Fourteen Years Later

I still remember that day as if it was yesterday, which makes it so surreal, given that 14 years have passed since. My wife and I had just returned from a trip to Catalina island the night before and it was supposed to be my first day back at work at some dotcom in L.A. I was working for at the time. For some reason I had turned on the TV while I was fixing breakfast and I still remember the shock when I saw both towers burning. Recall that AA11 hit the North Tower at 8:46am Eastern followed by AU175 at 9:03am . Although I used to get up early whilst living in California to check the markets we over at the West Coast were just rolling out of bed at that time.


I knew right away that this couldn’t possibly be an accident. A few years earlier I had been living in Norther California and had begun studying for a VFR license. Although I wasn’t a full fledged pilot or anything I knew a thing or two about protected airspaces. And in my mind there was no way that a commercial airliner would be permitted to fly at such a low altitude straight over Manhattan – let alone two. What played out in the following hours was a series of carefully orchestrated shocks to a nation who until that day had considered itself almost invincible, at least on its home turf.


I called into work and asked whether or not I should come in and was told to not bother and to ‘stay safe’. In retrospect this sounds a bit silly of course but recall that L.A. is a prime target and in situations like these it’s rather easy to become paranoid. Besides there was no telling the type of traffic chaos even a small scale attack on Los Angeles would have produced. I happy complied and wound up returning only two days later.

Although I now again live back in Europe, where I am originally was born and raised, I was already a green card holder at the time and had lived in the U.S. for almost ten years. California had been very good to me and although I would enter into a period of significant hardship only months later, when the dotcom bubble started bursting, I was banking coin and life was great. Deep inside I already considered myself an American and I was determined to become a full fledged citizen as soon as I was eligible. Which eventually is what happened but many years later, some of you senior rats here may actually remember the day.

The country has changed quite a lot since that dreadful day and IMNSHO not for the better. In my mind 9/11 marks a clear turning point in the soul of the United States. I think we all lost something very important that day – I wouldn’t call it innocence, that would be naive. Perhaps a better way to express it would be ‘a certain lightness of being’. I remember back when I emigrated to the U.S. in 1991 – to me it felt like an imaginary rock had slipped off my shoulder. The energy we all felt in L.A. back in the 1990s is something you need to have experienced to really understand. Although the place was clearly dealing with significant social problems (e.g. the Rodney King riots just a year later) it felt like I had entered a magic sphere in which anything was possible if you put your mind to it. If you worked hard and if you were ready to sacrifice then the sky was the limit.

I don’t feel that sensation anymore when I’m visiting these days. Perhaps it’s because I’m quite a bit older now and my life has taught me a few lessons (in humility) since then. I personally cannot complain as some of the hardships I experienced turned out to be a catalyst for improvement years later. But the world around me is clearly not the same anymore and I see nothing but failure across the board and short sighted decision making in response to imaginary threats. Meanwhile we are ignoring the real threats that affect not only the U.S. but also life over here in Europe, the current migration crisis is only one among many. The implications of the 2007/2008 market crash are still with us and the prevailing cynicism and general feeling of helplessness is feeding a populace that is unwilling to make the sacrifices necessary to implement profound changes.

I will always remember the victims of 9/11 – all the people who died that day and especially the ones who sacrificed themselves to help safe countless lifes. Those are the true heroes of our time, not the false idols the mainstream media insists on elevating as examples of a successful and true existence. The biggest loss that tragic day however was something more intangible. Call it our nation’s soul perhaps – a certain swagger or can-do attitude that, as inappropriate or imaginary as it may have been, had sustained us through several post world war generations. What we lost that day is something a lot more profound and I fear it will take many more generations to rekindle.

The people who died 15 years ago today – how would they feel about the nation that succeeded them? Surely I cannot speak for them, but had I given my life that day with the knowledge of what would happen in the years to come… I think it would have been deeply saddened me. In my mind we wasted a great opportunity for constructive change on both sides of the Atlantic – Europe is as guilty here as the United States. The wars we fought since turned out to be not just a colossal waste of life, resources, time, and money. We actually managed to exacerbate the situation for us since then and the world has become even more hostile and dangerous since.

Right now it seems that we are all living a life of distraction and blissful ignorance. It is time we put down our game consoles and mobile phones and take a hard look at ourselves and the world around us. Ask yourself – is this really the best we can do? If the answer is no (and I little doubt it is) then go out there and make a difference, for yourself, for your family, for all of us.


Alright, since it took me a lot longer to write this post some of these setups may not be valid anymore. EUR/JPY – I’m getting ready to flip this one as it’s near my stop. If it does we may see a juicy squeeze to the upside.


ZM – still good to go – this is actually a setup from yesterday and we are waiting for a punch higher – whenever that’ll happen. Now is actually a brilliant time to grab this one as it dropped back toward the prior lows.


Bonds – the five year – this one took off already – sorry. If it retests (and it very well may) then I recommend you try to sneak in here.


Same story on the ten year – maybe I should have posted the charts first before starting to write this long a… post. Apologies but once I get started time just flies by.

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.


Time To Pay Attention (Again)

Most market participants suffer from chronic recency bias in that they weigh recent data or experience more than earlier data or experience. In particular retail traders more often than not expect more of the same, which actually is correct most of the time. Except for when it matters the most. Come again?


If you have come here for a while then you have seen me use the word ‘inflection point’ on various occasions. I use that term rather deliberately as it succinctly expresses a moment in time in which an equilibrium between potential outcomes can be shifted rapidly by comparatively small movements in price. Say again?

Back in my wave wanking days this is a typical situation I would refer to as the 1-2 conundrum. Meaning – do we push higher and then fall into our graves, or do we drop from here and then ramp higher and continue the long term bullish trend of the past few years. The implication of that would be that down actually would be short term bearish but long term bullish – whilst a move up would set up the bulls for an even bigger correction.

Since then I have come to accept that these are all valid scenarios but that there is quite a bit of a gray zone in between. And without boring you to tears let’s just jump to the conclusion which is that there is a myriad of ways this one could play out. But that is exactly the part we need to focus on. What matters the most right now is what happens in the coming days, starting today! If we push higher on quite a bit of participation (you are a Zero sub, right?) then the bulls have a good thing going and may be able to defend continued attempts to draw the tape down.

Interest hike be damned – whether or not it comes in September or next year or in 2020 – I suggest you watch the tape as it will give you all the information you need. But let me be crystal clear about one thing. If you are a bull then this is most likely the most important moment of the year. On the other hand if you are a bear then this is most likely the most important moment of the year. And if you are neutral – like me – then…. well, I guess you got the point.

By the way, in case you are curious. I am still holding the remainder of my long positions as I have not seen the need to pull them (i.e. my trail has not been touched). I have however advanced it to near the bullish Maginot Line, which in my mind is near 1940. If that one goes then we probably correct quite a bit lower.


Gold is actually in a similar spot and I just took a small long position here with a stop below 1127. However it could easily resolve the other way and drop quite a bit lower. The price pattern allows for either scenario which often annoys traders. In my book however this is where the benefit to risk ratio is the largest – in that I can apply deterministic rules within a small price range whilst expecting increasingly larger price moves the further we advance from said price range (up or down).

The majority of people feel uncomfortable embracing uncertainty and perhaps a long time I was one of them. One day however I realized that this is where the real opportunities are and it is probably the one take away I am still thankful for having studied Elliot Wave Theory. However when it comes to predicting future price movements EWT is absolutely useless. There is simply no predicting future price movements – many people smarter than you have tried and all of them have failed. What you can predict however (sort of) is volatility – but that is a topic for another day 😉

Alright, quite a few setups waiting below the fold – please join me in the lair…

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In case you guys need a good tune to get you in the spirit of things:

Alright, if nothing else this is what I need you to take away from this post.  Pay attention now and bank coin all the way into December/January. I mean it.


The Reckoning

For months now we have been watching equities flail around sideways, plotting increasingly spasmodic gyrations which have tested the patience of even the most battle hardened veterans. The recent series of gaps and overnight price jumps have only added to our growing list of evidence suggesting that we are witnessing an increasingly unhinged market. Adjusting to and surviving unscathed in such market conditions has been no easy task but I can truly say that we have negotiated some of the most challenging tape in years like bosses.


But now the time of reckoning approaches and I want you all to take a deep breath, lean back, and detach yourself from daily chaos that has thrown your feeble minds into recurring tailspins. We are going to look at some weekly charts because it is there where some real magic is going to happen in the coming days. Let’s start with the S&P E-Mini futures.

First thing that stands out is that we haven’t really gone anywhere since late last year. I’ve covered that topic to exhaustion and will not waste our time on regurgitating this again. Volatility has been out of control and the current VIX reading of 13.37 is a big joke. One I plan to exploit to the max however. Look at that stack of weekly Net-Line Buy Levels which starts at ES 2113 and ends at ES 2122 – we also have one at ES 2118.

This is where the boys are going to separate from the men. Meaning – if we get anywhere near that I plan to accumulate a nice collection of front month lottery tickets (a.k.a. OTM puts). They are not going to cost me much and I will expect to lose all the premium. However at the off chance that the bulls drop the ball there – which I estimate at around 20% – 30% – they are going to print ‘una burrada de dinero’ as they say over here in Spain.


So yes, we are talking lottery tickets. Here’s the same view on the YM – the range between the Net-Lines on that one is actually a bit more narrow starting at 18089 into 18180 – barely 100 YM handles.


Finally the NQ – here we are almost there which is why it probably should be our canary in the coal-mine.

I promise you it will take days for you to get that song out of your head again 😉

But seriously – watch the NQ and note what it does as it’s starting to bump into those Net-Lines starting at NQ 4536. If it happily pushes higher then we should hold off and perhaps wait for new instructions. If it stumbles and encounters resistance then we may have a shot at exploiting what I would consider the fattest chance for the bears in a long long time.


ZN Update – it’s looking good so far and I’ve moved my stop to break/even. And so should you! I’m holding this for a potential run higher on the daily – which makes this a daily campaign now.


Same idea on the AUD/NZD – another good entry yesterday and thus far it’s playing ball. First hurdle ahead will be 1.2 – if it pushes above it we may be able to enjoy another short squeeze.

A few more goodies for my intrepid 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.


A bit of event risk today – try to be out of CAD related pairs after the NYSE open. We also nave some Kiwi tremors after the close.

Now have fun but keep it frosty.


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