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February 12, 2016

What Goes Straight Up

What goes [straight] up must eventually go down. However when exactly a symbol which has turned exponential runs out of fuel is the more important question. Once emotions reign high all bets are off – or in this case all bids are on. You may recall that I was pointing at gold the other day and suggesting that we may see another wild push to the upside.

Which is exactly what we got and I’m pretty glad I got out of my short position at break/even. We are now seeing an obligatory pullback but medium term this thing may have legs.

Just FYI – the P&F claims that we met the bullish price objective. However I wouldn’t really think [...]

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January 11, 2016

You Ain’t Seen Nothin’ Yet

I seriously doubt that the average market participant realizes the magnitude of the devastation that lays ahead. It is our human nature to project forward based on recent events – a common cognitive bias which can easily lead to painful losses during regular market conditions. But what we are facing over the coming weeks and months will register several standard deviations beyond current worst case scenarios, at least based on activity/pricing I’m currently seeing in the option chains.

We have a lot of material to cover this morning. So grab a cup of your favorite morning brew and pay close attention. Yes, there will be a test.

Let’s start with [...]

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December 14, 2015

Expect Nothing And Accept Everything

That will be my motto for this last full trading week of the year as we are at the same time approaching the most significant fork in the financial road of 2015. As I am sure you are all aware this Wednesday at 2:00pm Eastern the Federal Reserve will issue its verdict on whether to make good on a year long promise to finally raise its benchmark interest rate (i.e. fed funds rate). The current consensus is an increase from 25bps to 37.5bps – a meager increase of merely 1/8 of a percent. Nevertheless the increase would be the first since the financial crisis of 2008 and would be perceived as setting the stage for further tightening down the line.

You probably noticed that [...]

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May 26, 2015

The Bulls Are Back On Notice

Just this morning I was hoping for some movement, but this may be a bit more than we bargained for. Right after the open the red candles started to stack up and at 10:15am EDT our trend day alert suggested the moderate possibility of a downtrend day. Yeah, no kiddin’!

The Zero shows us several strong signal swings to the downside. This is real selling pressure folks and all dip buying attempts (quick spikes up above the zero mark) thus far have failed. This could easily continue into the close.

Boy, this is one ugly chart – several bearish signals triggered today: First up the NLBL at 2134 was never even touched, then the NLSL at 2113.25 was [...]

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Cognitive Bias Carousel
  • Herding BiasHerding Bias
    Something very interesting happened during our trip back to Valencia last Sunday. After checking our luggage and passing through the airport’s security procedures we had a … more
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