My New Best Friend

My apologies for being relatively quiet on such an exciting day. Unfortunately there was a death in my wife’s family and I had to be there to offer some moral support. Which means I haven’t been trading (much – the systems are always on) and earlier this morning there was no reason to grab positions ahead of Draghi’s announcement.


So let’s talk about the big news first – most likely I’m not telling you anything you don’t already know but in a nutshell: Despite strong dissent by both German members of the ECB’s board the decision is to issue €1.1 Trillion in QE at €60 Billion per month. That’s a mighty chunk of change aimed at countering the threat of a supposed deflationary spiral. Obviously much of that had already been priced in but the expectation had been around €50 Billion per month but what’s another €10 Billion among friends, right?

Accordingly the EUR/USD is now at 1.13 and change and there’s no telling when this free-fall will end.


Clearly Draghi didn’t win any popularity contests over in the old Vaterland today, but he’s now officially my new best friend. Looks like I’m going to save a lot of money on toilet paper and may be able to move operations into my favorite Valencian palacio. Because unless the U.S. Fed is interceding somehow in the near term future we may see the Euro on par with the Dollar at some point this year. How about we organize an Evil Speculator Euro-Par-ty over here in Spain when it happens?


On the equities side we’ve been getting exactly what I suggested yesterday – more upside and we are now approaching the point of no return for the bears. Given my post I had a very tough time taking an NQ long position via Thor last night – the short campaign had previously ended at break even. It’s interesting how I was emotionally uncomfortable about placing this trade. Scott and I were on the phone and the consensus was ‘yes, we absolutely have to take this trade’ – especially since we were both pretty bearish. Practice what you preach, so to say.


Bottom Line: Nothing has changed – 1600 is where the bears fumble the ball again and we most likely are going to see new highs. Which however wouldn’t mean that this bull market picks up where it left off a few months ago. I maintain that we are in the late stages here and I also don’t like the participation I’m seeing on the Zero. This may turn any day and I suggest that you slim down any significant equity exposure (i.e. large stock portfolios, stock based funds, ETF/ETNs, etc.).


Our gold campaign is looking very good now as we are only a bagel throw away from the 100-week SMA at 1310. Not shown on the panel above is the monthly NLBL at 1290 which we’ve already crossed. A close above this mark on January 31st would be a monthly buy signal and excellent news for anyone already long (i.e. this lowly Mole). I’ve told you guys that I intend to hold this one into 1500, that would be one trade for posterity given my 1212 entry.

That’s all for today – see you guys tomorrow.

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Swiss Only Learn The Hard Way

If you just woke up and found your Forex account in flames then let me give you the skinny. The Swiss National Bank finally realized the errors of their currency pegging ways and decided to suddenly throw in the towel. Which of course triggered a massive dislocation across Forex markets as the Swiss Franc surged by 30pc. As I’m typing this the Swiss stock exchange is a sea of red dropping as much as 14%. Well done!


Now when I was a young kid traveling in Europe a Swiss train conductor kicked me out of the train in the middle of nowhere somewhere in the hinterlands of rural Italy because I couldn’t afford a pass for the sleep wagons (there were only sleep wagons on that train). Since that day I can’t stand the Swiss and for good reason. They are stubborn as heck and they only learn the hard way. And that’s coming from someone who actually went to Kindergarten there! I hope the SMI gets cut in half you cow tipping alphorn blowing wankers.


So let’s observe the damage. Here’s the EUR/USD – dropped toward 1.15 and has recovered a bit of that first wipeout. Word has it that the Swiss will now have to sell a ton of Euros (at massive losses) and that probably means more downside on that front.


Is that an ugly chart or what? EUR/CHF – back from whence we came back in 2011 when they screwed with everyone the first time around.


Dollar got kicked in the head and then in the balls. I don’t recommend you pick any direction here at this point – let it settle down.


U.S. equities rather tranquil in comparison. But look at all that volatility over the past few sessions. So far that support cluster appears to be holding however – the onus is now on the bears to take it lower. Today. If they can’t drag this sucker lower on a day like this they’re toast (again).


Gold update – jumped higher as should be expected. My entry at 2012 is starting to look solid now.


Crude is taking advantage of all the confusion and is trying to make a run for it – the 50 mark is in its sights. This would be a long/buy if it breaks the daily NLBL.

A few juicy setups below the fold – meet me in the lair:

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You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.


Lottery Ticket Tuesday

We are at a crucial stage across the board with equities and futures near inflection points which respective resolutions will define the direction of the current quarter. I’m going to make this short and sweet for you: Hopping on the right bus is the name of the game here. However the tape at this stage is intrinsically geared toward misdirection. So my approach will be to take out a few lottery tickets and build my positions as I’m proven right. As usual let’s start with equities and then cover forex and bonds:


On the E-Mini we’re clearly in a shake out zone which spans between ES 2020 and 2060 – forty handles of pain and confusion plastered with opinions and high emotions. The bulls currently have the upper hand as the 100-day SMA is below us and it’s slowly rising. You could use the high of yesterday’s shooting star as a long entry with its low as the stop. On the downside things are a bit more tricky unfortunately. Thor is currently short the NQ but that 100-day will be very difficult to overcome. The reason why we decided to include it into the Sunday entry line up was due to the potential of a sudden slide lower that would burn a hell of a lot of longs.


However right now it’s looking still as if the bulls can hold the line. On the hourly the 100 is already swinging higher and a long position here with a stop below 2023 is a lottery ticket with very limited risk. The dynamics are balancing on a knife’s edge – below 2020 things could easily accelerate lower quickly, but as of right now as I’m typing this the bulls still have a solid chance to shake out a few more weak hands and then drive this higher.


Another short term lottery ticket today is the EURUSD – a few more pips lower and I’m going to grab a long with a stop just below 1.175. As you know I’m implicitly short the EUR (i.e. I live in Spain and earn in Dollars) thus I’d be happy to get stopped out on this one ;-)

Quite a bit more below the fold – 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!

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Very nice setups across the board – don’t get over exposed however as we may see a bit of shake out today.


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    1. No Juice
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    4. Riding This Beast Into The Sunset
    5. Let’s Dive Right In
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