Bonds Reloaded

Looks like we may get another opportunity to dip into some bond action. If at first you don’t succeed try try again. In general I’m seeing very nice price action on the futures side today, so let’s get to it:


The five year continues to coil up and as it’s near a rough rising diagonal I’m playing an hourly Net-Line Buy Level to the upside. Stop below 119 – 1/2R only as the tape is highly volatile.


The other half goes to the ten year bond futures – that keeps gyrating its way higher and seems due for the next leg higher. I am open to the downside here as well but do not like the context below, which tells me that any drop lower will most likely be fast and short lived.


Gold still continuing lower and I’m currently long 1/2R but am expecting to flip on a stop out.

More below the fold for my intrepid subs:

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You have been briefed – now have fun but keep it frosty.



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.


Monday Morning Briefing

I’m back from my weekend get-away and much to my shame I was looking forward to getting back to the lair most of the time I was gone. What the hell is wrong with me? Well, we’ve got very interesting tape unfolding this morning which means we’re going to hit the ground running. But first let’s get up to speed on what’s happening on the equities side:


After a rather eventless looking Friday (good timing on taking the day off) we seem to be slowly descending lower. Damn you Skynard! 😉

Anyway, we are looking at soft support here between the weekly NLSL and the 100-day SMA near 2080. I know that’s a 20 handle window but I can’t offer anything that’s not on my chart.


The YM is looking a bit more productive actually. It’s already trading below its 100-day SMA and the next weekly NLSL is at 17690 (typo on chart). Which means I wouldn’t think about long positions before we descend into that range.


Soybeans is looking like it wants to continue higher plus volatility is expected to jump here soon. I’m long with a stop below 937.


AUD/CAD – long here as well with a stop below 0.9460. I would prefer to be below the spike low but that’s a bit too far away, so I’m taking a little chance here.


CAD/CHF – short here with a stop above 0.758. Again I would have preferred to be above the spike high but it’s a bit distant right now.

I have some very nice goodies for you subs – 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.

In completely unrelated news: The German women team beat Ivory Coast 10:0. What are they feeding those gals?



In one of the pics you actually see one of them floating in the air. My money is on advanced genetic engineering… YOU GO… uuuuhhhh…. gals? 😉


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