Under The Weather

So I was starting to feel better on Saturday when I made the mistake to head to the gym and hit it hard. I started to feel super exhausted on Sunday morning and woke up today with a cold. As you can imagine I’m pretty miffed about myself – it was supposed to rain Sunday and Monday (and it did), which is why tested my luck and went to the gym in the first place. Did I ever mention I absolutely loath winter?


It’s funny how the bears are always pining for massive corrections which they most of the time are unable to participate in. It’s not just that large scale corrections only happen perhaps 5% of the time – it’s also that they are extremely difficult to ride out. Just look at the gyrations on our hourly chart. Up – down – up – down. Almost every retracement is recovered and stops are run in both directions. This is usually how it goes except for the big (third wave – cough cough) wipe out somewhere in the middle.

Right now the spoos are at the 25-hour which only represents soft resistance. However if you are looking for a good place to be short then this is probably as good as it’ll get. If equities continue higher from here then we are looking at a much more complex formation and who knows how the rest of December is going to flow. The second hurdle is obviously the 100-hour at around 2025. So these are the two inflection points right now: 2010 and if that goes 2025.


The Dollar is looking weak this morning and I grabbed a tiny short position here with a stop at 88.9. The reason why I’m risking it is because of what I’m seeing on the Euro:

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Eking Out Some Profits

It’s been some turbulent pre- and then post-holiday tape; but by courtesy of our policy of fading the noise and by choosing our victims carefully we have been able to eke out some profits. Once again I’m seeing a lack of participation in the comment section which suggests that many of you are missing out on ill gotten gains.


That’s unacceptable for any self respecting steel rat. Don’t make me call the Techno Viking! He’ll sort you out!


That was some prime rib AAA entry on the spoos this morning. It’s still early to tell if it’ll hold but if you’re in this one then I suggest you hold it, assuming that we close above the 100-hour SMA today.


AUD/NZD was one of our setups for the subs yesterday. We ventured into this one as the weekly was scraping a pretty established diagonal plus it had peeked outside its lower 100-day Bollinger. Almost a picture perfect entry there near the close of the session and thus far we’re good about 1/2R (since we only played 1/2R). I suggest you move your stop to break/even now.


The Forex side is bestowing us with two kick ass setups today which both have weekly implications. I can’t believe I’m throwing this one to the wolfs but nobody seems to be trading anyway. Anyway, I’m long here with a stop below 1.2355 BUT what I really want to see is a breach of that mark which may lead us into a slide lower. So this is the play – long right here and anything below the green line is bearish territory.

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Bonus Chart:


The Zero has been producing very nice Mole scalp signals today. However note that the signal range on the Zero Lite today is very small (i.e. < 0.5) – so we are NOT out of the woods just yet here. I think the close will be important which is why it’s a condition of holding on to today’s ST longs.

That’s it for today – now get to work steel rats!


An Impending Trend Shift?

With the exception of equities we have been seeing a pronounced shift in market behavior across the futures as well as in Forex. Once again it drives home the point that one’s approach has to constantly be gauged and if necessary modified in response to shifting market phases. Or in other words - none of your trading strategies/approaches work all the time – the trick is to apply the proper market strategy to each discrete market phase.


Gold for instance has been stuck in a pretty uneventful sideways churn for most of the year. Hunting for an trend trades on the precious metals side would have been a total waste of time which is why we barely touched it all year. Just look at the P&F chart above – note that the part covering 2014 is a quarter of the size of that of 2013. Reason being – P&F charts do not track time – they only focus on price, which is why I appreciate them. If there’s no movement then no boxes are added to the chart.

That may however soon change. Gold just painted a low pole reversal warning and that means the bears are officially on notice. And as coincidence would have it we do have a promising setup on the roster today:


We have a nice hammer formation there on the daily panel – right underneath the 25-day SMA. I would take a breach of today’s highs with a stop below yesterday’s lows (today’s a bit low for my taste). Pretty simple setup but be aware that it’ll most likely try to shake you off. When it comes to precious metals every campaign has to be earned.


The EUR has been among the trending charts this quarter – but until August it had barely painted any boxes on our P&F chart. Then Draghi announced a whole new battalion of printing presses in response to lackluster GDP growth in the EU and the rest is history. I have been enjoying the sell off quite a bit as you can imagine but the downside ride may be over soon as we are but a bagel throw away from producing a low pole reversal as well.

Are We Due For A Trend Shift?

Now if both the EUR and gold turn then it may also mean that equities are due for a much needed correction. Seasonally however that would be an incredibly inopportune time for the bears. Not that the Santa Rally is chiseled in stone but it’s rare to see any significant corrections this late in the season. Not to second guess what may happen next (which is usually out of touch with reality at any rate) I have decided to simply keep my trailing stops where they are and let the chips fall where they may.

That’s all I have for today folks – nothing exciting to report on the setup front. And quite frankly – given the recent gyrations across board I am a bit cautious and when my Spidey sense tingles it’s usually good medicine to remain extra selective when picking entries. See you guys tomorrow.

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