Discretionary Trading
Now Reading
Careful Now!
75

Careful Now!

by The MoleMarch 26, 2012

I think most of you would agree that this is a very strange session – things feel a bit out of sync. First we got a textbook ramp & camp formation plus a moderate trend day alert. But then we have Mr. VIX up over one percent as well:

What gives? Besides, this is starting to look a bit like a bottoming pattern and we now have a range between 14 and 16. Let’s see which side wins this one. But as we are approaching single digits I’d say that the bears have the long term advantage – plus May is approaching.

Meanwhile the hourly spoos have run into upper resistance, which may explain the ramp at the open which quickly ran out of steam. However, IMNSHO the daily chart is a lot more interesting:

[amprotect=nonmember]
More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
[/amprotect]
[amprotect=1,13,9,12,5]

As you can see we are right at the 1405.75 NLBL – a breach here today would be pretty bullish as we already sliced through the one at 1400. If it happens tomorrow that’s fine as well – there is no resistance above, just a big volume hole. Note that this is a new NLBL and it’s good for the rest of this week.

As you can imagine I am also following the AUD/JPY as it’s often an early harbinger of trouble on the equities side. Interestingly we pushed all the way into an inflection point here as well in the form of our previous NLSL at 87.37. If you look carefully however you see that we are currently trading again below an older one right below at 87.2.

Bottom Line: Something smells fishy here and I don’t see any setups I like today anyway. Thus I will just watch the Net-Lines shown above. Of course IF we push above SPX 1414 then we’re probably off to the races – the AUD/JPY and the spoos should provide early indications of that. Bear in mind fair value today is -5.9 – almost -6.0. Thus a breach of 1411.75 on the SPX is roughly equal with the NLBL on the daily spoos – mark your calenders! But until then I’d be very cautious about the long side here.
[/amprotect]

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c

  • Anonymous

    Can anyone explain the disconnect b/w the VIX & the VXX?

  • Schwerepunkt

    Um . . . VXX is garbage derivative of a derivative?

  • Anonymous

    VIX is not tradable. VXX was made so retail investors lose money. I think that sums it up pretty good.

  • http://evilspeculator.com molecool

    VXX is a piece of shit ETN just like TVIX – unlike ETFs TVIX is not an ETF – it’s an exchange traded note (ETN). The manager does not have to issue new shares if the security trades at a premium to NAV which can feed insider trading & short/long squeezes. How often do I have to tell you kids to stay way from this crap?

    If you really want to play volatility then learn about options vega.

  • Anonymous

    I think we should just create a permanent folder somewhere entitled “Don’t Trade TVIX (or VXX)” and direct all future posts there!  While it SOMETIMES can track the VIX, it seems to have all manner of reasons for not doing so that are too numerous to be worth mentioning.  It lurches and jumps like a manic depressive shadow of itself in seemingly random fashion, makes a mint for Credit Suisse and can neither be rationally analysed nor traded nor commented upon.  Apart from that, a wonderful instrument indeed.

    As for Mole’s post – an official “like”.  We have been in this twilight world melting up but nevertheless standing on the cliff’s edge for a while now.  Reminds me of the old wisdom that the market can stay wrong longer than right people can stay solvent.  

  • Anonymous

    Thanks for the insight.

  • Schwerepunkt

    1409 ES; new high.

  • Anonymous

    VXX is a play on short term (front month) futures on VIX and not $VIX today, as a result when $VIX is expected to be higher in the next few months compared to now the cost of buying the futures increases (Contango). As VXX is having to constantly replenish its expiring futures contracts with more expensive ones in the future it loses money. At the moment the lost opf all this means that even if VIX remains unchanged in the month you lose 15%+, so in summary sounds like a shitty deal alround really.

  • Anonymous

    Oh man…I’m so gonna puke watching this tape.

    I think today’s post-market-close workout is gonna be a painful one…

  • Schwerepunkt

    We have lift-off; it seems.

  • http://evilspeculator.com molecool

    Embrace the pain!

  • http://evilspeculator.com molecool

    Indeed….

  • http://evilspeculator.com molecool

    You can actually like the post by clicking the ‘thumbs up’ icon above.

  • Anonymous

    “Never run after a bus, a woman, or a trading setup. There will always be another one in a few minutes.”
    to misquote John Wheeler

  • http://evilspeculator.com molecool

    BTW, the expression is ‘the market can stay *irrational* a lot longer than you can stay solvent’.

    The market is NEVER EVER wrong.

  • Anonymous

    Was that highest tick so far 2 mins ago?

  • Anonymous

     Holy mother of… What is this market made of?

  • Anonymous

    Exactly – I haven’t chased after getting knocked off the ES/Spoos train last night and kept a tight lid on an AUD/JPY short but that doesn’t stop me from feeling nauseous watching this (even if my wallet is in tact) =P

  • Kudos

    Fiat money, which is only increasing in supply

  • Anonymous

    i got +1272

  • Anonymous

    I think the more important part is the second one. Don’t get distracted over a missed opportunity but focus on finding the next one. It will always be there but you may miss it if you’re still busy beating yourself up for missing the last one.

  • Anonymous

    nice post, thanks

  • Anonymous

    Aud/jpy lotta stars

  • Schwerepunkt

    Big green candles now. [now, big red candle] LOL

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

    embrace the pain, muwahahaha.

    don’t fight the T.

    the bobbleheads on TV are soooo happy!

  • Schwerepunkt

    NG is the true house of pain. New 10-year low. I recall a few weeks ago an ANALYST said we could see $1.50 for NG. 

  • Schwerepunkt

    Short raping now. That’s gotta hurt. Glad I’m just watching this. Big numbers on BID/ASK; might be a bit of a blow-off?

  • Anonymous

    IWM broke the swing and is now below it . ..  see if it squirts over at the finish line

  • Anonymous

    The lower 100-month Bollinger is at 1.437. It’s the only thing remotely resembling support on any chart right now. But there is a daily NLBL at 2.369.

  • Anonymous

    /tf churning at the 5min 50 day trader line
    See what the next session brings
    Holding my short 842

  • Fibz

    If we’re going to be the world’s largest gas and oil producer by 2020 (displacing Russia and Mid-East), both are certainly going to be cheap for us.

  • Anonymous

    Bonds seem to be standing on the sidelines for the most part . . . in the end it has so far been a very minor pullback.  Still holding my calendar spreads looking for a possible retest of the high.  30 year bull markets have an awful lot of bulls around to exploit with another blowoff high.

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

    always be closing
    *Casino Closed*

  • Anonymous

    SPX at 1416.47, new high, no ZL divergence and /ES closed above the daily NLBL. I thinking 1430 on the SPX.

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

    http://i40.tinypic.com/14e5uet.png 
    the midmonth correction is over
    bullish bias till EOM.
    -DG

  • Anonymous

    Something I missed?  I see tails down on SPY, IWM and AAPL after hours (each of them showing trades down near session lows, but then back up near the close – i.e after hours candle with small body and huge tail down).  Is that just a data error at my end or did I miss something?

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/bb2e80d1-6e15-4a47-90ef-6eb0e319c3bc/2012-03-26_1634.png
    alright I will hold on to my short that was triggered at 87.00.  I will jump off at 87.50. see ya at 84 😉

  • Anonymous

    Cable looks interesting here

  • Kudos

    Gold looks interesting. Increasing range to the upside, but cluster of support from 1687-1705 which includes the 25, 50 and 100 day moving averages. Poked through the 200 day MA today on higher volume though. Silver is also now above its 100 day.

  • Anonymous

    I see AH tails like that on AAPL often. I’ve not been able to discern any particular meaning from them.

  • Fibz

    Real estate looks like a cooked goose. (TOL, LEN, etc)

  • volar

    FWIW I know ISEE has been quiet.. but 410 today?? that is a record…. and prob. not good IMO

  • Anonymous

    Didnt you hear Bernanke fixed everything. Stop looking at numbers…..

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

    irrational exuberance.
    and tomorrow,…..even more irrational exuberancy!
    http://macrobusiness.com.au/wp-content/uploads/2011/03/greenspan.jpg 

  • Kudos

    Crazy, but ISEE is usually early by at least a week, if not a month. And i’m talking about when the 10 day MA of ISEE reaches around 250. 

  • volar

     agree. hard to fight seasonality of both bonds and stocks right now as well

  • Kudos

    I think sell in may, and focus only on commodities during the summer is the game plan for this year.

  • Anonymous

    http://www.youtube.com/watch?v=viJ5W-E3EJc
    My attitude toward this bull market. lol sorry I had too. Honestly this ramp made my life easier I didn’t have to wait as long like the last time it fell from grace at 88

  • Anonymous

     Now THAT is a quote!

  • Joe_Jones

    resistance on monthly spx is only 20 or so handles away
    http://stockcharts.com/h-sc/ui?s=$SPX&p=M&b=5&g=0&id=p55342908496 

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

    it felt much more like Katrina.
    and I’m sure someone Be LOOTED.
    http://dybiz.com/sites_randomblog/wp-content/uploads/2011/07/katrina_beer_looter.jpg

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

    three more days….7 pts a day?….

    http://digibody.com/obama/images/photo/yes_we_can.jpg 

    sorry for the homoerotic fist pump. purely unintentional.
    😉

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

    Mole, are you slipping my ideas to Tyler?

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/03/20120326_ESGOLD_0.png 

    (just kidding, lotsa of people like ratio charts)

  • Anonymous

    Ha!

  • http://evilspeculator.com molecool

    Thanks for the update – I may put a pertinent post together later.

  • Anonymous

    Bad news, Prechter has been doing the INDU/Gold ratio for years. 😉

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

    OMG, I have pretcheritis!
    is it lethal?

  • Anonymous

    Only to your account.

  • Anonymous

    Not really inspiring confidence.

  • Anonymous

    speaking of that place of ill repute. Ive noticed them harping about yen devaluation yada yada gonna happen within days and your gonna have to eat your dog, you know what I mean.

  • Schwerepunkt

    Ya think 1425 is it? 

  • Anonymous

    I don’t know. Those divergences have been in play for weeks and months now without anything meaningful happening to the downside. They can always get more extreme, but 1425/1430 on the SPX looks like a good target due to the Bollinger bands. However, those are sloping up, so we could see a sideways move for some time and then more upside. It’s hard to tell how much longer this can go on as it usually goes on longer than anybody expects.
    We should keep watching the other key markets like the DXY and copper for clues. I also just noticed that AUD/JPY may be in the process of painting a classical Head and Shoulders pattern if its advance comes to a halt around 87.90 (maybe at that daily NLBL at 88.11).

  • Schwerepunkt

    I was thinking 1425 because of the arrow off an important pre-crash high.

    http://screencast.com/t/by0WRZYgWb

  • Anonymous

    Interesting, I didn’t notice that and you may have a point there. Intraday high on 19 May 2008 was 1440.24, closed at 1426.63.
    If I were wave-wanking, I’d call that the top of Intermediate wave 2 of Primary 1. Incidentally, that point can be a meaningful target under EW rules.

  • Joe_Jones

    Sometimes one has to look at the bigger picture to get more insight:
    http://stockcharts.com/h-sc/ui?s=$SPX&p=M&yr=3&mn=5&dy=0&id=p89010565002&a=226823824 

    Here are my 2c.

    Last year we had a doji and this year we have already exceeded last year’s high. 

    2010 candle < 2009 candle, whilst volume dwindled.

    A failed trend reversal after a doji is bullish.

    But that needs participation, and given the last 3 months declining volume, robots and the vampires will need to come up with new hat tricks to ramp up this cow dung. Hence the urge for more liquidity and QE talks.

    Now if we finish the month at the high, we gonna need a lot of participation to keep going up next month. So Bernank's betta open wide the valves. If we don't finish at the high and reverse below 1370, we have a fail breakout on the previous year's candle, and that would be really bearish, for the short term at least.

    Very short term I think SPX 1440 is still possible, could happen tomorrow a.m., but I suspect we may see some profit taking before month end as some fund managers may want to show some good numbers for their books.

  • Joe_Jones

    Yes, We Can Fist America!

  • Joe_Jones

    RBW used to draw ratios with gold.

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

    at the risk of being shot at.
    didn’t today’s close feel like the end of a T?  I mean, come on! 19pts?

    I’m not asking anyone to stand in front of a train, but today was mysterious, was it not?

    T time.
    http://i39.tinypic.com/2ihtnde.png 

    and the old post to back it.
    http://practicalt.blogspot.com/2012/02/denied.html

    yes, DG took his meds.
    -DG

  • Anonymous

    Nice inside day setup on /CL.

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

    at first I didn’t care.  but AUD/JPY has been a major source of talk in this realm.
    should we be chicken little’s?

  • AudioTactics

    I’ve been feeling the same… today was very strange.  It appears everyone misunderstood what Bernanke said too… he was just supporting his easy monetary stance but not announcing QE3.  Bernanke will not embark on QE3 because he is getting flak from Obama for higher oil prices and from global central banks for higher resource prices as well.

  • Anonymous

    Tight BB’s as well

  • http://evilspeculator.com molecool

    Sorry guys – I was planning to do a post on the record ISEE reading but I came home to a pet emergency. My cat is very sick and tried to scratch his eye out – long story. There was blood everywhere and we had to take him to the vet. What an evening!!!

  • http://evilspeculator.com molecool

    Two prior long term touches is very weak resistance but heck let’s see if she holds.

  • 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¸