Better Not Fighting This…

Massive jump off the lows. I expected a little courtesy shake out this morning but the bots had other plans and immediately boarded the express elevator to the upside. Loving this tape although my damn lottery tickets got shaken out right near the lows. Hey you can’t win ‘em all – but you can try.

north_korean_hackers

So word has it North Korea hacked their way into Sony Pictures in response to a planned release of the tongue-in-cheek comedy ‘The Interview’. Guess shit just got real for James Franco.

So let me be the first to extend my sincere thanks to Kim Jong-un for sparing us yet another James Franco movie. Also, the whole situation gave me a great idea. Why waste your time hacking movie studios – that’s so 20th century. Instead turn those hackers into stone cold stone stock traders and sell the hell out of Sony stock! Much more effective long term – oh, and legal. (Kim Jong-un – call me!!)

2014-12-18_ES_update

Alright so here’s where we’re at. The spoos sliced through that first NLBL like hot butter. The next one at 2049.5 is where the rubber really meets the road. As you can see we’re right at the 25-day SMA and if we closed above it then I think 2050 is most likely in the cards. I really hope nobody is still short equities – jumps like these may find post corrections but usually (i.e. 80% of the time +) resolve higher in the weeks that follow.

See, Boosie’s got you covered.

2014-12-18_corn_setup

Now on to the setups – we have good stuff here tonight. Corn is looking good and I tweeted about it earlier today – did I really just say tweeted – we are all doomed. Anyway, nice price action suggesting that we either fail right here or there’ll be a jump and massive stop run higher. I’m short right now but am hoping for an opportunity to hop on the long bus.

My favorite setup today however is the CAD/CHF – super dreamy:


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Cheers,

How To Slow Grind

Just yesterday I talked about what I consider two dirty words in my trading vocabulary – overbought and oversold. A few people chimed in; Scott was among them and he pointed out that both concepts can be useful in sideways markets. I thought about that and on the surface it makes sense – after all I have written about various market periods extensively in my time. Sideways market behave differently than trending periods. However in the end I must still respectfully disagree as we would be comparing apples with oranges.

Clearly once a sideways market has been recognized few are going to point at a touch of the upper channel and say ‘boy oh boy – this market is overbought’. You play the swings – sure – forces are in equilibrium within a contained range. BTW, even in those situations people get screwed because quite often they expect more of the same and suddenly find themselves in a first rip of a rocket. Ooops…

In any case – the terms ‘overbought’ and ‘oversold’ are used over and over without care and for some reason you encounter them most often during strongly trending tape (i.e. short and long squeezes). Like some cat who showed up yesterday with his fancy RSI/stochastic/MACD combo chart which he thought was handed to him by the good Lord himself. Problem is – all these momo indicators can wind up embedded all the time. And poor retail schmucks find themselves trapped after attempting to trade against a strongly trending market. Don’t be that guy!

2014-11-11_spoos_update

And almost as to prove my point the tape continues its slow grind higher, marking new highs on the way almost each session now. It may embark on a correction tomorrow or by next March – who knows?? What I do know is that my long campaign has now produced a stunning 13R and I’m starting to move my stop a big closer. That NLSL at 2,020.5 ought to do fine. If I get taken out there I don’t think they’ll find me calling the Spanish suicide watch hotline.

2014-11-11_USDJPY_update

Update on yesterday’s USD/JPY campaign – that’s a good start and as we’ve touched 1R we’re now moving our stop to the break/even point. Nothing else to do right now.

2014-11-11_EURCAD_setup

New setup on EUR/CAD – I think a long above today’s high is permissible if it closes as a second hammer in a row. I plan to put my stop below that NLSL at 1.4058.

A few more goodies below the fold – please meet me in the lair:


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And if you’re not trading right now (which is the majority apparently judging by the comment stream) then you may as well learn something useful:

Now personally I’m more of a merengue person (and you can’t beat practicing with a hot latina). In any case I hope your partner is a little less bossy than this gal – daaammnn!!

Cheers,

Dirty Trading Words – Part 1

The late George Carlin used to have a great routine on the hypocrisy of the seven unspeakable dirty words not permitted on radio or television. We all know them and there’s no need to repeat them here. As I’ve had one crappy day today I’ve probably been using all of them several times over – but that’s a different story.

There are however is a list of dirty words I myself have been adding to my trading vocabulary over the years. All of them share a common theme – either they are essentially meaningless or they are aimed at manipulating retail traders into making bad trading decisions. And in that respect what we are dealing with is Neuro Linguistic Programming at its finest. Let’s cover two of them today – actually it’s really just one with a downside variation:

Overbought and it’s bearish cousin oversold.

Every time I hear or read either of those two words my brain lights up and I’m ready to tar and feather the culprit who uttered it. Yes, I have been guilty myself once in a while – here I’ll admit it. But to my defense it’s always been in the context of keeping you guys from picking tops or bottoms, e.g. this tape is overbought by any definition but don’t assume it can’t run even higher. But in the future I’ll make sure to add an appropriate disclaimer as I should not contribute to the propagation of harebrained definitions/concepts.

2014-11-10_spoos_update

So what’s so bad about using these two words, you ask? What’s the harm? Because they have absolutely no meaning – that’s why. Just think about it: OVER BOUGHT. What does that mean? Too much has been bought and there are no buyers left? Fine – but if that’s the case when and how do short squeezes happen? That’s right – in so called ‘overbought’ conditions – that’s when. As a matter of fact buying high and selling low is a favorite past time of trend traders and although they are wrong most of the time – when they are right they are very very right and hell hath no fury like a short or long squeeze on steroids.

Just look at the current situation in equities? When exactly do you think the tape here was ‘overbought’? At 1950? At 1970? At 2000? Yes, yes, and yes. So we can derive the following – the word is meaningless as it offers absolutely no value to our trading activities. It’s a cognitive bias with the underlying assumption that buying can not continue just because a lot of buying has preceded it. There are no rules and there is no script as to how tape ‘is supposed to be’ behaving. As a matter of fact markets across the board have a knack for punishing the majority of participants every single day. And usually it’s the ones who share a common belief. Remember one of our prime directives – what everyone knows is not worth knowing.

So why are these two words continue to be used? Because just like any old superstition people have a tendency to believe in things that they have never spent one second investigating. Which is wonderful news for institutional traders as they always need more meat for the grinder – and guess what – you are it. So keep using these words and, despite all evidence to the contrary, keep believing in whatever you are being told about how the financial markets are ‘supposed to’ work. Because actually sitting down and collecting your own statistics would be hard work – and nobody really is interested in that part. I mean banking fortunes by trading the market should be easy right? I can just download some fancy trading app like TOS, open an account, and then let the fortunes flow in!

Moral of the story: Challenge everything you ever hear or read, especially when it comes to trading or making money.

2014-11-10_USDJPY_setup

USD/JPY – that hammer is looking pretty nice here and I am willing to enter at today’s highs (which may still change) in tomorrow’s session. Put your stop either below the NLSL or the low of the hammer.


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.

If you have collected your own list of dirty trading words then please submit them here. I’ll make sure to add them to mine and cover them all over the next few weeks. It should be fun and hopefully it’ll serve to prepare you once (and not if) you come across any of them the next time around.

Cheers,




    Zero Indicator


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