The Mad Momo Ratio

Over the years I slowly shifted away from using TOS/Prophet charts toward NinjaTrader as I am able to enjoy coding my tools in an object oriented fashion. Scripting languages have always been the bane of my existence and although they can be great for prototyping you will run into limitations pretty quickly if you’re trying to do anything a bit more sophisticated. In addition consumer oriented trading platforms also suffer from an inherent problem which is that you simply cannot rely on a data feed that is either filtered or buffered.


One of the few things I however appreciate about Prophet charts is the ability to quickly create ratio charts via a mathematical formula. Basically it’s the poor man’s Mathematica for data series. What is shown above is a special volatility brew of mine which has served me pretty well over the past year. I call it the Mad Momo Ratio and one of its components is the VIX – I have also thrown in a few other symbols for good measure (pun intended).

The lower pane shows us the SPX (I don’t know how to add a 2nd series to my shame) and I have pointed out all daily highs and their correlations with my mad momo ratio. As you can see a push toward the upper line on the BB(100) either meets or precedes the highs on the SPX in all but one case (5/22). The subs should expect seeing this chart more often in the future, so here’s another reason to join the club 😉


Volume profile – last chance for the bears (how often have I said that in the past few years?). We are now pushing back into the high participation range between ES 2050 and 2100 – 50 handles of pain for the grizzlies.


The short term panel shows the spoos in the process of establishing a base near the 100-hour SMA. We should never discard the possibility of a counter response but as of right now I’m not seeing any pertinent evidence. So I’m moving my stop below that stack of Net-Lines and let the chips fall where they may.

A few more setups for my intrepid subs:

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Europe Will Never Be The Same Again

The series of terrorists attacks that occurred in Paris on Friday evening rattled not only France but all of Europe. I hate to say this but perhaps many years from now it will become known as the defining moment when Europe finally realized the magnitude of the crisis in which it was finding itself. Mind I point out that this one hit pretty close to home as my stepson lives only five minutes away from several of the attacks:


He’s in his mid twenties and actually was out with friends in that very vicinity. Fortunately he’s not a fan of punk rock but he could have been hit very easily. When the cops told everyone to get the heck off the streets he managed to traverse his way home through dark alleys and by remaining out of sight. We got lucky this time but given the sheer number of unknown vectors circulating within Europe it is just a matter of time until we get hit again.

This is not a political blog and I therefore will not elaborate on my personal opinions regarding the current mass immigration train wreck but some of you senior readers probably know me well enough at this point to make an educated guess. Let’s just say that if I was truly as nefarious as my alternate persona on this blog I would be very short personal liberties and long civic volatility. I also am pretty pleased with myself not having bought property here in Europe and having kept a pretty low profile in general. Anyone care to recommend a nice place in South America that offers relatively safety plus high Internet access? 😉


Speaking of trading, we have an opportunity here given the long term context on the spoos.


This is the setup I have in mind – let’s wait for a drop on the ES toward 2013.75. Long there with a stop below the recent lows. Yes, that’s a big range but volatility will kick you in the keister if you even think about being stingy controlling your risk. Deal with it.

My favorite equities setup however I am keeping for my intrepid subs. If you’re not one of them yet you only have yourself to blame 😉

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Update on our ZF campaign. Proceeding just famously and I’m moving my stop to MFE minus 1R. Will trail it this way until I see a spike low.

I’m going to dig around for more setups and report back here in the next 30 minutes.


Short Term Inflection Point

After yesterday’s spectacular failure by the bears to close the deal equities managed to quietly claw their way higher over night. We are now at an important short term inflection point and thus we have a binary entry opportunity. If you are still short then move your stop down to near 2088. For everyone else still in cash here’s the skinny:


I am short here which has horrible odds quite frankly but it’s a lottery ticket. Most likely we’ll get continuation higher but we should wait for a solid breach of the diagonal shown above. Most importantly the 25-hour SMA is starting to push higher now and I expect it to act as support. So in a nutshell:

  • Short opportunity with horrible odds but potentially big payoff right now.
  • Be long above 2088 with a stop below 2080ish.

I’ll chime in here a bit later if I dig up more setups for the day. BTW, great discussion on system development in the prior thread – keep it up folks!


Expect a bit of volatility in a few minutes as Draghi is hitting the mic again.

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