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 - and there’s a wide range of keys available – take a look:

2015-03-16_brain

You think of yourself as a rational person? Well, think again – 90% of what we do is steered by habits and emotions. Just look at how much of your brain is actually devoted to emotional interpretations and responses in comparison with rational analysis and the exercise of judgment. So if you are still exposed to the downside all these sections of your brain are most likely feeding you a party mix comprised of disappointment, fear of losing more of your prior paper profits, temptation to double down and sell the rip, doubts about your prior analysis, anger at not taking full profits last Friday, etc.

Mind you this is NOT the time to second guess your system (if you have one) or to react as opposed to simply act. I think this is an essential maxim every trader should be print, frame, and hang on the wall facing you during your trading activities:

ACT – NEVER REACT.

2015-03-16_ES_update

The hourly and daily price panels are looking pretty bullish at this point. However we are at a short term threshold which will determine if this leads higher. Notice how the BBs and SMAs on the hourly are starting to slightly swing higher – if this continues into the close then the bulls take this one home and probably squeeze things higher. So watch the next two hours – the bears need to act now in order to prevent a massive squeeze to the upside. Accordingly I have put my final stop near the 25-day SMA which is probably more than generous.

2015-03-16_spoos_weekly

Weekly – the bulls definitely won the first important battle. That NLSL and the 25-week SMA held up like bosses and unless challenged early this week it will henceforth act as additional support.

2015-03-16_VIX_ratio

Let’s take a look at market internals – the SPX:VIX ratio is looking a bit suspicious as it’s trailing price. This may be nothing but I am sharing additional considerations below the fold.

2015-03-16_zero

The Zero super flat today – no participation. Which leads into two charts that grabbed my attention – please get your secret decoder ring and join me in the lair:


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RainbowPamPortVila

UPDATE on Ivan Krastins – I am happy to report that I just received notice from someone in contact with Ivan. Apparently the old buzzard managed to survive a category 5 cyclone wearing his Chinese wok as a helmet and by chaining himself to a boat anchor. He has no electricity or internet and his computers have been damaged. But he does have phone access and I wouldn’t be surprised if he’s calling in futures orders as we speak. Well done old chap – if you need anything please don’t hesitate to ask – we’re here for you. Unfortunately Scott is in Bali right now otherwise I’m sure he’d be on a boat by now. I have an old MBP I could ship him or perhaps someone closer to Ivan could help him out? Getting things over there will be difficult for the next few weeks and any Aussies or Kiwis please steps up – he needs our help.

PUBLIC COURTESY ANNOUNCEMENT: I am heading to San Diego for a day and am scheduled to return to Los Angeles tomorrow early afternoon. I won’t be bringing my lappy as I’ll be on my feet most of the time down there. This means that tomorrow’s post will most likely be after the market closes. Thank you for your understanding – I am doing my best to keep the blog flowing during my time on the beautiful West Coast. By the way the weather here has been fantastic – super sunny with dry heat – just like the Mole likes it :-)

Cheers,

Low Probability High Payoff Lottery Ticket

This is a quick update on our equities saga – finally the time has come to wield the iron as it’s hot. You recall that I suggested a bull/bear inflection point at the ES 2055 NLBL. We’re there now which bestows upon us the opportunity to grab what I call a low probability high payoff lottery ticket (LPHPLT – I loves me those acronyms):

2015-02-05_spoos_setup

The time is now – so go grab a handful but be advised that the odds of success are probably around 15% – 20% – if that. However if it for some reason drops from here then the payoff may be significant. Most likely however this thing is going to push higher over the coming days – the bulls seem to be running this tape.

Trigger and stop on the chart, so have at it but only play 1/2R or less – again, this is a bearish Hail Mary and most likely it’s going to fail. It’s literally a place and forget type of setup.With the VIX back at 17 a long put play may an option as well – but I would grab OTM strikes in this particular case but that’s me.

A little more context below for my intrepid subs:


More charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don't waste time and sign up here. And if you are a Zero subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Bottom Line: We’re grabbing lottery tickets here but it seems like the bears have had it and the bulls are running the show now. If stopped out I’m planning to be long with a stop a respectable distance below 2055. I may get whipsawed yet again but that’s the price of admission to be trading here.

Cheers,

Riding This Beast Into The Sunset

Forget about equities – everyone and their mother is trying to sort out this gyrating stop sweeping mess. And yes, they are about to get interesting (see below), but I expect our chart of the month to be gold and not the spoos or the NQ.

2015-01-20_gold_update

Fortunately some of us rats managed to secure a seat on the bus just before it took off. I have to run the numbers as I scaled into a bit over an R between 2012 and 2018. Which gets me to roughly 10R at this point and I’m just getting warmed up. The weekly shows us approaching the 100-week SMA – our first major hurdle. However I’m going to keep my stop below 1272 for now in expectation of an obligatory shake out attempt.

riding_into_the_sunset

The long term implications of this campaign are very promising and with a bit of finesse it’s possible that we’ll ride this sucker into the sunset. Which means somewhere around 1500 – you heard it here first.

2015-01-20_spoos_update

Okay on to equities – which as I said are about to get extremely interesting. We currently are what I believe are the late stages of a limbo period (see my 2012 excerpt on market weather). However we are most likely facing long term implications here – this is not just another leg lower or higher. I repeatedly have pointed out the increase in intra-day volatility expressed here by long wicks and overlapping candles. Very very tough tape to get a read and even tougher to get a good entry. Which is exactly why most traders miss the early stages of a downside correction.

2015-01-20_spoos_GBPJPY

But let’s not count our chicken before they are hatched. Most likely it’s going to get worse before it gets better. The GBP/JPY correlation is pointing upward right now and I think short term it’s quite possible we’re going to stop out the current NQ short campaign (courtesy of Thor).

2015-01-20_UVOL_DVOL

However there is conflicting evidence and in order to interpret the big picture we need to put it all into context. Now our UVOL/DVOL ratio today remains pretty negative despite the current push higher – could be indicative of slow accumulation especially as the Zero is donning a very flat signal (meaning little participation and quite a lot of monkey business).

A LOT more below the fold – not a post to miss – please meet me in the lair:


More charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don't waste time and sign up here. And if you are a Zero subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Bonus chart:

2015-01-20_CrazyIvan

CrazyIvan now at 77R – new all time highs since 1/1/2014. Who would have thunk? And it started to really get cracking when volatility was on the increase starting November/December. Seems like CrazyIvan is loving the IV and I hope to see more of this. Message to everyone who left during the summer: Watch the Nick Rage video again. This is a long term game, folks and instead of going with the program I watch you picking up pennies in front of bulldozers. Enough said.

Cheers,




    Zero Indicator


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