The Quiet Before The Storm

Personally I believe that very little is going to transpire here before Monday morning. I’m sure you are aware that the Greek are holding a referendum on Sunday the 5th [good write up here] which is I expect will throw markets into a turmoil – no matter which way the pendulum swings. Expect a ton of volatility and most definitely expect stop runs galore right after the Sunday open (which is night time here in Europe and preliminary projections will be coming in).


All of that means I’m pretty much shutting down the liar starting tomorrow morning – and I won’t be taking on any new setups in the interim as we’re now heading into low participation territory. I’ve got two charts of note though:


First up bonds - here’s the 30-year futures contract. As you can see it keeps failing at the 25-day SMA and is now heading down for a revisit of the recent lows. The weekly panel on the right however toggled my interest – the 147 mark near the 100-week SMA has survived a few times but the Grexit vote this Sunday could be the catalyst that finally breaks that camel’s back. Nothing but air below – this could get ugly quickly.

Honestly I completely hate what’s going on right now. I would love to be long here but the continuous Greek roller coaster is producing so much uncertainty that taking directional positions has been extremely difficult as of late. And being short here today ahead of Sunday is simply not an option as we may find ourselves facing the gap from hell Sunday night.


My long positions on the E-Mini survived that little dip lower yesterday by a mere tick. Sometimes you get lucky and sometimes they’ll get ya. Not that it’ll do my much good though as today was supposed to be the session which drives this puppy higher. I have already closed them out for a meager 1R profit. As I quipped a few weeks ago – I don’t remember working so hard for so little coin for quite some time now.

As you can see we’ve produced an inverse island down here and unless that NLBL at 2071 gives before the close we’ll most likely remain stuck down here until Sunday night. And that means very little buffer to the downside – extremely serious conditions. But frankly speaking it’s all academic as the odds for a huge move down or up are significant. Thus I caution all of you from holding any equity positions over the weekend.

Words To The Wise

With all the gapping action and general uncertainty I wouldn’t want to wager on where we’re heading next. Holiday weeks are tough sailing to begin – without EU members falling by the wayside. Plenty of opportunity for monkey business and you know someone will get the results early (hint – it won’t be you or I). FWIW – I hope the Greeks decide to rip off the band-aid and leave the EC. It’s been nothing but drama since they joined up and I’m convinced both sides will be better off over the long term. I believe some type of separation over the long term it’s inevitable. Under the current conditions Greece is simply unable to function as a member of the European Currency Union.

Alright, if I see anything interesting I’ll make sure to post a quick update tomorrow morning. In the interim keep it frosty and don’t take on any positions that would cost you any sleep over the long weekend. It’s summer – go out and roast a hotdog or something. Get a tan. Pet your dog. Talk to your wife if you have to. The markets still will be there on Monday – hopefully in one piece ;-)

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Thursday Morning Briefing

First up – good news for you rats. Due to the crappy weather throughout Northern Europe all weekend as well as next week I have decided to postpone my mini vacation. No reason to go through all the motions of traveling if you have to bring umbrellas and jackets in June. Yes, I admit it – 20 years living in Los Angeles has completely spoiled me. There’s no way I could ever live in those parts again. Yikes.

Instead we’re just going to head to the beach this weekend right here in Valencia where it’s going to be sunny and warm. Then we’re going to pull up the Alpine reports whilst laughing maniacally. Yes we are easily entertained…


Still long the spoos since 2070 and so far so good. My stop is now dangling below the slightly slipping 100-hour SMA. Yes, the tape is looking positive but unless this thing gets out of the gate soon I fear we may see more shake out gyrations. See summer weather in Northern Europe…


Bonds looking more positive and I grabbed a small long position near the 100-hour SMA. Stop goes below that stack of NLSLs. On the daily we have yet to break the series of lower highs and lower lows. Which is why I’m playing cautiously here. On the positive side the 100-hour BB is compressing suggesting that we see resolution soon (i.e. today or within the Sunday/Monday session).

This is all I got this morning – see you later this afternoon.

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.


Meanwhile Down At The Evil Lair

Over the past few weeks I have hinted a few times that I was developing a swing trading system based on Darth Mole. Which you may recall is a simple indicator I developed last year with the aim of predicting expansion in price volatility. Quite a good thing to know if you’re about to enter a symbol and over the past few months we’ve been watching it nail one big swing after the other. Some of you are subscribed to the free email alerts or have seen it in the twitter feed. But for the uninitiated here are a few screen grabs:


Here’s DarthMole running against the EURUSD. The blue arrow indicates when you received the alerts.


Here it is killing it on crude.


Here it’s calling out gold.


And here it’s having fun with the 30-year bonds.

I guess you get the idea – it’s bang on when it comes to predicting volatility. Of course the missing piece always has been DIRECTION. Quite frankly DarthMole has been driving me crazy over the past six months or so – I kept watching it nail those volatility swings day after day and became almost obsessed with developing a system that would take advantage of its uncanny abilities.

For months I spent almost entire weekends scrolling through mountains of charts. Just watching and taking notes of anything that stood out to me. Exhausted and desperate I tried to get Scott involved who took a long look at it and pretty much told me he was seeing no edge. There simply seemed no way of making a directional calls and thus building a system around, no matter how tempting, seemed out of reach. After all volatility knows no directional allegiance – it’s great to know when it’s coming but what to do with it?

But persistent (and a bit obsessive) as I am I kept plugging and testing various ideas – correlations, other indicators, Net-Lines, moving averages, heck, everything I could think of. I realized that taking losses would be part of the process and that any successful system would thrive via large outlier winners followed by a succession of small losers. But when exactly to take that entry was the big puzzle I needed to solve. I was laboring for weeks on end until about three weeks ago the light bulb suddenly came on. The result is a fairly trivial and unoptimized swing trading system which is frankly speaking is killing it across the board. I call it (drum rolls) SCALPIUS. Let me show you:


Scalpius vs. the USD/CAD – all stats show the past 19 months (i.e. since early November 2013).




The spoos…


But it really really loves Forex for some reason. Here’s the gofer.


Cable is just a beauty, isn’t it?


EUR/USD – gorgeous…


And finally here’s a graph showing all symbols above combined. I know – 732R – insane. Took over 2700 campaigns to get there – a bit over six to seven campaigns per week day (i.e. about one per symbol). Yes, it loses more than it wins – the ratio is a win rate of about 1: 1.6. But the winners can be huge and it loves to ride the trends.

In case you’re wondering – no this is not something I plan to offer as a service via email/Jabber alerts. It’s way too busy for that and I’ve learned my lesson with CrazyIvan (remember, only 4 subs left). And honestly I’m still pondering whether or not I’ll be accepting LAMM signal subscribers either. Perhaps a small number in a few months from now – if so only the people who already signed up for the LAMM service recently. Frankly it’s probably the best system I’ve ever build plus it very much suits my trading style. A bit busy but it’s manageable as it’s running on a 60 minute chart.

I’ll be leaving for Austria for a few days on Friday morning and will start trading Scalpius after the 25th when I’m scheduled to be back in Valencia. I’ll keep you guys posted on how it’s doing. In the meantime keep watching out for those DarthMole alerts – I always told you guys there is a great system in there! ;-)

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.


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    1. Happy Independence Day
    2. The Quiet Before The Storm
    3. Timing is everything – Black Gold
    4. Short Term Updates
    5. The Game In A Nutshell
    6. Filling The Gaps
    7. Greece Saga Precautions
    8. Furious And Furious Friday
    9. Dangerous Turf
    10. Forex Update