Wrapping Up The Year

And here we are – the last trading session of 2014. It’s been an exciting year to say the least with plenty of nasty traps along the way. But we made it through just fine, consistently banking coin all year, by simply sticking to our guns (i.e. charts) and of course by persistently honing our game. Trading is a constant arms race and stagnation equals slow death – the sharks are constantly circling. I for sure am a better trader today than I was last time I drafted my final post for the year. I am glad you all were along for the ride and hope your accounts are better for it. Now let’s wrap things up Evil Speculator style – with an exhaustive long term perspective of where we’ve been and what the new year may hold in store for us.

2014-12-31_crude_LT

We have a lot of contenders but the most salient chart of the year clearly was crude. Rarely have I witnessed such a concerted and systematic sell off, even in futures. I say rarely because if you look back it has happened once before in 2008 in the midst of the financial crisis. That drop took us from over 140 all the way to 40. But this time was completely different in that we didn’t see any major market dislocations and in my mind this clearly was a message to Putin from our friends at the State Department.

2014-12-31_WTC_PNF

Which makes it a bit harder to propose any technical support levels – many have tried and failed over the past few months (I wasn’t one of them – knowing the cost of engaging in long term predictions). However there are inherent dynamics in the production and supply chain of crude which suggest that prices below the 50 mark would be difficult to maintain for extended periods.

Our P&F chart originally suggested a price objective of 82, which has been far exceeded. So technically speaking we don’t have much to hang our hats on and it’s quite possible that we may see an exhaustion spike lower before crude is ready to paint a floor. Plus we just triggered a bearish triangle break down two days ago and that’s not the time you want to start accumulating long positions. Remember that markets can remain ‘irrational’ a lot longer than you can remain solvent – that rule applies to both the up and downside. By all means buy the fear but make sure you have at least some technical context to back you up.

2014-12-31_ES_LT

It’s not been an easy ride in equities this year and by all definitions we are in the late stages of an historic five year bull market. But it’s those late stage that often prove to be the most treacherous, as they are paved with increasing volatility on both the up and down side. The 25-week SMA was tested five times this year but the bears only managed to breach it once. It was the most serious medium term correction we had seen since late 2012 but the counter response speaks to the more volatile market conditions we should also expect for 2015.

2014-12-31_SPX_pnf_b

A few weeks ago I posted this P&F chart and mused that the rallies proceeded faster and more violent than the preceding corrections. Usually, meaning 95% of the time, it’s the other way around and there’s a reason why they call it the ‘wall of worry’ and the ‘slope of hope’. Medium and long term bull markets grind higher and then eventually correct relatively quick. A contrary situation implies that we are indeed in the late stages of a bull market. So I don’t think 2015 is going to be an easy year for equities. Now for us evil speculators this may actually be good news as there will be plenty of opportunities to play the swings. To all you investors however I suggest that you prepare yourself for rougher waters ahead.

Quite a bit more waiting below the fold – secret decoder ring required.


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happy_new_year

And with that I would like to wish all my readers and in particular all my intrepid subscribers a very happy near year. Prosperous? Well, that goes without saying, after all that’s what we are here for. Scott and I will be continue to work hard to steer you through the coming year, banking coin as always, and most definitely enjoying a few good laughs on the way.

Cheers,

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?

2014-12-15_spoos_briefing

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.

2014-12-15_DX_briefing

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:


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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Cheers,

Wrapping Up The Month

As usual October has been a pretty capricious month and there wasn’t a dry eye left in the house. Tomorrow will be its last trading session but since Sunday is Halloween I don’t expect much activity. So let’s take a quick look at where we are on some of the most salient charts:

2014-10-30_EURO_monthly

The most ominous chart right now must be the Euro. We finished September near the lower Bollinger and it looks like we will be doing so again. What’s worse most likely it will be a shooting star and a drop below 1.25 may actually lead us toward the 1.2 mark. Frankly that was on my Christmas list last year and it’s about time Santa delivers! For the noobs – I’m a U.S. expat living in Europe – you do the math.

2014-10-30_ES_monthly

Pretty much the inverse situation in equities. This is one of the longest hammer candles I can remember (only challenged by the July 2011 candle) and it has reversed a whole cluster of Net-Line Sell Levels (NLSL). Very very positive and we may be scraping new highs by the end of the year.

2014-10-30_spoos_update

A quick peek at the daily and weekly panels. Nice formation here on the daily (left) side and although we are overdue for a little correction I think we may close the week above the NLBL I highlighted. That would be our first weekly buy signal in a while. With a bit of luck, effort, and some scotch tape we may be ready to roll into Santa season. Frankly a little shake out beforehand would actually be healthy and shake out some of the late comers.

But the best chart today I will have to reserve for my intrepid subs – we are most likely near one of the best monthly buying opportunities of the year:


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.

Bonus Chart:

2014-10-30_zero

Nice bearish divergence today on the Zero Light.

Cheers,




    Zero Indicator


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