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January 14, 2016

The Whites Of Their Eyes

The famous order “Don’t fire until you see the whites of their eyes” is a battle cry which became known in stories about the battle at Bunker Hill which was fought on June 17, 1775, during the Siege of Boston in the early stages of the American Revolutionary War.

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January 11, 2016

You Ain’t Seen Nothin’ Yet

I seriously doubt that the average market participant realizes the magnitude of the devastation that lays ahead. It is our human nature to project forward based on recent events – a common cognitive bias which can easily lead to painful losses during regular market conditions. But what we are facing over the coming weeks and months will register several standard deviations beyond current worst case scenarios, at least based on activity/pricing I’m currently seeing in the option chains.

We have a lot of material to cover this morning. So grab a cup of your favorite morning brew and pay close attention. Yes, there will be a test.

Let’s start with [...]

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December 11, 2015

Scaring The Children

The fear is literally oozing out of my charts right now. Hedge fund redemptions are on the increase, various funds are closing, banks are allegedly buying puts on other banks. Retail has been heading to the exits a long time ago, even here in the comment section it’s been suspiciously quiet in the past few weeks.

And who could blame you guys? After all we’ve got Mr. VIX slowly creeping higher and momo divergences are popping up everywhere. The Dollar is taking it up the rear and the Euro is back with a vengeance squeezing the shorts.

Here for example is the NYA50/NYA200 ratio. Boy, that is one scary chart!

VXV:VIX ratio – [...]

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March 16, 2015

Bounce It

The magic pendulum swung back the other way and Friday’s decision to take partial profits (according to system rules) managed to lock in at least 50% of the profits accumulated on the way down. Of course the question rattling around in your retail rodent brain right now is whether or not this is just a temporary bounce to shake out a few weak hands (i.e. you) or if this thing manages to squeeze higher.

If you want my advice – just bounce it all. You should always always know what your campaign will do at each step of the way – ahead of taking entries. Remember that the game always has and always will revolve around pressing your emotional buttons [...]

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Cognitive Bias Carousel
  • Sunk Cost EffectSunk Cost Effect
    The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired. Also known … more
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