Only The Paranoid Survive

Originally attributed to Any Grove, the founder of Intel Corporation, this has remained one of my favorite quotes and one that has kept me out of trouble over and over again in my time spent as a trader. It always pays to watch your six and if you think you live in turbulent times after following the ongoing Grexit saga over the weekend then think again. Here’s a quote by Andy which summarizes the first twenty years of his life:

By the time I was twenty, I had lived through a Hungarian Fascist dictatorship, German military occupation, the Nazis’ “Final Solution,” the siege of Budapest by the Soviet Red Army, a period of chaotic democracy in the years immediately after the war, a variety of repressive Communist regimes, and a popular uprising that was put down at gunpoint. . . [where] many young people were killed; countless others were interned. Some two hundred thousand Hungarians escaped to the West. I was one of them.

So however bad you think you have it – think again. Things could be a lot worse. Of course not to diminish the situation in Greece right now. I often image myself living there, unemployed, broke, and standing in line in the smoldering summer heat trying to pull my last few Euros out of my bank account. In comparison I live a rather a sheltered existence - which of course could change at a moment’s notice (I reside in Spain). Which is why I personally employ a mixture of living in the now bundled with basic preparation and diversification.

2015-07-06_spoos_gaps

And that should be a standard policy given what I expect in the months ahead. After indecision and a six months + sideways churn we are now seeing successive gapping action across various market verticals. That is not a sign of a healthy market and the wheels could come off here at any moment. So just because the almost reflexive BTFD perhaps worked for you last week doesn’t mean it’s a good idea moving forward.

2015-07-06_EUR_gaps

Be cautious and avoid charts which signal uncertainty – the EUR/USD certainly is one of them. Given the weekend headlines the drop back to 1.1 is actually rather mild, just like when we gapped here last week. But we could see a huge jump or drop here at a moment’s notice (without the notice), and it won’t have anything to do with technical inflection points but rather political brinksmanship played for months/years finally coming to a sudden resolution. Remember that six sigma events happen when we don’t expect them. People have expected one for months here – and perhaps it will happen when everyone thinks the situation has been resolved. I personally don’t have a crystal ball but I do know a dangerous chart when I see one.

2015-07-06_ZF_gaps

You could get lucky and catch the right direction or you could find your trading account severely diminished one morning. To see the five year bonds paint such gaps is certainly disconcerting – especially if you understand how damn huge the bond market is (almost twice that of all equities combined). Gaps like that cost a lot of people a lot of money…

2015-07-06_AUDUS_briefing

Of course there are still charts out there which seem to benefit from the overall increase in volatility but aren’t flagging alert signals. The AUD/USD did a bit of gapping down but makes for a decent short term long this morning. However I’ll be pretty nimble here in the coming days – meaning small position sizing and being quick to take profits.

2015-07-06_soybean_briefing

Soybeans on a rampage – we did ride some of that beautiful advance recently. After an obligatory 3.0+ standard deviation reversion it may be ready to continue its way higher. I’m long 1/2R here with a stop below 1016. However I’m only playing half an R because…

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2015-07-06_soybean_meal_briefing

… I also like soybean meal. It’s facing an hourly NLBL plus its 100-hour SMA. No guarantee for a low but as good a chance as any we’ll get technically speaking. So I’m long another 1/2R with a stop below 342.

2015-07-06_natgas_briefing

Natgas – it’s always been a volatile bitch but compared with equities it seems almost serene these days. At least we’re seeing clear trading ranges and it seems to be observing LT support levels. Which is why I’m trying 1/2R long here with a stop below 2.73.

2015-07-06_AUDNZD_briefing

AUD/NZD is my final victim for now – I like the combination of the daily and hourly charts. However I could be a bit early here so I’m only taking 1/2R. I would try again with a full position if it drops lower and kisses its 25-day SMA.

[/am4show]

That ought to keep you guys entertained for a while. See you guys later this afternoon.

Cheers,

The Quiet Before The Storm

Personally I believe that very little is going to transpire here before Monday morning. I’m sure you are aware that the Greek are holding a referendum on Sunday the 5th [good write up here] which is I expect will throw markets into a turmoil – no matter which way the pendulum swings. Expect a ton of volatility and most definitely expect stop runs galore right after the Sunday open (which is night time here in Europe and preliminary projections will be coming in).

quiet_before_the_storm

All of that means I’m pretty much shutting down the liar starting tomorrow morning – and I won’t be taking on any new setups in the interim as we’re now heading into low participation territory. I’ve got two charts of note though:

2015-07-01_bonds_update

First up bonds - here’s the 30-year futures contract. As you can see it keeps failing at the 25-day SMA and is now heading down for a revisit of the recent lows. The weekly panel on the right however toggled my interest – the 147 mark near the 100-week SMA has survived a few times but the Grexit vote this Sunday could be the catalyst that finally breaks that camel’s back. Nothing but air below – this could get ugly quickly.

Honestly I completely hate what’s going on right now. I would love to be long here but the continuous Greek roller coaster is producing so much uncertainty that taking directional positions has been extremely difficult as of late. And being short here today ahead of Sunday is simply not an option as we may find ourselves facing the gap from hell Sunday night.

2015-07-01_spoos_update

My long positions on the E-Mini survived that little dip lower yesterday by a mere tick. Sometimes you get lucky and sometimes they’ll get ya. Not that it’ll do my much good though as today was supposed to be the session which drives this puppy higher. I have already closed them out for a meager 1R profit. As I quipped a few weeks ago – I don’t remember working so hard for so little coin for quite some time now.

As you can see we’ve produced an inverse island down here and unless that NLBL at 2071 gives before the close we’ll most likely remain stuck down here until Sunday night. And that means very little buffer to the downside – extremely serious conditions. But frankly speaking it’s all academic as the odds for a huge move down or up are significant. Thus I caution all of you from holding any equity positions over the weekend.

Words To The Wise

With all the gapping action and general uncertainty I wouldn’t want to wager on where we’re heading next. Holiday weeks are tough sailing to begin – without EU members falling by the wayside. Plenty of opportunity for monkey business and you know someone will get the results early (hint – it won’t be you or I). FWIW – I hope the Greeks decide to rip off the band-aid and leave the EC. It’s been nothing but drama since they joined up and I’m convinced both sides will be better off over the long term. I believe some type of separation over the long term it’s inevitable. Under the current conditions Greece is simply unable to function as a member of the European Currency Union.

Alright, if I see anything interesting I’ll make sure to post a quick update tomorrow morning. In the interim keep it frosty and don’t take on any positions that would cost you any sleep over the long weekend. It’s summer – go out and roast a hotdog or something. Get a tan. Pet your dog. Talk to your wife if you have to. The markets still will be there on Monday – hopefully in one piece ;-)

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

Short Term Updates

I’m not really hot on any new positions this morning but I did close out a few of yesterday’s short term campaigns. Although I was able to snag two good ones there’s one that played me for a sucker:

2015-06-30_GBPNZD_update

GBP/NZD – I dug deep and grabbed a few longs after seeing selling exhausting. It was the right move but the bastard wound stopping me out by a mere two pips before it took of like gangbusters. Just to show you that this happens to everyone – nobody gets a free pass from Ms. Market.

2015-06-30_AUDNZD_update

Fortunately I had the foresight to also grab a few longs on the AUD/NZD. Sweet move here as well and I just took profits.

2015-06-30_EURUSD_update

My EUR/USD campaign has come to an end as well. As much as I would love to see this one drop lower for a repeat performance the odds of this transpiring are rather low.

2015-06-29_zero

There were some questions regarding that subtle divergence on the Zero Lite (right panel) yesterday and earlier this morning. First up, it’s pretty normal to see a bit of a taper at the end of an extended sell off session. That doesn’t always mean that we’ll see an instant bounce. Perhaps if the signal would have started touching the Zero mark (in blue) a bit in the last hour. In that case I may have been tempted to grab a few lottery long tickets.

2015-06-30_spoos_briefing

Now you may look at the overnight bounce and tell yourself that the Zero called it. I would disagree there – the price action almost 11 hours ago has little to do with what we ensued after the closing bell. Correlation does not equal causation. Thus I believe holding off on getting long last night was the right decision. If you stayed up late and kept watching the price action of course then you may have had opportunities as the spoos started to test a stack of Net-Line Sell Levels.

Alright, I’ll keep parsing around and if I see anything of value will  post it here.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,




    Zero Indicator


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  3. recent misdeeds

    1. Picking Up Pennies Behind Steamrollers
    2. Catch A Ride On The Wild Side – Aussie Trade
    3. Only The Paranoid Survive
    4. Happy Independence Day
    5. The Quiet Before The Storm
    6. Timing is everything – Black Gold
    7. Short Term Updates
    8. The Game In A Nutshell
    9. Filling The Gaps
    10. Greece Saga Precautions