Happy Thanksgiving

Apparently the Thanksgiving correction I anticipated quickly devolved into an obligatory shake out followed by a bounce. Obviously you won’t hear me complain as I’m still holding my long positions since ES 2013.75. Given that participation is bound to dry up quickly after lunch today I suggest you limit your exposure and instead attend to planning your respective holiday weekends.


After seven consecutive years of meager holiday dinners for the few surviving bears I wonder how long the current stew of QE madness is going to keep us treading in place. Most likely we will finish this year near where we started it. Last December we closed the yearly candle at SPX 2058.90 – and almost eleven months later we are now trading at 2089.14 – a measly 39 handles higher. That’s about 3 1/2 handles per month. The bear is getting tired of being slowly roasted and at some point he will emerge from hibernation to exact his well deserved revenge.


Here is the view at the spoos this morning and what stands out is the 100-hour BB which is now starting to get squeezed tightly. Given the lack of participation this potentially invites volatility and quick stop runs, so if you intend on holding through the holidays then set your trails at a respectable distance to avoid some of the noise.


Yesterday’s setup was the AUD/CHF – if you missed it then you should consider signing up!

One more goody for the subs below the fold:

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.

Alright, that’s it for me for this week. The NYSE will only be open for a half  session and close early at 1:00pm Eastern. I don’t expect any of you to be around for that and neither will yours truly as I think I deserve a few relaxing days without staring at charts. My next post will be on Monday morning.

Until then here’s me wishing you the happiness of good friends, the joy of a happy family, and some appreciation of the spoils as well as the tough lessons we managed to extract during a rather difficult trading year. Have a magical Thanksgiving!


Great Call Flawed Execution

Let me precede this post by openly stating that in general there is no such thing as making a ‘great call’. Well there is and then again there isn’t. Now that I sufficiently confused the heck out of you let me try to explain. You may recall some of my past write-ups on volatility, market cycles, as well as knowing when to be active and when to be sit on your hands. A very simple way of summarizing all of the above is that there are periods I would refer to as ‘easy time’ followed by the more mind numbing ones which test not only your patience and testicular fortitude but also your ability to stick with your script.

Assuming a solid understanding of how the tape flows, how volatility flows as well as affects price movement, and perhaps a bit of natural talent, it is quite possible to predict medium term turning points within a margin of a few days during easy time. So great – if that’s all it takes we’ll all be billionaires by Christmas, right? Well, the only problem standing in the way of spending the remainder of your existence attending Las Vegas pool parties is an annoying little detail: Easy time only occupies about 20% to 30% of market time.

The remaining 80% is spent screwing around, either correcting or sucking in hapless retail runts in preparation of the next shake out. In other words – preparing for easy time.


By my personal definitions the short before the sell off on November 10th was a pretty easy call. We had produced a ton of context and the timing was perfect for the shake out. A few ticks higher would have shifted the odds into a short squeeze scenario.

Similarly the bounce on the 16th was in the vicinity of long term support and the short term context was favorable. Some may disagree and I would love to take credit for having a crystal ball but in this game it’s all about probabilities. And at that very moment in the early morning on November 16th the odds supported a bounce, which fortunately transpired.


Yesterday’s call was a bit of a crapshoot as there was less context. It was more of a hunch but it was backed up by sufficient daily and short term context. Of course proving that the Mole indeed does not have a crystal ball I put the stop for my clever little hedge a few ticks too low. So it’s fair to say that I nailed the highs – with my stop 😉

Yup, it happens to all of us – so next time it happens to you smile and remind yourself of the fact that you are in good company. Heck, I should print t-shirts! Or perhaps given the recent thread on birthdays bedpans with Evil Speculator logos on it may turn into a seller.


Anyway, easy time is officially over as we are now in corrective mode within a high volume range just a day before participation is about to dry up. So if you wisely put your stop a big higher than the Mole then I suggest you do nothing for now. The context on the daily is a bit iffy – we may hold here but given the lack of participation it’s quite possible that the kiddies not invited to the Hamptons are going to have themselves a bit of fun.

Not much out there today but I managed to scrape together a juicy setup 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.


Time For A Little Hedge

As you may recall I am still long the spoos, having trailed the current advance since 2013.75. Last week I proposed that we may be heading into yet another pre-X-Mas correction as the timing has us a little early in the season. Given what I’m seeing this morning we are literally sitting at the knife’s edge and that’s a great opportunity for a little cheap hedge:


Since I want to hang on to my ES long position I decided to hedge myself via the NQ, which shows us very nice context. Quite frankly I have no directional bias here yet – we could easily paint new highs today. But given the ST context this is a very effective hedge given the current inflection point.


Crude – I’m feeling adventurous and am taking a long here after a bit of short term volatility. It’s a low probability high payoff lottery ticket thus I’ll only throw in 1/3R.

Not much else out there this morning. As we head into the tail end of one of the most difficult trading years in recent history I remain very conservative when selecting setups. Sure 2008 and 2009 were tough but they also had their highlights if you were positioned right and were able to ride the trend lower. 2010 was a watershed moment for me in that it forced me to up my game and approach trading in a more objective and systematic manner. 2015 however has been nothing but an ugly sideways grind – basically we’ve been running all year and getting nowhere fast. Despite this we have managed to stay ahead of the tape but only because we remained nimble and refused to let wishful thinking or directional bias influence our trading. Let’s keep this up folks, because I don’t think 2016 will be any easier.

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.



    Zero Indicator

    Darth Mole Alerts

  1. poll

    • How many discretionary trades to you place per month?

      view results

      Loading ... Loading ...

  2. NinjaTrader

    search warrant

  3. recent misdeeds

    1. Happy Thanksgiving
    2. Great Call Flawed Execution
    3. Time For A Little Hedge
    4. Soylent Green And Orange
    5. Misses Mean Reversion 2015 Runner Ups
    6. The Mad Momo Ratio
    7. Europe Will Never Be The Same Again
    8. E-Mini Session Wrap Up Video
    9. Support Zones
    10. Short Term Inflection Point