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Can We Control?
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Can We Control?

by The MoleSeptember 24, 2010

After duking it out with the Slopers this afternoon I actually feel pretty good about this week. Yet another bear trap avoided – another point goes to the Zero.

Here’s our stainless steel rat theme song for next week:

Remember – we KNOW nothing – the tape will show us the way. Don’t trade what you think ‘should’ happen – trade what’s happening. Can’t repeat that simple lesson often enough.

Have yourself a wonderful early fall weekend – it’s my second favorite season. As usual I’ll be in touch on Sunday with my medium to long term outlook.

Cheers,

Mole

P.S.: Wish I was in München right now – it’s the 200 year anniversary Oktoberfest!


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.

  • 99er

    You know I come here for the videos, right?
    Have a good one.

  • http://evilspeculator.com molecool

    🙂

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

    I come for the girls.
    and does he pick up on the theme today? Hell No.
    http://1.bp.blogspot.com/_wepe5ntAcJc/R-0R0hIHcEI/AAAAAAAAAF0/pWHVihy1XZs/s400/o11.jpeg

  • 99er

    Raised By Wolves, in the unlikely case you forgot:
    Seattle, WA — Fremont, a lively neighborhood in Seattle, holds an even livelier beer-fueled celebration at the Fremont Oktoberfest from 9/24-9/26.

  • http://www.blenderking.com Dan Robbins

    Jeeez, I saw some of those comments at SOH. Since when is trading 100% guaranteed? We all have our preferred tools. I tried the Zero a few months back and probably might have stayed with it, but I moved back to corporate world and only swing trade now for the most part. Nonetheless, it's Friday night and I'm drinking a wonderful 7.0% ale. So life is goooood….

  • http://evilspeculator.com molecool

    Life is wonderful – glad you can appreciate the little things – because one day we'll all be worm food 🙂

  • Biowolf

    Auf da Wiesn giebts ka Sünd, ans , zwa gsuffa.

  • 99er
  • chronographics

    Just some mental masturbation, perhaps an interesting week ahead. longer term chart just gives a bit of perspective sometimes. Technically you could make an argument either way here, really think net week will give some clues to the Dollar and therefore everything else. Good Luck to you all 🙂

    EUR Weekly
    http://screencast.com/t/YzY5M2JiODQ

  • gagelle

    Mole, I'm embarrassed at the way you were treated today on Slope. There are some good people there but unfortunately some rude reactionary ones. I'm virtually ignored when I bring up important macroeconomic and historic information. I usually don't bother with the site during the day because the interesting people are often on at night. But it was good to read your excellent post and wish you the best in your trading.

  • 99er

    Slope of Shit
    Just had a look at The Slope and was shocked to read the negative postings about Evil Speculator, particularly from a juvenile delinquent from Seattle (no, not you RBW) named “yazzer.” Being from Seattle myself, let me apologize on behalf of us from the Emerald City that we as a whole are much better than “yazzer.” He is an asshole pure and simple. I hope that the fucker goes to Fremont to get laid during the Oktoberfest celebration and gets his ass pushed off the bridge into Lake Union.

    (Hey yazzer, did you read this post?)

  • raised_by_wolves

    Why does Oktoberfest have to be the one weekend I'm away? Oh wait, the world doesn't revolve around me. By the way, they arrested me last year for disorderly conduct. Given the wide range of behaviors that can constitute disorderly conduct, let's just say that I may have been arrested for this crime without proper cause. I say may have been because I can't fucking recall what happened. Thanks anyway. For the reminder.

  • raised_by_wolves

    The trading world isn't big enough for two juvenile delinquents from Seattle. I'll kick his ass if he comes around here.

  • raised_by_wolves

    Gerbil, this is the difference between you and me: You come for the girls; the girls come for me. 😉

  • 99er

    Can crippled kung fu masters join in too?

  • average_minimalist

    test

  • raised_by_wolves

    Yes, of course, I don't discriminate against the cripples. And once a kung fu master, always a kung fu master, right? Plus, they work so well together.

    Hey, here's ($SPX/$VIX) with time-ish channels . . .

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/6f3e76b7-058a-4cc2-b728-3d2cffaca1c5/00002194.png

  • average_minimalist

    i can't believe how so many people with so much experience and knowledge struggle to trade profitably every day, and yet this actor who knows nothing about trading picked up a few series 7 books, read them in about a week, and turned $20,000 into $650,000! AND he did this trading on his cell phone!!! this guy makes all of you (and me) look like fools!!

    http://finance.yahoo.com/tech-ticker/wall-street%27s-celluloid-heroes-brolin%27s-%22evil%22-addiction-labeouf%27s-650k-payday-535447.html?tickers=^DJI%2cXLF%2cFAZ%2cGS%2cJPM%2cNWS%2cSCHW

  • raised_by_wolves

    How much of that was luck? The game is about staying power, isn't it? If he can continue doing that for an entire trading career during all sorts of market conditions and enduring multiple black swans without blowing up, then and only then does he makes us look like fools.

  • average_minimalist

    “if he can continue doing that for an entire trading career….”

    dude, if someone could make 3000% in a matter of months, and consistently do this over and over for 30 years, he would OWN THE WORLD. and he obviously would be some alien or something that has access to the future. there is NO WAY!!!

    it's just kind of interesting that this guy who doesn't know jack shit about trading just stepped into the game for a few months and did better than 99.99999 % of all traders out there. i think either a) he's lying his ass off…or b) he got a nice juicy inside nugget from one of these big shots he was hanging out with.

  • http://evilspeculator.com molecool

    Damn – I think you took it a lot worse than I did! Listen mate – you can't let asshats like that suck away your positive energy. Balance is everything and although I was close to the edge a few months ago (stress and too much work) I am completely Zen now. Let them gloat, bitch, moan, complain and act all smug. We'll be on the other side of their trades 😉

  • http://evilspeculator.com molecool

    Thanks mate – I do realize that the majority visiting the Slope does not act and think like Yazzer. Which is why I stuck around for a bit trying to engage folks into some candid exchanges. Suffice to say that there was little interest – which was disappointing. As one reader wrote me today privately: You can bring a horse to the water, but you can't make it drink.

  • http://evilspeculator.com molecool

    You just earned a few points here, mein Freund 🙂

  • http://evilspeculator.com molecool

    Yes, that makes for cute headlines – now welcome back to reality 😉

  • raised_by_wolves

    My account went parabolic when I first started trading. ~1000% in a matter of months. Then I blew up. So what if that guy did 3x better than me if* he's on the road to blow up.

    *It's just a suspicion; I have no way of knowing whether he's methods are sound or not.

  • Zero % forever

    I do hang out at slope sometimes.Nowadays social chit chat is 80% and useful exchange of info,charts etc minimal. Mole's site comments even below 200/300 per post mostly offer useful insight.
    Iam not sure Long Bond has broken completely.Bond's yet to make a lower low.
    Next week End of the quarter Options (Thursday) & weekly option expiry on 1st OCT (Friday)
    SPY recovered 4 days of losses in one go on Friday.Next week consolidation may be .
    Bond/SPX movemnt somewhat coordinated since Sep1st.

    http://www.screencast.com/t/NGM4Yzhm
    http://www.screencast.com/t/YTVmYzcx
    http://www.screencast.com/t/Nzk3NWM5YTM

    http://simpletechtrading.blogspot.com/2010/09/bonds-crashing-and-stocks-break-out.html

  • gagelle

    I had an accounting professor who formerly had a seat on the NY stock exchange. She left the business to teach because she couldn't deal with the corruption. She told me that it was common to trade on inside information. That's how most made big bucks. She only met one honest person in that capacity. This was in the 1980s. I wonder if things have changed..Lol

  • amokta

    At great expense, i have just signed up to Zero
    So tell me, does zero predict the future (holy grail of 'leading' indicator), or is it best regarded an 'in-time' signal that effectively integrates a lot of market data that a human could not do, to come up with an 'in-time' view validating or refuting a move in the market (i.e. to join in or not). That leads me to ask, what is the genesis of a 'fake' move, if there is such a thing, if it is not just herd beaviour, and what would differentiate a fake move compared to herd move – does volume, etc come into play?
    -no one need answer this, if i am on the right track above already !

  • 99er

    Okay. I'm hosting a dinner party at home, having invited some old friends–including one who has spent the past few years abroad (let's pick Voralberg). As introductions are made, one person makes a rude comment to this guest (okay, the dude is impolite); over drinks he cusses at my guest (okay, he's a jerk); and all through dinner this guy says absolutely nothing of substance but throws all manner of insults. So when do I as host decide–for the sake of the dinner–to throw the bum out?

  • 99er

    Uh oh. What I first noted was an Ascending Triangle and just about spilled my coffee. Quickly grabbing the John Murphy textbook, I realized that a Wedge would better define what I saw. Then I noted a Broadening Top and my day if off to a good start. Thank you.

  • 99er

    Except of course for Bob.

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

    prob not…the rules are theoretical for the public face, behind the scenes rules are ignored or only there for when it suits…(from experience)

  • 99er

    The SPY chart diagrams a Descending Triangle which would usually be interpreted as bearish; what are your thoughts about that pop up?

    You're in Hong Kong? Do you have a sense of what China's currency plans are? What is market sentiment like at the International Commerce Centre? Thanks.

  • 99er

    Chart: NQ
    The Week That Was
    http://99ercharts.blogspot.com/2010/09/nq-weekly.html
    aka The Top

  • http://evilspeculator.com molecool

    Yes, I was surprised that Tim never stepped in to defend me. We are supposed to be friends and he chose to completely ignore the issue. I even sent him an email asking what the deal was with Yazzer but he never responded.

    Maybe we're not as good the friends I thought…

  • http://evilspeculator.com molecool

    Wasn't that awesome? LOL

  • BobbyLow

    ” Remember – we KNOW nothing – the tape will show us the way. Don’t trade what you think ’should’ happen – trade what’s happening. Can’t repeat that simple lesson often enough.”

    Hey Mole,

    Can I add that using conventional logic when dealing with the market can be dangerous to one's financial health? Furthermore, the tape has no logic. The tape is what it is. It is the result of many driving forces from which I have no control. Not recognizing this has perhaps been my major problem for many years. This premise also dovetails very nicely with Convict Scott's posts about “Expectation Bias” and all the psychological traps that we set ourselves up for.

    I can honestly say that even with the recent disappointment of yet another P3 expectation bias failure, I am probably as about as numb to this market as I have ever been. For the past month, I've been scalping SPY Options on my own with very limited expectations. These kind of trades have been time sensitive as in day, overnight, or a couple of days at the most. In other words, they “either have to shit or get off the pot”. Anyhow, since August 27th, I have made 24 Trades using relatively small amounts of capital and have 15 Wins and 9 Losses for a 63% Winning Percentage. Within these trades, my losses have been relatively small so the total net profit has been reasonable when compared to my risk/reward ratio.

    Of course, while I've had success with my short term scalping, all I've been able to hear is the “Giant Sucking Sound” of Dollars Flying out of my account due to my “expectation bias” of P3. So even though, I still have a number of long term puts that might or might not come off life support before they expire, the expectation of P3, the exultation of thinking that it has begun and the terrible feeling after its continuous egregious failures, have perhaps sent me a strong enough message.

    The message is very simple but not necessarily easy to accept. Perhaps 12 years of doing this hasn't been a total waste. If I've learned only one thing it is that the Bulls are always right until they're wrong and the Bears are always wrong until they're right. But as much as I hate to say it, the tape is always right.

    BTW, you mentioned that you wish you were in Munich. I spent 3 years in Germany and remember Oktoberfest. I had some great times there. If you look at my Avatar, that is me and my 1955 Ford in front of the barracks at Ramstein Air Force Base, Germany. This picture was taken in 1966. Man, that was a long time ago. 🙂

  • 99er
  • 99er

    Fuck it. It's Oktoberfest after all. (My best wishes to yazzer: Good luck trying to get laid this weekend.)

  • SW6

    RBW and Average_Minimalist,

    assuming Labeouf is not just engaging in BS promotion and is telling the truth, the key thing to keep in perspective here is that although HIS account went 650k it's not him that made the profit. He made an appearance on ( I think it was Letterman) a talk show where he worked with sophisticated and corrupt traders. These traders had, by Labeouf's account great talent in their breadth of market knowledge but also traded illegally on inside information. These traders boosted Labeouf's P&L. Two of the traders that Labeouf worked with are now in jail for insider trading; that is another thing he said on the talk show.

  • http://evilspeculator.com molecool

    You crack me up, Bobby. Here you are scalping yourself into profits and at the same time complaining about the long term puts that are ruining your game. Why don't you simply dump those puts then and focus on your scalping? Listen mate – those puts were lottery tickets all along – which is why I referred to them as 'black swan insurance'. If they affect your profitability then you obviously are overextended. Just dump a few of them and focus on what works for you – done.

    I don't think you have wasted the last 12 years at all – you've learned a lot obviously. Now USE IT!

  • 99er

    Banned From Disqus?
    What does “This comment is awaiting approval” mean?
    http://www.screencast.com/t/MmE5NDBhNDU

  • raised_by_wolves

    That's strange because I don't even see those among the unapproved comments. Try reposting those HKD charts.

  • raised_by_wolves

    Thanks for pointing that out SW6.

  • raised_by_wolves

    Never mind, I found you with the SPAM. You have been approved.

  • raised_by_wolves

    You are now approved, and you shouldn't have that problem again.

  • raised_by_wolves

    You didn't know that SPAM filters are highly sensitive to the letters “HKD”?

  • BobbyLow

    OK Coach! LOL

    You might have missed one of my posts from yesterday on ES. This is part of it:

    “It is with regret, that discretion has become the better part of valor and I have just sold those December 105 Puts for $1,634. which resulted in a total net loss of ($153.) RIP – I suppose that I could claim moral victory because if I had not continuously tried to work my net cost down by selling puts against the position, my net loss would have been $5,706. – $1,634 = ($4,072.) I still own 28 other SPY Put Contracts most of which do not expire until March and June.”

    Back to today: The 28 “other” SPY Put Contracts are now designated as “Black Swan Insurance”. The current value of them is not worth cashing out and would be better served as “Lottery Tickets”.

    So the hardest adjustment has already been done. I think my Account Delta is close to neutral at Positive 67 with Long October Call Positions offsetting my Lottery Tickets.

    So let's see what Monday Brings. 🙂

  • 99er

    Serious? WTF? Jeez…not another STD for yazzer to worry about.

  • http://evilspeculator.com molecool

    Quit fucking with 99er 😉

  • 99er
  • average_minimalist

    wait, so these traders went to jail, but labeouf gets to keep all the money he made using their illegal tactics? huh?

  • convictscott

    Mate I sold out every last bit of my long term put insurance when SPX hit 1130. Trying to “predict” P3 was a major failure for me. Its time to face reality and admit I am a far better short term swing trader than long term position trader. To deny reality at this point is foolish.

    I had to take a long objective look at my trading results. I am getting awfully close to 200% profit YTD in my futures trading account, without a losing month since March.

    My equities investment accounts…. well they dont look like that. And I have 10 times as much money in my investment accounts. Time to grow a pair and change that.

    I decided that if I can compound my wealth at >100% a year (which should be trivial for me at this point) its actually enough. I dont actually need to hit the ball out of the park with P3, I'm already doing it with this shitty tape.

    It sounds to me like you are too 🙂

    I had a bit of an epiphany when I found that my results in es futures were, in terms of expectancy (total R winners – total R losers / number of trades), better than double the expectancy in my currency trading. So I make es futures trading my primary focus now, and to satisfy the part of my psyche that wants to be a discretionary trader, I allow myself to make totally discretionary trades for 1/10 the R value that I use for ES futures. It allows me to be a bit freewheeling, but for $1000 R values I can never really hurt myself, and I do make living expenses off it.

    I had a further epiphany when I designed a mechanical system to trade Mole's gothic church fractal in the adv/dec, that has had its last losing trade on 26/2. Im currently working the courage to trade it in my retirement accounts.

  • convictscott

    Amotka, Zero is not a holy grail, though it differs markedly from most indicators in that it is based on more than price alone. Stochastics, Oscillators, MACD etc are all fancy versions of price, turned into a squiggle.

    Zero is more than that, but zero alone will do NOTHING to make you a more profitable trader. You need to sit down with the zero, and design a set of RULES for entry, profit taking, and when to reverse positions based on zero and whatever else you use.

    Then you need to sit down and backtest those rules manually, with a pencil and paper, over a long data set. Then you need to examine the results carefully, and choose a position size that gives you a negligible risk of ruin, and a max drawdown you can live with, without giving you sleepless nights. Then you need to examine the results to make sure results are *consistent* over time and not simply curve fitting for the way markets are right now. Then, finally, you can apply logic to choosing correct exit parameters.

    Then, after some serious amount of work, you will have YOUR OWN SYSTEM, that suits your personality, that you are certain will make you money, as an unshakeable article of faith.

    Its a lot better than paying Mole 50 bux in the hope that zero will do it for you 😉

  • amokta

    Thanks CS. By the way havent paid for zero yet, as was 'free sign-up' (not sure when it expires!)
    yes, i need to work on a system of my own,but bias,expectation, etc are a problem – but then a firm system would avoid these issues
    zero may help, for those who, like myself, will need a helping hand perhaps!

  • amokta

    p.s. CS, i think you have said in past that zero is invaluable, so clearly you are not saying that zero is not useful, just that it should complement a trading system that one should have of ones own

  • raised_by_wolves

    Who? Me? Never! 😉 Besides that would be gay.

    Hey, have you ever charted NDX/SPX?

    Can you imagine it going parabolic again?

  • convictscott

    The way to work on bias is to be biased until you are sick of losing money. First you need to design a rock solid trading plan or system (the more beginner trader you are the more it needs to be set in stone and not vague guidelines). Then you start trading that system, keeping proper records. What will happen is your biases will keep you from taking many of the best trades, but hopefully your system will system will keep you from hurting yourself. (but you will still hurt yourself because you wont stick to your system all the time)

    At some point you will realise that if you had just followed the rules of your own creation you would be better off. Then this realisation will cause you to trade worse, not better.

    Then some long time after that you will probably go close enough to blowing up that either you stick to your rules or you DO blow up.

    Then, if you have come through the furnace and out the other side, you can call yourself a trader, and not simply “one who trades”

  • SW6

    Well yeah, why shouldn't Labeouf keep the money? Until the authorities want to open up a case against him or a new case against those traders the money is his money.

  • SW6

    My pleasure RBW.

    Guys, this is the video. It's Kimmel not Letterman and it's four guys not two.

    http://www.youtube.com/watch?v=zP0C-G_iWAg

  • amokta

    Thanks again CS. still working on a system! – any suggestions for a system (without giving away proprietry info!) in 3 lines – lots of trade-set-ups on your blog, but i need something generic/simple i can apply every day while watching the tape (maybe trading not that simple!)

    p.s. i wonder if anyone has modelled a stock market where everyone was trading to the same trading plan – i wonder what would happen! perhaps the HFTs are do that, and it results in volatility.

    anyway time for sleep – so good night!

  • SW6

    How long of a data set Convictscott? Decades?
    I am guessing long enough to capture many market cycles. For equities, at least decades and for commodities a century or more if the commodity in question has been trading that long.

  • raised_by_wolves
  • convictscott

    Zero is very useful to me, I wouldnt trade es futures without it, since I trade in a size that the $50/month is insignificant. However its not the indicator which makes me profitable, its ME. I never choose entries based on zero, only exits and partial exits. I do, however, believe its completely plausible to design a complete trading system based around the zero, I just havent done it yet (though I have some excellent ideas). I have a method I've been trading and optimising since 2002, it works very well for me and I'm comfortable with it. Despite being a whore and trying many other things, the stuff I originally learnt from Ivan Krastins is the best fit for me. But I have modified it enough that its my own method now, and not his anymore, even though I use his patterns for entries.

    You just need to put in the work. ANYONE can do it! Do it yourself, come up with some plausible ideas, test them all, combine them in different ways, whatever. Put your brain to work on the critical issue of designing a set of rules (a BUSINESS PLAN) for getting rich from the markets.

    It might even take you a few days! A few whole days of your life, what an imposition!

    The way you go into this is the way you come out, if you go in with a real plan you have a real chance of success, and a real way of measuring where you are failing. If you go in half assed and think “I'll learn how to trade by trading” you may as well throw the money away. BTW one of my old mentors from long ago has resurfaced and is doing excellent work with Dudeplunger, who has made *very* significant gains in his trading in a short period of time, and I'm very proud of the changes he has made to himself recently, particularly getting long when he is a bearish as bearish gets. If anyone is looking for help working on their trading skills I have never met anyone who knows more about price action and market psychology, and he is always willing to chat to traders on skype: his name is Ivan, skype Inved2

    From your posts I am not sure you are at the stage where you understand the point where whether or not the profitable trade continues to go in your favour, the risks associated with it are no longer justified by the extra potential return. This comes with time, but for now I suggest having a set of rules for this stuff.

    For example I am currently long es z0, if it gets to the old spike high of 1164.75 I will get out of my longs as the odds favour either a pullback then continuation, or consolidation, or reversal, and I have no way of knowing, since my crystal ball is broken, and also since PREDICTIONS ARE FOR LOSERS, PERIOD. If along the way it gets to close twice in a row outside the 2.0 bollinger band I will exit, since the odds then favour exhaustion of the move. If the zero lite shows significant divergences on the way up I will lighten up and lock in profits, and reduce position size. I reduce position size because experience has shown me that the zero lite divergences have been a statistically valid and consistent indicator of potential reversal areas. When the odds favour reversal over continuation, I want to tighten stops. How much, thats something you need to work out with your own system and personality.

    These are RULES. I have no discretion in them, no way to fuck myself. In fact I dont really care if es z0 continues to rise. I have no control over the market, only my decisions in it. At this point the odds clearly favour continuation, if my stop, which was originally 1117, but I have now moved to the daily low of 1118.25, gets hit (on Monday) I will get out and be short. This is extremely unlikely, but if it does reverse that hard on Monday it is a strong indication that the bull move is over, and I should be short.

    I could give you entries and exits for my trades every day, and I guarantee you'd find a way to fuck it up, until you do the necessary work on yourself, and get a set of rules to exit trades to think like a market winner. I can almost guarantee you'd pick and choose the trades to take, and pick the wrong cherries.

    The simple fact for you is that you will NOT be consistently profitable until you are consistent. You will NOT be consistent until you have a measurement of that consistency, ie a system of rules to follow. Getting on this blog and hearing someone you respect saying “im getting short here” and apeing the trades is a good way to fuck yourself good and proper.

    “I must create a system or be enslaved by another mans; I will not reason and compare: my business is to create.” William Blake

  • convictscott

    Not that long. The danger in backtesting is that you are curve fitting. What I like to do is apply ideas to 3 month periods of markets that are different. Ie some blow off tops, some rangebound, some wave 4 type shitty action, some steady bull market accumulation.

    What I am looking for is some ideas from Ed Seykota, which are basically that your worst results and your best results should not be completely dissimilar… you shouldnt have one set of parameters test as a home run while the others are losers. Basically valid concepts tend to be consistently profitable, and you are looking for standout results within a lot of similar results.

    I NEVER backtest with computers initially, what I like to do is get a pencil and paper, give a set of rules for exits. The standard ones I use for VERY PRELIMINARY testing of concepts are as follows. These are NOT THE IDEAL rules to use, but they give a very good indication of whether a system will work or not.

    – trade has 3 periods to make 1R, if it doesnt make 1R I exit win lose or draw
    – After it moves 1R from entry I move stop to breakeven
    – If it moves 2R from entry I get out and mark it down as a 2R win
    – At 1R I start trailing a stop 1 tick below or above the recent daily high (or 60 min, or 15 min or whatever chart you are using)

    I pull out a pencil and make 3 columns, win, lose, breakeven (a .2 R win or loss is considered breakeven to me since its close enough that it makes no difference)

    I then backtest my concept in blocks of 3 months, looking for
    – loss ratio (more important than win ratio)
    – max drawdown
    – expectancy (winning R – losing R)/number of trades

    Good systems should initially backtest at >.25 , very good systems much higher.

    Once you do a year of backtesting you should have an idea if your plan is worth of further research or is just a shitty idea.

    You might have to go through 20 shit ideas to come up with a winner. Too bad! When you come up with a winning concept you then test it
    – ACROSS DIFFERENT MARKETS
    – ACROSS DIFFERENT TIMEFRAMES
    – FOR A LONGER PERIOD, IN BOTH BULL AND BEAR MARKETS

    Winning concepts should be valid across all of these, if not to the same extent, at least to the extent of being profitable

    Hope that helps

  • convictscott

    Contact inved2 on skype – he has many ideas for system development. I dont mind sharing my own systems either, it costs me nothing.

  • SW6

    Yes, it does help. Thanks.

    Also, you need to write a book on trading. You could self publish right off your website. I for one would be a buyer.

  • SW6

    Love what you've said here, but then again I usually do. 🙂

  • Zero % forever

    Not fully convinced about the pop.
    Friday at the open-I bought back my (weekly)Sep113 short call & SPY (weekly)short Sep 114 PUT .
    Held on to my OCT 113 call & OCT114 put till lunch and closed my OCT113 call for a profit leaving my OCT 113 open put thinking I will cover if it comes down a bit.
    3''O clock ramp has my puts under water.
    I have to buy calls Monday to hedge and try to sell SEP30/OCT1st (weekly) calls & puts to gain theta burn.
    HK is my base for a long time.Now family has moved back home.I stay 5-10 days in China /HK and rest travel.Iam typing this from a notebook /USB wireless broadband in a hotel room far away from home.
    China and exporters feel RMB is strong.Inflation in Shenzhen/Guangdong ,Beijing is very high .It is because of rural poor coming to work in the factories for $200/month wages,they are able to export.Till they build up their Middle class & domestic consumption-they will give face to any US demands but take action at their own suitable time frame. Exports to USA less than Europe+Rest of Asia.
    Exports to Africa & South America also going up.But- US is the single largest customer.
    You got to see Shanghai .It is brand new and makes you fell Seoul,Tokyo,New York belong to stone age.

  • ricebowl

    I don't think anyone's going to like this, but the question must be asked.

    1219.80 – 666.79 = 553.01
    1219.80 – (553.01 * 0.382) = 1219.80 – 212.25 = 1008.55.

    Can someone tell my why it's not possible that we just experienced B of P2 and are now in C of P2?

  • raised_by_wolves
  • Zero % forever

    Do you trade AUD/HKD, EUR/HKD?
    Half the Hong Kong population (including Filipina maids,chinese grand ma) hold multi currency pass book a/cs in HSBC,Hang Seng Bank,Standard Charted & Bank of China.
    NZD/HKD,EUR/HKD,AUD/HKD are the popular a/c's s.
    AUD& NZD gives high interest.EUR does not give higher interest but people buy hoping it will bounce.All the banks have big screen LCD on the street front showing currency exchange. You have to see all kinds of crowd staring at it.
    Once (before Asian crisis) ,I have had THB (Thai Baht) fixed deposit in HSBC Hong Kong. It was giving 13% interest for 3 month deposit!

  • ricebowl

    Exactly. It would confirm on a break of 1219.80 and have likely targets of either 1348.89 (161.8%) or 1557.78 (261.8%).

  • 99er

    Hey RBW, did you hear that rumor going around Seattle about some guy who couldn't get laid? Some juvenile delinquent named yazzer was caught jerking off in the boy's room with a broom up his ass.

  • 99er

    What's that? Yazzer with the broomstick?

  • 99er

    Thanks for the input. Would appreciate any insights you might have about RMB or HKD exchange rates as they develop. And I agree with you: Shanghai makes many places look primitive. Of all places in Asia, I think Kyoto will always remain my favorite.

  • raised_by_wolves

    What's you trading plan if this is “a top” instead of “the top”? What's you plan if there is instead a breakout above this red line?

  • 99er

    No but I'm now following them. I see the HKD as a proxy for the CNY and would like to better understand the dynamics of a possible revaluation. I have a multi-currency account at the Citibank branch on Pedder; they're great.

  • raised_by_wolves

    So, Yazzer couldn't get laid by either a woman or a man? Haha.

  • 99er

    I've been short for awhile now so the plan is simple: if the market goes up above my original entry level, I'll buy more shorts. I'm more a position type of investor and not a day trader.

  • 99er

    It's only a rumor.

  • raised_by_wolves

    You're a short and hold investor, eh? If you're not leveraged, then you can't be wiped out unless $SPX moves up to something like 2400, right?

  • Zero % forever

    When Hong Kong bent back to China in 1997,they promised to keep it independent.
    HKD is pegged to US$ @7.8.During the worst Asian Crisis when Sing $,Korean Won,Indoneisian Rupiah,Thai Baht etc depreciated 20-40% against US$- there was a hue and cry to remove the us$ peg and allow HKD to depreciate as HK asset prices/wages were out priced by rest of asia. But they did not. So I dont think HKD/USD peg will be removed in the near future.
    But RMB has been accepted as a storage currency and every one has FD a/c also.
    HKD/RMB used to be more than 1. Now 0.87 cents RMB buys 1 HKD.
    If you are allowed try to put money in RMB fixed deposit instead of HKD.

  • 99er

    Dow 36,000, baby.

  • raised_by_wolves

    Sounds like you have plenty of cash on hand. Are you going to save some for AAPL if/when it touches this line?

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/9c868076-f00f-4eae-b5f1-1ef4470ad324/00002198.png

  • raised_by_wolves

    Probably did get laid; douchebags usually do.

  • 99er

    Several years ago, I was invited to have lunch on the 48th floor of BoC Tower. Over dessert, the head of HK Branch suggested that I take all my money and deposit it in his branch downstairs. Not that I'm a tycoon or even wealthy by HK standards; he said this was simply a recommendation from one friend to another. Looking back (and looking forward) I should have listened to him.

  • 99er

    You know, I've always been more of a Windows kind of guy.

  • raised_by_wolves
  • Zero % forever

    Nowadays HK citizens keep only limited money in HKD for local expenses

    as it is the only legal tender.HKMA follows US FED in fixing interest

    rates.So HKD loans are dirt cheap.That is why people are leveraging

    (still 10-15% down payment not like in USA) and buying real estate.HK

    job markets hollowed out but asset prices are high due to excessive

    speculation,cheap interest rates.

    Now Iam getting to think that You were a Hongky and emigrated to

    canada in 1997.Lot of ex emigrants are coming to Hk/china for business

    leaving their family in canada/australia.

    China is a boom town.

  • raised_by_wolves

    Windows always made me depressed. I was always happy using Macs even during the 90s when they were ridiculed.

  • average_minimalist

    so let me get this straight…he made 3000% in a few months, and admitted that it was due to insider trading by some guys that are now in jail…and he's now going around the world bragging about how much money he made by trading? cmon, something just doesn't add up here. this is obviously a publicity stunt. if his money was made by illegal tactics, would he really be waltzing around the world talking to every news outlet about how much money he made??????

  • gagelle

    I was watching an interview with Reggie Middleton today. Some of his predictions are startling. He said that the banks are holding so much housing inventory, that he expects values to fall within a year more than they have fallen already. Obviously, it's just his opinion, but I've found some of his predictions over the last few years to be accurate.
    Then there's the issue of Fannie and Freddie illegally hiring banks to repossess houses they don't even hold title to. Class action lawsuits have been filed against both institutions and it looks like the courts are starting to rule against them. Their mandate is to negotiate on behalf of the public to restructure their debt. There are also allegations that Fannie and Freddie are making big bucks off these repossessions.

    If this drop in home values takes place, it will probably hit some areas harder than others, like CA. and FL. In my area, home values will be where they were in 1997.

  • average_minimalist

    nobody wants to accept the fact we are gonna break april's highs before the end of the year. if you wanna make money just buy the dips for the next 3 months. i hope the people on this blog finally realize that the market has nothing to do with the economy, but rather is some random force that lives and breathes on it's own rules and is completely unpredictaboe. please please please lose your bias. this force goes up and down, and is as predicatable as the clouds in the sky. until you realize this you are going to be at a loss trying to predict it's behaviour. this place is my favorite blog, so i hope everyone on here takes heed as to what i'm saying…i hate for good people to lose money to those assholes in nyc.

  • gagelle

    I totally agree. The market will go where it wants to unless something catastrophic occurs. Another factor to consider, that I read over at zero hedge, is that there's no way the Fed will let the market go down before the November elections. They keep printing and pumping money into the markets. Eventually, this will stop working, but it can go on longer than most people imagine.

  • gagelle

    I was just looking at the T shirts and was disappointed because I'm a double X-large. X large only fits me if it's cut very large in the shoulder area.

  • Brishort

    I will not say it is not possible. But here is what you should consider to have it work:

    –> relation ship to prior wave. If you count ABC that way, then which wave would it be?
    If you still believe in the previous P1 that encompasses 2008, then you need to look at fibonaci and time relationship of your projected P2 or whatever wave count you have for that abc wave. If it's not P2, then everything is possible but that means requestioning the existence of P1. I am not brave enough to do that yet.

    I don't want say it's not possible, but from a time relationship point of view, your P2 lenght in time would be very high compared to P1, making less likely that P1 was indeed a P1. I.e.it frustrates my EW principles that P2 going into another C wave up would have such a retracement of P1 and last for so many more months compared to P1 own lenght in months.

    But this market has been so stubborn, it may just do it and it's not the market that will have to change, it's most likely the relevance of EW then.

    Because if the market goes up a further 40% from here, there wont be anyone left to do EW. Bulls don't do EW, because EW has been bearish since Y2K. Despite all, I think Prechter has the count right up to Primary level. If we start requestioning that, then let's remember we are mostly doing EW based on his book methods!

    EWI that has, despite their guilty short term 12 months range accuracy and inaccurate guilty way too bias short term forecasting bearishness, an overall accepted overall count when discussing the primary level up to P1 existence.

  • 99er

    Bitches too.

  • http://pulse.yahoo.com/_WT77LFNXN7HDLZ6GUPXUJ25P5I Ed

    The current is UP…. September (so far) is the best in the past 70 years….Fed has the unlimited ability to print money and it wants a bit of inflation….the mass positioning for the worst by piling into bonds. Bears expecting a depression.

    The result: a tiny bit of good economic news turns into a huge rally like Friday. Why? it was not expected nor planned/positioned by too many traders. Hence, the so-called bear trap.

    Keeping it simple: Trading contrary to the current trend is costly and indicative of a massive psychological mistake.

    BTW. If you have another job, you are at risk because trading is a hobby, by definition and it will cause you to have poor money management control. I speak from my own experience. I quit my COO position a year old to become a full time trader. It has become a real business.

  • telacimr

    Mr. Top Step from the S&P futures pit is calling for 1250 by year's end. Also a friend of mine routinely talks with a former pit trader now running his own fund who says 1250 by middle of next year. So it seems pros are of the same opinion.

  • http://evilspeculator.com molecool

    I'm going to switch it over to my own store in a few days – should be available there.

  • Eva S

    I wouldn't worry about a friend like this. I suspect Tim is worried about his bear theories not playing out and how to address them in his blog.

  • Eva S

    That's so true. I can attest to that!! 🙂

  • raised_by_wolves
  • Eva S

    What a lovely chart. Thanks! I haven't seen it before.

  • http://oahutrading.blogspot.com/ steveo77

    Quick Note
    Are we at the edge of a P3 event?

    Who knows, but this is clear–

    Wallstreet is completely detached from mainstreet.
    “They” ramp things in the opposite direction to catch as many people off guard as possible. This is clear when correlations suddenly break down, which they have.

    It is amazing that “stock value” is actually computed into what is presented as cumulative “wealth”.

    Think about that word, Wealth. Stock prices are just an electronic blip, a fleeting data point with less mass than a thought. But now that prices are up, suddenly the lie that wealth has increased is being pimped out by the Gov/Financial/Media complex.

    Just over a decade ago, I thought this way– That the stock market price reflected the wealth and strength of our nation. This is how we are trained by the media and our financial “leaders / advisors”. It is false.

    So in the last 2 weeks especially, that market is being ramped in the face of every other indicator showing the opposite. How long can the insanity last? Well look at 1999, it can last a long time. Elections coming up could really be Dabama saying to his G-team….whatever, take $100B and ramp the futures and market indices….make sure people are happy by election day.

    Here are some charts by darell, lots of ratio charts.

    http://oahutrading.blogspot.com/

  • http://wealthadviseruk.blogspot.com/ Gary_UK

    No, you have bought the view the Fed sell to you. Their bank shareholders are effectivey bust, they only reported half-decent figures last quarter by reducing previously announced exceptional charges for bad loans (in the face of rising delinquencies).

    They need a quick and massive round of QE2, remember the Fed operates for the banks benefit, no one else's. That is why EX-GS man Hank Paulson let Lehman (not one of the club), go under, to force through TARP and QE1 (a huge theft from US taxpayers).

    So, now, Bernanke and his banks will take the markets down, induce some panic, helped by stuff in Europe, and just before the mid-terms we will get QE2 to 'rescue' the world (in reality provide yet more easy money for the banks).

    WE have a 20-30% correction dead ahead, the banks are ready for it, with JMP having sold out of 13m IWM shares purchased in early August.

    Just watch in happen.

  • convictscott

    Steveo,

    The market ramp on fumes over the last 2 weeks happened NOT because of market manipulation. It happened because every bear in the world was short, and the decline, on decreasing breadth on the way down, to a major intermediate term support, was NOT strong enough to represent a one in 200 year decline like was predicted. The bears fumbled yet another chance is what happened, not any mysterious “them” who nobody can ever name.

    Basically bears were forced to cover when 1040 held (there may have been some manipulation at the actual 1040 number) That this short covering rally occurred on weakening internals/decreasing breadth on the way up was indicative of weak hand bears gradually capitulating.

    However Friday changed that. Friday, for the first time, was indicative of FRESH BULLS BUYING THE DIP. We had a strong upday on last monday, 3 weak pullback days, then a STRONG UPDAY ON MASSIVE UPSIDE BREADTH.

    It is now behaving like an uptrend again. The upside breadth of 4.63 will take time to work off.

    These are the stats from Friday.

    COMPARED TO YESTERDAY’S RANGE
    74.3% of stocks are above yesterday’s high.
    93.8% are above yesterday’s midpoint. (6.2% are below.)
    2.2% are below yesterday’s low.
    23.5% are inside yesterday’s range.
    87.0% of stocks with today’s high > yesterday’s high. (13.0% less than).
    4.9% of stocks with today’s low < yesterday’s low. (95.1% greater than).

    EVIDENCE OF INTRADAY TREND
    83.9% of stocks are above today’s open. (15.1% are below).
    83.6% of stocks are above today’s open and yesterday’s close.
    3.5% are below both.
    98.5% of stocks opened above yesterday’s close. (1.4% opened below yesterday’s close).

    COMPARED TO TODAY’S RANGE
    31.4% of stocks are in the top 10% of today’s range.
    53.4% are in the top 20%.
    84.1% are in the top half . 15.9% of stocks are in the bottom half of today’s range.
    5.2% are in the bottom 20%.
    2.7% are in the bottom 10%.

    GAIN
    96.0% of stocks are above breakeven. (4.0% are below b/e.)
    13.2% are up 4.5% or more. 0.1% are down 4.5% or more.
    30.2% are up 3.5% or more. 0.2% are down 3.5% or more.
    11.6% are between +1% and -1%.

    All those indicators you follow are just fancy squiggle versions of PRICE. Price is what matters here. This weak rally of last week became a strong rally on Friday. What matters now is how much follow through it has. Bears will have another chance soon, if they fumble it then, then a test (who knows if it will pass or fail) of the old highs is in order.

  • raised_by_wolves
  • http://oahutrading.blogspot.com/ steveo77

    Those fresh bulls buying the dip, along with GLD/SLV rocketing downward (i.e. retail getting heavy into the PM game) could very well be the meat in the market before “they” drop the bids like a rock.

    The gov admits that it intervenes in the various markets. Just read the fed minutes and other various news commentary. They recently stated that “we don't intervene in one particular market”, which is a nice way of trying to not lie.

    The manipulation is obvious and blatant and self stated. “They” are the US gov, and HBB—Goldman, Morgan, Schwab…. now you know who they are. They want to bring “con”fidence back. Many 30 year traders have stated that they have never seen anything like these markets. Why would “they” not manipulate the market? Of course they would, they know that no prosecution is coming and have known that for years.

    Agreed that the best time to ramp with futures is when you can use short positions to get more bang for the ramp buck, you can see it on the tape.

  • convictscott

    Steve, I feel your frustation 🙂 Consipiracy theories, market manipulation cabals, evil GS, the PPT… none of that stuff enhances my profitability as a trader even one bit.

    If the market is being manipulated (my belief is that at 1040 there was surgical application of buying pressure defending a line in the sand. I dont believe there is any evidence at all that it was the fed or ppt, more likely a smart hedge fund or two seeing a good risk/reward opportunity, which is what I do everyday) the ONLY logical thing is to trade on the side of that manipulation.

    After all, god is on the side of the big battallions 😉

  • Eva S

    The market is at the same level as 10 years ago. Plus when you add inflation, stocks do not appear that expensive.

  • http://oahutrading.blogspot.com/ steveo77

    So now my interpretation of that manipulation is that “they” drop the market to take money from the new bulls, and then to get support for QE2 so that more taxpayer money can be handed to the banks/brokers. That is the side I will bet on, maybe not quite yet….

  • convictscott

    Very plausible 🙂 I get confused when I start thinking fudamentals (funny-mentals) so I just trade the tape. When this rally blows itself out (highest probability = a little more upside, not just yet like you say) the bears have another shot.

    We get more evidence then, the form and severity of the next pullback will likely decide the market direction for the next intermediate term

  • convictscott

    Markets recently have exposed serious systemic holes in EWT. At this point the evidence points to it being a flawed theory for predicting current markets.

    EWT has no way of addressing either the positive feedback loop which occurs when a count doesnt play out, external market intervention (extended low interest rates), or the symbiotic relationships between currencies and bonds (much larger markets than equities) which can wash equity markets around like the tail on a dog. It also doesnt address time adequately.

    EWT is a theory from the 1930's. The last year has shown that while there is a LOT OF USEFUL info from EWT, as an all-in-one trading methodology, its got some serious holes.

    There are several smart people doing overhauls of EWT right now, trying to make it more relevant for modern markets. EWT needs an overhaul.

  • Eva S

    How do you interpret these 2 charts? That tech has been has been a lot less volatile than the more broad S&P 100?

  • amokta

    Futures are up, bears = fur coats for winter!
    Welcome to Hollywood!

  • http://wealthadviseruk.blogspot.com/ Gary_UK

    I am trying Zero for the trial period. Does the 5min version kick in during overnight futures? WIll I see it tonight? Potential for lots of divergences I would expect, with RSI's staying low, even as prices push on up?

    Good luck this week all.

  • amokta

    I havent used zero yet, as only got trial sign-up after close friday
    not sure if it only works during cash-market open times ??

  • Eva S

    The fact that it was 96 F here yesterday doesn't mean it will not be 10F below zero in a few months. I am keeping a little fur coat myself in the back of my closet… LOL

  • convictscott

    It is calculated using data only available in NYSE hours

  • 99er
  • SW6

    Yes, the logic of his story is curious. Labeouf is quick to point out his money was in a separate account from the corrupt traders, but why would that matter. If they traded his account his gains are likely as crooked as theirs.

  • http://evilspeculator.com molecool

    Achtung Achtung – it's 106 degrees in L.A. and I had a power outage in the midst of writing my report. Probably lost 20 minutes of my work as my damn UPS did not kick in. Anyway – power is still down and I will post it whenever fucking DWP restores power. Sorry guys – spread the word as I typed this on my phone.

  • chronographics

    Last comment before I hop the plane. Ian Copsey (a good friend of nine) is writing a new book on EWT, he has authored before and with some success. He calls it Harmonic Elliott Wave, similar except he seems to get it right more than most. He has been Bullish… will let you know when his book is out. He also has a blog site but you might need to google for it… Good luck

  • Eva S

    We want an Elliott Wave indicator that *works*. Bon voyage!

  • chronographics

    LOL don't we all? EWI is about crowd mood so guess best we will get on that is the bull/bear percentage indicator. The main problem with EWT is that its subjective, so when you are hot you are really hot and when you are not you are just &*%#
    🙂

  • Eva S

    Poor Mole… Is UPS a backup battery?

  • SW6
  • Eva S

    I thought Mole does not allow vulgar language on his blog…

  • SW6

    Eva, surely you jest.

  • 99er
  • Eva S

    For Think or Swim scan users: how do you add a column with a “YTD % change”. I am surprised they don't have this variable in the list. Do I need to learn their script language?

  • 99er

    I think it's a new STD going around the Seattle area. Patient Zero is said to be a juvenile delinquent named yazzer.

  • http://wealthadviseruk.blogspot.com/ Gary_UK

    http://www.moneymovesmarkets.com/

    A good site I follow above.

    If my conspiracy theory is correct, it is backed up by the evidence in the 1st post you will see, the Fed ALLOWING the monetary base to contract, which often proceeds stock markets falls.

    We'll see this week, I believe it's now or never (and I still believe it will be now!).

    Good luck all.

  • http://evilspeculator.com molecool

    Moderator – please remove this link!

  • http://evilspeculator.com molecool

    Fucking A!

  • raised_by_wolves

    Maybe the L.A. power outage affected jing and screencast. Whatever the case, they are not working. This highlights the importance of having local copies of anything that is important to you, not just depending on the cloud.

  • 99er

    Fuji-san
    Hey, RBW. The hottest chick in the blogosphere has a post up at The Slope of Shit. What the fuck are you going to do about that that?

  • 99er

    Jeez…and I thought I was banned!

  • raised_by_wolves

    If you back up another five years, you can see (or imagine since screencast isn't working for me) that $NDX has been outperforming $OEX overall since late 2002. $NDX tends to underperform $OEX during the most intense parts of bearish phases, but $NDX also tends to outperform during recovery, accumulation, and bullish phases.

  • 99er

    Noh
    No, not that kind of no. Not yet anyway. RBW, please send this message to Fuji-san and tell her that she has two secret admirers in Seattle (but watch out for you know who.)
    http://www.youtube.com/watch?v=Sn2mHeGnu_k

  • raised_by_wolves

    Hey, you still sound angry. Those jerks over at SOH aren't worth getting bitter over.

    Also, I have always assumed that Fujisan is married. I don't know why. Maybe it's a certain dignity about her.

    Since you recommended I check it out, I did skim Fujisan's post. They don't use DISQUS anymore though; I'm feeling too lazy to sign up to comment.

    Fujisan has avoided $SPX because it has been relatively flat. Her targets for EEM, AUD, and EUR are approaching. Her target for EWM has already arrived. She has counted 5 waves up so that implies that she is expecting a correction soon.

    What do you think of her target for the dollar?

  • raised_by_wolves

    Dude, I don't even know if Fujisan knows that I exist 🙁

    I'll let you know if that changes 🙂

  • 99er

    I'm not angry…I'm having fun. I'll stop if you want or, in any case, when there is a page change. In the interim, I'm learning more about the intertubes and what they have to offer. And Noh, I haven't read her post yet; I've been in a revelry over Kyoto.

  • raised_by_wolves

    @ Eva: As you may already know, you right click on the top gray part of one of the columns and select customize to add a column. Unfortunately, “YTD % change” is not available to add; so, a ThinkScript would be necessary.

    @ ThinkScripting Superheros: If a “YTD % change” scan would be trival to code, would someone be willing to help Eva with that?

  • raised_by_wolves

    Have some extra saki, er I mean sake for me 🙂

  • Eva S

    Thanks, Wolfie… I found a Yahoo TOS group… I will experiment with their scripts tonight.