.
    5m candles should be enough.
    especially if you are a big swinging dick.
    (no offense)
    😉

    http://www.urbandictionary.com/define.php?term=big+swinging+dick

  • Anonymous

    Green line got a lift! Is that Bullish? LITS is 1216.38;)

  • Anonymous

    I normally check multiple timeframes mate, and just some days you see weird stuff like today.  Its very unusual.  I’m taking some off the table here at 11,530.  

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

    yes.  i’m hooked.
    switching to 10m candles.
    😀

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

    they get 1208.50…ES….selling 2

  • Anonymous

    Mate, not saying it isn’t but I think you need the Zero itself to confirm that.  I have witnessed on small spikes the green line will lift up while the white line stays at zero and sometimes the green line just comes back, sometimes especially if that candle isn’t fully written.    

  • Anonymous

    http://www.youtube.com/watch?v=viJ5W-E3EJc
    a ridiculous video but the way i felt today with markets. never scared. ok sometimes i do get nervous. lol.

  • Anonymous

    Got it, thanks!

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

    out at 1208…feel like one day being short could get your face ripped off.

  • seek_truth

    GG –  I know you watch FAS like a hawk watches a gerbil so you may be interested in the number of Puts trading hands on the weeklys that just came on line today, 7k trading on the 10 strike and 3k of the 12 strike both of which are high numbers for opening day,  I am not smart enough yet to be able to predict what this means directionally but experience tells me some one is expecting a really big move and sooner than later. 

  • Anonymous

    GG,

    Do you reside in the states?

  • Anonymous

    ok what was benny doing?!

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

    thanks!
    yes, I didn’t like yesterday’s FAS oscillation at close and got out.
    and I definitely don’t like the last 40 minutes of sideways just now.
    I agree with your statements.  OpX is dangerous, and no edge without Zero.

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

    yes.  it’s in my profile.

  • Anonymous

    Front month? They expire tomorrow. Unusual indeed!

  • Anonymous

    You see its back to flat now.

  • Anonymous
  • 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„¸

  • Anonymous

    Yes, have to say that it is a good edge!

  • seek_truth

    No this activity was in the weekly options that just opened today for expiration next week.  

  • Y KW

    Thanks … ‘my’ thoughts … or ‘universal’ thoughts?

  • Y KW

    Howdy there from out of town Vanuatu!

    To start, I guess I should put the cart (setup) where it belongs … behind the horse.  L.I.V.E. is an acronym for the way I have chosen consciously to live my life … personally and also market-wise (or often unwise)

    L = Look for opportunities … to do this I have to live consciously and consciously live, putting personal bias where it belongs … in terms of markets, this means Looking for 1 of the 12 setups that I have distilled from price-action (sans any indicators, volume or other derivative noise).

    If, and only if, I find one of my 12 ‘treasures’ do I proceed to the ‘I’ phase

    I = Investigate for where, how and when do I take advantage of said opportunity … simply put, where do I enter and where and when do I cry Uncle … Opportunities are like quicksand.

    V = verify for the only reality in life and trading … that is Risk … no matter if a setup/opportunity has a 95% strike rate and I over-commit, then on with my “The Investment Educator” attire, into the plane and out of Vanuatu to do the circuit that served me rather well in the 80’s and 90’s … not my preferred option (no pun intended as I have not traded options since the early 1990’s).

    E = execute into the market.

    Most/many get this process backwards by Executing first and reaping accordingly. (Without conscious intent, my chosen acronym for the process is also interesting backwards!)

    IPOPIP = an OP surrounded by an IP … logic dictates that any OP (Outside Period) must have an IP immediately before it … an IP after the OP is seen as the quiet before the storm or the coil being wound up, if you get my drift … the direction of the breakout is really unknown, tho odds can and have been compiled regarding probable directional outcomes … the direction of the break is very context specific.

    For the record, the IPOPIP is not one of my 12 setups … the main 12 consist of only 3 trend-following, 8 reversal and 1 in-between … the ratio lines up nicely with market action as markets trend less than half the time … hence other oars are neat to have, else I am rowing with only one oar and going around in circles!

    I trust this helps.