Misses Mean Reversion 2015 Runner Ups

A few years back I wrote a post [1] in which I profiled one of the main deadly sins of retail trader ignominy – the ubiquitous and often almost fanatic anticipation of mean reversion. I am not going to regurgitate my point; if you are a culprit (and you know you are) then I strongly recommend you read my old post and perhaps also one of my more recent ones [2]. If you’re a noob here then you may also want to point your browser toward our all time favorites page [3]. The holidays are nigh and tis the season to debug your brain and start the new year fresh.


However book knowledge is one thing – seeing things play out in reality is quite another. Let me present to you Ms. Gold, our first runner up for our ‘Misses Mean Reversion 2015′ contest. She’s quite a tease, enjoys frustrating gold bugs for months in sideways ranges for months on end, only to finally slam them with a relentless sell off which counts eight consecutive lower lows (CLLs) followed by 7 CLLs.


Not to be outdone here’s Ms. Copper – she’s been popular since the bronze age, thrives in industrial production, but is particular fond of electric circuits. She managed to paint 11 consecutive lower lows this year and she doesn’t look she’s breaking a sweat just yet.


Last but not least here here’s Ms. Silver – she’s got a special shine and is particularly interested in jewelry and fancy cutlery. Most recently she managed to paint 15 consecutive lower lows and thus far is our official winner of the Misses Mean Reversion 2015 contest. Congratulations!!


Moral of the story – whatever you have been told about mean reversion is a lie and will fail you when you most expect it. This spells true in particular when it comes to trading the futures as well as forex. So next time someone suggests mean reversion to you – keep calm and just say no.


On the equities side we seem to be building a base on top of the 100-hour SMA after the initial short squeeze higher. So far so good…


I really like the context on the daily NQ futures which I have highlighted above.


EUR/CHF update – that was quite a ride in the past few days but it seems it’s finally ready to bust higher. Putting my stop below the current Net-Line Sell Level.


Soybeans update – that was one of yesterday’s setups. Moving my stop to break/even here.

More goodies 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!

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A bit of even risk later today when get the FOMC minutes, so I don’t expect too much activity before 2:00pm Eastern.


Bear Spanking

Every once in a while we snag that perfect entry and I would lie if claimed that it’s not hugely satisfying. Equities are now in full squeeze mode and after a continued push higher overnight it’s due time to convert a portion of my paper profits into cold hard cash. The remainder stays in the game in expectation of a much more pronounced bear spanking.


My trailing stop is near 2053, a respectable distance away permitting sufficient room for the obligatory late Friday monkey business. This has third wave written all over it – cough cough 😉


Bonds – stopped out at break/even overnight. Can’t win ’em all.


AUD/CHF – attaboy! Also taking partial profits here and will start to trail the rest below that spike low and NLSL on the hourly.


Soybeans got stopped out at b/e overnight but corn is still in the running – such a trooper. If it can make it through today without stop out then I think this campaign has good odds. Actually this is a great entry opportunity with a stop below 372.


My crude campaign will most likely get taken to the woodshed. However if it breaches that support line on the daily and then recovers I would try again. If stopped out once more I would go short as we most likely would revisit the prior lows near 38. Hey, can someone tell me why gasoline is still so bloody expensive? Consumers have been gipped for almost a year now – refinery cost my shiny metal butt!

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.



Brilliant Context

We have context ladies and leeches – that little dip lower yesterday has produced short context which I intend to take advantage of. On the volatility scale the daily is dropping quickly and the hourly is just about to bust higher in the coming hours. So what is a self respecting evil speculator supposed to do?


Time to strike folks – this is a brilliant spot to grab a bit of exposure as we’re literally sitting on the knife’s edge here. I’m currently with a stop near 2011 (I dare you bloody stop hunters!). A short position below it is absolutely on the menu assuming of course the Zero plays ball – so I recommend you watch that one like a hawk today and tomorrow.

Alright, let’s catch up on some of our recent campaigns:


Bond Update – pretty nice entry there yesterday and we’re moving our stop to break/even.


EUR/JPY Update – jeezes – I got to remember to mail another envelope to my main man Draghi. Taking aaaample profits here and I’m outta here :)


AUD/CHF Update – looks like she’s ready to pop. Stop near the 1R mark.


Soybeans Update – stop a bit above break/even – just below the 100-hour.


Corn Update – this one could go all the way – stop to break even.

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.


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