Not A Game For Adrenaline Junkies

All eyes are on equities right now as a lot of people have been taken by surprise in what should be the early phase of the seasonal Santa Rally. Someone in the comment section pointed out yesterday that it’s not unusual to see a correction in early December and a push higher starting near the 15th, just when a lot of folks are getting ready to leave town (hint – trading bots don’t take X-Mas vacations). And that’s exactly right – in fact I was suggesting on several occasions that we would actually benefit from a pre-Santa buying opportunity. Well, folks – here it is – so let’s take advantage of that when the time is right.

What bothers me however right now is exactly what I mentioned in my introduction – all eyes are on equities right now. Which means a lot of folks will be trying to either find a floor, find a buying opportunity, waiting for the pain to stop (some poor fellow mentioned he was still short from the top), are waiting for another leg down, etc. You get the point – movement attracts attention, right? Now SLOW moving targets evade attention – take a cue from the turtle. You barely see it move along and so you quickly lose interest. But before you know the little bastard has crawled yet another mile or two.

Adrenaline-junkie

A good example of that is the slow squeeze to the upside we enjoyed in the past two months. Please do yourself a favor and go back to some of my older posts throughout October and November. Boy oh boy – was it lonely in the comment section. I literally had to go in there and clear our the tumble weeds. Meanwhile we were adding one R after the other – quietly – while the bus was literally empty. Then near the top people finally started to chase the endless squeeze higher.

I remember one guy who canceled his sub and I always make it a habit to get in touch and (politely) ask whether I’m doing a lousy job or why our service wasn’t working out. Turns out the poor bastard had been short all the way from where I went long – I think it took him 10R or so to finally capitulate. Which was the point when he basically had blown up his entire trading account. This kind of stuff happens all the time, which truly saddens me as I’m working very hard to offer as much guidance as I can. Not that I have all the answers, but I do know how to cut my losers short and in particular how to let my winners run.

Now suddenly the blog is hopping again – as always when the tape starts to drop fast. Why is that? It seems that people like the ‘action’ – the ‘excitement’ that are part of big volatility swings. I’ve said this before and I’ll say it again: If you want excitement and fun then please jump in the car (or plane) and head for Vegas. At least there you’ve got pretty girls in short skirts serve you drinks and otherwise before they separate you from your ill gotten gains.

Trading is not an endeavor for adrenaline junkies. Quite on the contrary – it’s a lot like bingo or playing a long con. You need to know what you’re getting into and carefully plan for all eventualities. You need to keep track of what you are doing, where you’re going, where you’ve been. And you need to keep track of yourself, your emotions, your desires, your greed, your fear. The less of all that the better. All in all – quite boring really. There is no such thing as the ‘exciting world of trading’. It’s only exciting when you lose your ass – and not in a good way.

So the moral of the story is this: Change your mental programming. I know you guys are around because you’ll always show up at the wrong time! AFTER the big moves happen – preferably to the downside. In some of the most difficult gyrations where we have little technical context to work with. Instead you should have been here all October and November when banking coin was easy. Easy/boring tape – that’s when you bank the most coin.

spanish_inquisition

Obviously I’m not going to argue the point that anyone who went short near 2079 is all smiles right now. Please show me that person because I haven’t met him/her. Remember Monty Python’s Spanish Inquisition bit – it works like that with market turns. Everyone talks about them all the time – fears them even – but they always show up when you least expect them. Of course in hindsight it all makes sense, right? Just ask the guys over at ZeroEdge.

2014-12-11_spoos_briefing

Now on the spoos we are at the second and most pronounced volume hole I pointed out yesterday. Chances for a bounce here are pretty high – even if it’s just for a day or two. My short positions are still in play but I don’t think that my stop at b/e (a few ticks above 2035) is going to hold. And frankly I don’t really care too much – there are many other markets for me to focus on right now.

2014-12-11_NQ_briefing

If you can’t detach yourself from equities then here’s a pretty good ST inflection point: 4240 on the NQ futures. A push above it probably drives us higher for a session or two (maybe more). If the NQ cannot pop above it then down we go – where we can’t really just yet.

2014-12-11_cocoa_briefing

Cocoa – I’m long here with a stop below the 100-hour. BTW, I’m reducing all my exposure to 1/2R now as this tape is a bit fast for my taste, that includes Forex.


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Cheers,

Painful Ping Pong

I’m not exactly enjoying the current market phase and most likely neither are you. The painful ping pong we are forced to endure for the past few sessions is to some degree courtesy of the Dollar needing to correct. However there’s an apparent lack of sellers since Draghi’s recent jawboning has confirmed the perception of the ECB as remaining dovish. So I guess we’ll gyrate around sideways for a while.

2014-11-17_dollar_update

Just looking at the action of the past week is making me nauseous – clearly this is not a good time to be trading Forex. So I suggest we don’t force the issue and wait until this thing plays out. The Santa Rally is nigh – we can be patient and we all have been through worse.

2014-11-17_spoos_update

Similar situation on the equities side and I would suggest the same here. I did propose an experimental inside day period entry on the spoos last Friday and that blew up in our face. I did take a short (as I’m still long) but have little appetite for adding positions here (13R is enough – even for this manic market megalomaniac).

2014-11-17_natgas_update

Update on natgas – grabbed 1/2R here last week and we’re off to the races. That’s quite a jump higher and it’s why I only recommended half a unit here – no wonder we call it the widow maker. I’m not going to touch this campaign until it either banks me 2R or my stop at break/even is being touched. If she really picks up the pace I may extend my target – I’ll keep you posted.

I have two juicy setups waiting in the bullpen but need to keep those for my intrepid subs:


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Cheers,

Rational Ambivalence

Finally we are correcting a little. Don’t get me wrong – I rarely tire of banking coin but we need to see at least an obligatory correction before the Santa season hits late this month. My NQ campaign was obviously stopped out (with ample profits) and that still leaves the ES campaign which I have been trailing via Net-Lines and spike lows:

2014-11-13_ES_update

Which means I’m currently drawing the line a tick below 2020.5 which would still leave me in the plus 12R. If we drop below that then it’ll be difficult to suggest support levels. We have been rising like a rocket and there is very little context below. I think we need to see a bit more tape here – so far it’s been pretty lackluster.

2014-11-13_NZDUSD_setup

NZD/USD is starting to look like a possible floor – weeks of pain after a very solid down trend. Now it’s peeked above the 25-day SMA plus a NLBL which has me long right here with a stop below yesterday’s lows.

Two more goodies below the fold, please join me in the lair:


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

Cheers,




    Zero Indicator


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  3. recent misdeeds

    1. Freaky Forex Friday
    2. Better Not Fighting This…
    3. The Squeeze Is On!
    4. Post Fed Musings
    5. Strap On Your Helmets
    6. When There’s Blood In The Streets
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    10. Not A Game For Adrenaline Junkies