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Cover Short On Panic Days- Part 3
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Cover Short On Panic Days- Part 3

by MoleAugust 9, 2011

I would need a month to write the stats down on how extreme sentiment is right now.

Its epic.

Dont over-think this, dont get emotional. We are in a wave 3, the lows will at least be tested again.

I will be honest with you… bad economic data will come, dont be sucker. Markets move way ahead of the news, and always will. Moreover, the more the slide, the odds increase that we dont make new lows. Just think of 87. Bears dont need an 80 VIX, bc an 80 VIX means things will grind higher for months (again think 87-89 and 08-10). So if we do bottom here, I would not doubt we take out 1000 in Sep/Oct. Or maybe have to wait till Feb (now that would be a bearish scenario).

Anyways, (1) get out of US Bonds- China will dump them at 1% no???

(2) Look at the put volume.

(3) there are now more bear than bull assets in levered Rydex ETFs

(4) Momo seasonality

(5) VXO SP100 Vix

Bottom Line- self explanatory.

Cheers,

Volar


About The Author
Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://practicalt.blogspot.com/ Gold_Gerb

    first!

    open spot gold $1735

  • Anonymous

    C’mon short squeeze!

  • http://practicalt.blogspot.com/ Gold_Gerb

    that put volume IS epic.
    and who would be selling them? why Goldman Sachs of course.
    they’ve got to make a profit somehow.
    I don’t thinks they will be paying out at a loss.

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES 1125, dang.
    there goes the horse race theme.

  • Anonymous

    You think they have that much clout?

  • http://practicalt.blogspot.com/ Gold_Gerb

    not clout.  connections and cheating.

    http://www.ritholtz.com/blog/2009/07/the-goldman-sachs-tax/

  • Anonymous

    Thanks Gerb….good read!  It’s amazing they can get away with that!

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES 1127  
    now that’s some strength.
    as in sideways.

  • http://practicalt.blogspot.com/ Gold_Gerb

    if my teaching is correct.
    ES 1135, just go long long long until 11:30 EST.

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES 1140 – liftoff.

    where is everyone?

  • Anonymous

    Everyone is busy “turning Gerbil” right now.

  • http://practicalt.blogspot.com/ Gold_Gerb
  • http://practicalt.blogspot.com/ Gold_Gerb

    DOW +212

    11,022

  • http://pulse.yahoo.com/_OTAZAD4MZMGPRHWPEMAVGJULV4 Q

    I think we can easily crash to 1000. There will be no bounce, this panic is one of a kind, just like 1987. This will be the first time in history reversion to the mean fails, it will be legendary.

  • Anonymous

    Hi all…  hope everyone’s having fun, staying safe, and banking evil coin in all this action.

    Wanted to point out the nice bullish divergence on the longterm zero, the unsmoothed lower one. Just something to watch…

    BZ

  • tradingmom

    Right here seems to be the first test.  If we don’t continue higher, the SPX hourly will have a bear flag breaking to the downside.  Plus, the rough panel on the hourly zero has a bear wedge type thing going on.  I would really like a nice bounce, all the way up to the 200 DMA.  Pretty please :-)

  • http://practicalt.blogspot.com/ Gold_Gerb

    grab the ES by the horns.
    find the 5am bottom,
    and draw an ABCD pattern.
    :-)

    http://3.bp.blogspot.com/_mcz5MV92U5k/TG-gukDXQWI/AAAAAAAAAFU/ifJiD9olYao/s1600/TA_ABCDBe_draft.gif

  • http://practicalt.blogspot.com/ Gold_Gerb
  • Anonymous

    OK, the ZL seems to be cooperating….and holding….so far

  • http://practicalt.blogspot.com/ Gold_Gerb

    it’s above Zero?

    (ok, don’t answer that – you may get banned)
    😉

  • tradingmom

    Volar — thanks for the fantastic info. 

  • volar

    well i would agree w/ u that the lows are prob not in…

  • Anonymous

    V, you still in your s/2c?

  • volar

    it hurts, but yes

  • volar

    it hurts, but yes

  • nyse

    Interesting: http://screencast.com/t/ES2hbZoWDu
    (Hello everyone)

  • nyse

    Interesting: http://screencast.com/t/ES2hbZoWDu
    (Hello everyone)

  • nyse

    Interesting: http://screencast.com/t/ES2hbZoWDu
    (Hello everyone)

  • tradingmom

    Cory at Afraidtotrade has a nice chart up today w/ all the fib levels too.  Fascinating, isn’t it?

  • Anonymous

    Potential VIX double top I see

  • nyse

    Yeah, its pretty amazing. I will check it out, thanks!

  • tradingmom

    So…i seem to have a mental block on trend days, which is pathetic since 1) they are so frequent, and 2) they should be my bread and butter.  Just to review:  if today is a trend up day, should a divergence in the zero matter so long as the zero remains positive? 

  • tradingmom

    I swear, its like I had a stroke or something.  My thoughts are all fuzzy.  My trading confidence is shot after just a couple bad trades.  There is no reason for me to be suffering this kind of setback.

  • nyse

    Just remember that each trade is independent of what trades you made before that – good or bad. They only affect your next trade if you let it. A bad trade is like the Soprano’s – its over; move on 😉

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES T-time completed.
    where it goes from here – who knows?

    http://i54.tinypic.com/5v2ddx.png

  • Anonymous

    I also did the 2o/c, which is hanging on. I’m 4% temped to remove part of the longs in anticipation of the next drop – hoping that market correlation nails everybody. Unfortunately, my position size isn’t in an even multiple of 25. :)

  • Anonymous

    I also did the 2o/c, which is hanging on. I’m 4% temped to remove part of the longs in anticipation of the next drop – hoping that market correlation nails everybody. Unfortunately, my position size isn’t in an even multiple of 25. :)

  • Anonymous

    I also did the 2o/c, which is hanging on. I’m 4% temped to remove part of the longs in anticipation of the next drop – hoping that market correlation nails everybody. Unfortunately, my position size isn’t in an even multiple of 25. :)

  • volar

    well the report is thursday.. and the report drives the trade- so that is how i am playing it. Win some lose some…but my bet is for Thursday

  • volar

    well the report is thursday.. and the report drives the trade- so that is how i am playing it. Win some lose some…but my bet is for Thursday

  • http://practicalt.blogspot.com/ Gold_Gerb

    For those bears….if 2:15 can’t save the world…

    http://i54.tinypic.com/2ic9qmr.png

  • http://practicalt.blogspot.com/ Gold_Gerb

    For those bears….if 2:15 can’t save the world…

    http://i54.tinypic.com/2ic9qmr.png

  • http://practicalt.blogspot.com/ Gold_Gerb

    For those bears….if 2:15 can’t save the world…

    http://i54.tinypic.com/2ic9qmr.png

  • Anonymous

    Does anyone have a good link that explains P3? I’m having trouble finding info on it.

  • Anonymous

    just GOOGLE:  elliot wave  …  primary wave 3

  • tradingmom

    Or go to daneric’s blog…he wrote a bunch about it yesterday or the day before.  Brace yourself.

  • tradingmom

    Elliott wave international would be a good source too.

  • http://evilspeculator.com molecool

    Just don’t – you are not doing yourself a favor.

  • tradingmom

    Anyone ever check those WSJ selling on strength #s during the day?  SPY is at the top of the list.  Makes me a little concerned about the longevity potential of the bounce. 

  • http://evilspeculator.com molecool

    You sound like a noob in the game. Please do yourself a favor and treat very very careful. Easy to get killed in times like this.

  • http://practicalt.blogspot.com/ Gold_Gerb

    one more chart.

    If there is a rollover, I expect the SPY fib fan to hold due to it’s sloping trend.

    http://i56.tinypic.com/kdtv6x.png

  • nyse

    Sorry, mate, what does this mean?

  • http://practicalt.blogspot.com/ Gold_Gerb

    look at July 13 & 14th, see how the price trended lower but respected the line?
    we could have that the  next few days.IMHO, last night was a washout, but that does not mean the end.
    My very large inverse T was pointing to Aug 8 & Aug 12.  
    We got the 8th in spades, but the 12th is in question.
    so caution is advised.

  • Anonymous

    Exactly.  “Just say No” to Pee 3.  

    Besides, if we are currently in Pee 3, it’s more than a year overdue – at least for me.  So if and when it looks like we could get a re-test of 600 on the SPX perhaps we could call it something else?  

    Maybe we could have Poll to find a New Name for this possible phenomena.    :) 

  • Anonymous

    AUG 13 – FULL MOON

  • nyse

    Okay, that makes sense. Thanks for the explanation.

  • Anonymous

    Thanks all.  

    Mole –  If nothing else, it would be nice to know what everyone is talking about.

  • Anonymous

    Looks like we’ll be testing the bottom BB (20,2) here soon.  It has been a resistance during this downtrend.

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES hitting a 50MA resistance on the hourly.
    was resistance back on the 3rd.

    may be nothing..

  • http://practicalt.blogspot.com/ Gold_Gerb

    New moon to full moon – that is when most of this ‘fun’ happened.
    starting with the Aug 1 Blood (dagger) Hourly open candle.

    http://www.calendar-365.com/moon/moon-phases.html

  • http://pulse.yahoo.com/_N2BRXG3E35GXBXZTEBSXLUSDCM B

    What are these graphs showing?

  • http://profiles.yahoo.com/u/O37RR5KLCM6S77TU5DCD3U5OYI Cricket

    buy a toothbrush doode.

  • http://profiles.yahoo.com/u/O37RR5KLCM6S77TU5DCD3U5OYI Cricket

    That is normal. 

  • http://practicalt.blogspot.com/ Gold_Gerb

    If you think 2:15 will come, and the Market will just ‘sell it off’.
    Give me a Like.  let’s get a tally.

  • raised_by_wolves

    Hey fur ball, what time zone?

  • http://practicalt.blogspot.com/ Gold_Gerb

    I always state Eastern Time by default (EST).

  • raised_by_wolves

    It means the Gerbil would be happier with a close below SPY 114.00.

  • Anonymous

    Yes sir.  I tread very carefully, reading a lot and taking little action.  I have gotten hammered in the past trying to use fundamental analysis, wondering why the hell a stock isn’t behaving as it “should”.  You & Scott have really opened my eyes to T/A, and the markets make a whole lot more sense to me now.  I’m still trying to read an absorb as much info as possible, while heeding your advice as it seems to be sound.  Last but not least, thank you. :)

  • Anonymous

    Yes sir.  I tread very carefully, reading a lot and taking little action.  I have gotten hammered in the past trying to use fundamental analysis, wondering why the hell a stock isn’t behaving as it “should”.  You & Scott have really opened my eyes to T/A, and the markets make a whole lot more sense to me now.  I’m still trying to read an absorb as much info as possible, while heeding your advice as it seems to be sound.  Last but not least, thank you. :)

  • raised_by_wolves

    @itslance:disqus Primary three is an Elliot Wave term for the middle part of a bull or bear market. Most, but not all, Elliot Wave practitioners were bears who made bank during the financial crisis but lost everything they made and more during the rally in the years since. Basically, they didn’t cover their short positions because they had faith that the drop to SPX 666 was just the beginning of the bear market. They still may be right about that, but their blown up trading accounts won’t be better for it. The problem is that it’s not just the destination that matters. There’s also the journey getting there. I learned this the hard way when I shorted Washington Mutual. Yeah, I was right in my financial analysis that WM was headed toward zero, but I was wrong as a trader because WM more than doubled before getting there.

  • raised_by_wolves

    @itslance:disqus Primary three is an Elliot Wave term for the middle part of a bull or bear market. Most, but not all, Elliot Wave practitioners were bears who made bank during the financial crisis but lost everything they made and more during the rally in the years since. Basically, they didn’t cover their short positions because they had faith that the drop to SPX 666 was just the beginning of the bear market. They still may be right about that, but their blown up trading accounts won’t be better for it. The problem is that it’s not just the destination that matters. There’s also the journey getting there. I learned this the hard way when I shorted Washington Mutual. Yeah, I was right in my financial analysis that WM was headed toward zero, but I was wrong as a trader because WM more than doubled before getting there.

  • http://practicalt.blogspot.com/ Gold_Gerb

    well stated.

    reminds me of GM.  

    2.50’ish to $5, and then to Zero.

  • http://practicalt.blogspot.com/ Gold_Gerb

    well stated.

    reminds me of GM.  

    2.50’ish to $5, and then to Zero.

  • raised_by_wolves

    Thank you.

    So, which GM car ran you over? 😉

  • raised_by_wolves

    Thank you.

    So, which GM car ran you over? 😉

  • Anonymous

    Thank you for the explanation RBW.

  • Anonymous

    Thank you for the explanation RBW.

  • raised_by_wolves

    Would you please state Pacific Time (PST) henceforth since the world revolves around me. 😉

    By the way, I was the first to like you.

  • raised_by_wolves

    Would you please state Pacific Time (PST) henceforth since the world revolves around me. 😉

    By the way, I was the first to like you.

  • raised_by_wolves

    No problem. Someone needed to give you the context.

  • raised_by_wolves

    No problem. Someone needed to give you the context.

  • Schwerepunkt

    Had to be out for most of the day; just walked in. Now I have to acquaint myself with what’s been happening. That is one big gap and flat! Waiting for Helicopter Ben, I guess. I want this thing back below 1100 TODAY.

  • Schwerepunkt

    Had to be out for most of the day; just walked in. Now I have to acquaint myself with what’s been happening. That is one big gap and flat! Waiting for Helicopter Ben, I guess. I want this thing back below 1100 TODAY.

  • http://practicalt.blogspot.com/ Gold_Gerb

    grab some popcorn, it could go either way at this point.

    http://i55.tinypic.com/2qn5l40.png

  • http://practicalt.blogspot.com/ Gold_Gerb

    well, lucky for me a stop (har har) at 2.49 saved me on that open day.

    it never looked back.

    Did I mention the other position of F (Ford)?
    ;-D

  • raised_by_wolves

    @volar:disqus Hmm, I think it’s possible to put 87 to shame and then grind the market higher for-seemingly-ever. Here I am on the sidelines while my Aunty’s portfolio is rocking it (9/10 up days so far).

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/c7167cdc-a821-49b7-ad59-dfb9c20524d3/00003626.png

  • Schwerepunkt

    I don’t see any statement

  • Anonymous

    50 SMA on 15 min spx chart still holds.

  • Schwerepunkt

    ah, 0-.25% through mid-12013

  • Schwerepunkt

    BFD. 

  • Anonymous

    sell off, or go insane? I thought it was time not price bitchez?

  • http://practicalt.blogspot.com/ Gold_Gerb

    well, Convict scott has been preaching really good, about let the tape tell you.
    guess is a gamble at this point.

    and Yes it is Time not price, but I don’t have a T at 2:15 ya dufus.

  • Kudos

    What is going on with the last 5 minute ES candle?

  • Schwerepunkt

    maybe both?

  • Schwerepunkt

    Dropping like my stones after a hot bath . . . hehe.

  • Anonymous

    see my comment bellow.

  • http://practicalt.blogspot.com/ Gold_Gerb

    ES 1120, uh oh…. (covers eyes)

  • http://practicalt.blogspot.com/ Gold_Gerb

    Ewww bad image.

    Kidney stones, yeah – that’s it.

  • Anonymous

    could gt ugly MACD on 15 min rolling over

  • Schwerepunkt

    Was it just sell the news? or the dissent on the FOMC?

  • http://thefxspeculator.blogspot.com Onorio

    Anyone took my EURCHF sell @ 1.0550? LMAO moved my stop to 1.0290 now

  • Schwerepunkt

    Sorry about that. It’s firming up, like after a cold shower.

  • Anonymous

    DMI + – and ADX just showed “accelerometer” as ADX crossed over DMI+

  • http://practicalt.blogspot.com/ Gold_Gerb

    Well Hammie liked me first.
    😉
    whatever happened to him?

  • nyse

    What makes you think my toofs aint clean? Wipe that smirk off your face 😉

  • nyse

    What makes you think my toofs aint clean? Wipe that smirk off your face 😉

  • Anonymous

    Yea!  I’m glad I remembered to close my eyes to the first move after a Fed Announcement.

  • Anonymous

    Yea!  I’m glad I remembered to close my eyes to the first move after a Fed Announcement.

  • Anonymous

    Yep and if you are a Senior Citizen trying to live off of your lifetime of savings, either get into the stock market and risk it all or eat Dog Food because we (The Fed) do not give a shit.  

  • Anonymous

    Yep and if you are a Senior Citizen trying to live off of your lifetime of savings, either get into the stock market and risk it all or eat Dog Food because we (The Fed) do not give a shit.  

  • Schwerepunkt

    Grey/Blue hairs should march on Washington. I have one year left before I turn 50, or I’d join’em.

  • Schwerepunkt

    Grey/Blue hairs should march on Washington. I have one year left before I turn 50, or I’d join’em.

  • Anonymous

    Now I know what it’s like to get juked by Barry Sanders fake left, right. cuts left again — and now (good thing I checked before I hit the posr button) right again … no now back to the left. Shimmy to the right.

    Holy whipsaw! Any body find some shoes? size 9? I think those are mine.

    Edit: and he breaks to the right!

  • Anonymous

    Now I know what it’s like to get juked by Barry Sanders fake left, right. cuts left again — and now (good thing I checked before I hit the posr button) right again … no now back to the left. Shimmy to the right.

    Holy whipsaw! Any body find some shoes? size 9? I think those are mine.

    Edit: and he breaks to the right!

  • Schwerepunkt

    Maybe you should shift your lower T a bit to the right?

  • Schwerepunkt

    Maybe you should shift your lower T a bit to the right?

  • Schwerepunkt

    RED……………………..

  • Schwerepunkt

    RED……………………..

  • Anonymous

    Uh Oh

  • Anonymous

    Uh Oh

  • Schwerepunkt

    Markets need a double dose of lithium.

  • Schwerepunkt

    Markets need a double dose of lithium.

  • Anonymous

    This thing is pretty reliable.  Anyone else use it?

  • Anonymous

    This thing is pretty reliable.  Anyone else use it?

  • http://evilspeculator.com molecool

    Now you guys know why I didn’t want to pick a bottom.

  • http://evilspeculator.com molecool

    Now you guys know why I didn’t want to pick a bottom.

  • Schwerepunkt

    I guess looking at 1077 is too obvious to still pertain.

  • Schwerepunkt

    I guess looking at 1077 is too obvious to still pertain.

  • http://thefxspeculator.blogspot.com Onorio

    Well im really enjoying this last days of trading, but this is to fast for me! Too many things to look and many orders to manage in such a short time!

  • http://thefxspeculator.blogspot.com Onorio

    Well im really enjoying this last days of trading, but this is to fast for me! Too many things to look and many orders to manage in such a short time!

  • Schwerepunkt

    5-million ES contracts will trade today before 3pm.

  • Schwerepunkt

    5-million ES contracts will trade today before 3pm.

  • Anonymous

    “but I don’t have a T” – why not? Didn’t it break a BB or something?

  • Anonymous

    “but I don’t have a T” – why not? Didn’t it break a BB or something?

  • Fearless

    Gap up this morning did not hold, so selling was to be expected.

    That may be it, though.  1101.73 is the 38.2% retracement of the entire rally from March 2009, and we hit 1101.54.  Need bullish follow through and confirmation for taking bullish trades.

    This crash is a rare event (1987-like), and the bottom may not be accompanied by a bullish divergence on most indicators.  We may even have a V-shaped spike bottom without a lower low.

  • Fearless

    Gap up this morning did not hold, so selling was to be expected.

    That may be it, though.  1101.73 is the 38.2% retracement of the entire rally from March 2009, and we hit 1101.54.  Need bullish follow through and confirmation for taking bullish trades.

    This crash is a rare event (1987-like), and the bottom may not be accompanied by a bullish divergence on most indicators.  We may even have a V-shaped spike bottom without a lower low.

  • http://pulse.yahoo.com/_OTAZAD4MZMGPRHWPEMAVGJULV4 Q

    The HFT are gonna kill all reversion mean traders with a crash to S&P 1000. NYMO will show a legendary -300. It is coming. I’m 300% short!

    There will be no bounce, just an acceleration while all reversion mean traders turn into trend traders and throw in the towel.

  • raised_by_wolves

    I hear broken collar bones take awhile to mend.

  • Anonymous

    We could have just finished wave 5 of wave 1.  (Don’t hate me for being a WAVER)

  • http://pulse.yahoo.com/_OTAZAD4MZMGPRHWPEMAVGJULV4 Q

    Good call. There will be no bottom.

  • Anonymous

    Wow! Somebody got himself a crystal ball

  • Schwerepunkt

    Testing VWAP now. Edit: through VWAP now up against a pivot.

  • Anonymous

    Wow! Are these prices jumping all around or is it that my eyes have had too much computer time?

  • Schwerepunkt

    I’m afraid you may be correct with the V-shaped recovery, with the bottom of the V in the middle of the effing night. Crap, I’m not a nocturnal rodent like Gerb.

  • Fearless

    We hit a strong support at 1101.73 with less intense selling than the previous days, what did you expect?

  • labdude

    TLT sure is up.

  • Anonymous

    @mole Looks like the Swiss Franc is going vertical. What comes after that? Super duper overbought vertical? Can you also take a look at the 10yr also. Looks kind of same. good risk reward setup for a short or not yet?

  • Anonymous

    Mini reverse H&S last 1.5 hours ??? On the 1min chart

  • Anonymous

    Probably subscribes to EWI.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://practicalt.blogspot.com/ Gold_Gerb

    Jury still out, WOW what a swing..
    not sure if this is a backtest, or a continuation!

    http://i54.tinypic.com/2d0gbr6.png

  • http://evilspeculator.com molecool

    Current NYSE ratio: 4.47:1 – encouraging.

  • Anonymous

    Actually, I think your T’s are preTTy cool. Lately, I’ve been practicing scalping with something similar on the one minute time frame. But, obviously not during rip-your-face-off volatility. I’ve only just started, but I’m 23 for 24 scalps. wooo!