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Early Fall Market Momo Update
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Early Fall Market Momo Update

by The MoleOctober 4, 2017

The third quarter is officially on the books and that means we are now finally entering the most profitable trading period of the year, at least statistically speaking. As with everything in life your mileage may vary. Since it’s the beginning of a new month this we should once again take step back and look at the characteristics of the ongoing market phase in terms of volatility, momentum, as well as market breadth.

2017-10-04_VIX

Let’s take it from the top starting with implied volatility, which I’m sure you are a aware is once again scraping the bottom of the barrel, accumulating an extended series of single digits. I think the note I pinned on this chart many months ago serves as a constant reminder that low IV does not necessarily impel the precipice of a market correction.

2017-10-04_CPCE

Besides nothing even remotely bearish happens until we see the CPCE dip below the 0.58 mark. And even then it’s not always guaranteed. The current reading suggests that we are nearing the zenith but should be okay for the time being.

2017-10-04_breadth_SPX

Market breadth as measured by the SPXA50R versus the SPXA200R is starting to resemble more and more the effervescent period the bears had to slog through between 2013 all through 2014. There is no predicting how long these conditions will prevail but small controlled corrections every now and then prevent bearish momentum from accumulating and causing something more pronounced. Of course whether or not this is possible without full fledged QE is a completely different story. However for now P/C ratios are being managed very effectively.

Okay, now that I’ve got you all warmed up join me in the lair for the good stuff:

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Campaign Updates

2017-10-04_spoos_update

The E-Mini campaign is in great shape. My trailing stop is now at about ~2R which is 0.5R below MFE.

2017-10-04_TF

As a side note – I should really have grabbed a bit of small caps goodness as the Russell is completely out of control. How could I miss this one!!??

2017-10-04_USDJPY_update

Okay I have had it with the USD/JPY as it looks like it’ll either take its merry time ahead of a push or descend into yet another reversal pattern. I hope I’m wrong here but for now I’m back in cash on this one looking for a more promising entry.

2017-10-04_USDCAD_update

USD/CAD – the gift that keeps on giving, at least thus far. I have not moved my trailing stop since last week as I don’t see a compelling reason. Over 3R in paper profits at this point so I’m not going to start over thinking this and simply stick to my guns, i.e. my trailing stop.


About The Author
The 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.
  • Brishort

    Great post Mole. My indicators are a bit more nervous than yours on timing when VIX related, but indeed, nothing flashing red, so one need to tame’s any bear ambitions when the market has small slumps.

    In the campaign update, you had put Wheat on the watchlist. I am liking the risk ratio of the recent retest action I see.

    Currently positioned for entry at buy stop 448.50, trailing 1R below

  • ridingwaves

    MNKD hit the numbers I mentioned yesterday….gap closed best to let it settle down now…+2.5R
    will see if it pulls back…

  • Brishort

    Mole, ZN you recently covered also recommended to be re-actualized on the very short term entry watch list. Albeit I prefer myself trading ZB as higher magnitude of same movements)

    Right on the uptrending line you recently drew. Any break or bounce could make for a great entry, just need to be prudent with headfakes on entries.

    Buy stop orders remain my favorite way of entering trades as it add discipline on not anticipating technical information coming from the price action

  • http://evilspeculator.com Sir Mole III

    It may be a decent entry here but it’s still risky so I wouldn’t risk more than 0.3R:

    https://uploads.disquscdn.com/images/fb8624e0a499ce13d101a10fa5e88b30eb3f6e5efe57588007749e0e1047828c.png

  • Brishort

    Thanks, Since I like this one and believe it could be a runner, my play is as follows:

    Sell ZB, buy ZN (making it bias to the downside, 3 touches trendline that become broker makes the 4th break, if any, that much more significant)

    Deploying trailing stops = 1R on both. Keeping the one that doesn’t get taken out, letting the market pick the direction.

  • Brishort

    Oil is having its love affair with 50$ again…. having had another headfake short fling below 50 in the last few hours….

  • OJuice

    Took a couple tries back in Aug/Sept to get through 50. Nice band of support resistance between ~49.25 and 50. I suspect we can break a couple times below 50, and provided it is recovered, a good base for another move higher will be set. With seasonal pressures on oil, it might lose 50 altogether though.

  • Mark Shinnick

    BTW, what’s does the growth rate for CL demand look like these dazs?

  • evilasevildoes

    oil res 51

  • OJuice

    Not sure. OPEC announces their outlook on November 7th though. Might be some fresh data with some spin then.

  • StockTalker

    Bulls looking to attempt it.

  • Mark Shinnick

    Reentering short miners, very tight stop.

  • Brishort

    With INDU and SPX pushing higher, if there was ever a crossroad for NDX, it is exactly NOW from a trendline perspective.

    If it pushes up, a “panic buy” type of ascent is possible. From a P&F perspective, 6005 NDX is really the area where the rubber hits the road (NQ about 6010)

    https://uploads.disquscdn.com/images/ba3bc6fcb28cffd50f85b3ac72f57a4dfffc65cd413b5b52c0dc0cdfc3017b6d.png

  • Brishort
  • Mark Shinnick

    Agree, the ingredients all seem to be there.

  • Yoda

    Well one thing is sure, I am not going to be the one who panic buys the MF of all time high

  • Brishort

    My bear heart is with you! The likelihood of a temp high sometimes soon are much higher here than anything else. But as Mole Momo chart show, the crazyness may not yet be out of gas just yet.

    Bulls will need an all aboard market to continue pushing it up. The non confirmation by NDX is a good proxy of why not to trust blindly new all time high on INDU, SPX & Russell.

    I don’t care about the rotation, Trump tax plan or whatever bullshit we hear these days. The charts say price should confirm on all markets if a new sustainable leg is to occur, especially the strongest tech stocks. And for the moment they aren’t…

    So no ATH buying, even if an MF one until NDX has confirmed. But if its does, even reluctantly, can’t fight the trend, will have to buy.

    A lot of coiling energy being accumulated in NDX since August…

  • Brishort

    Just for the sake of the view: Trendlines on NQ 30 min vs ZN 30 m
    Upon solid break, implies rates will go up with the market going up.

    Beware of headfakes however on trendlines, so no initial break should be trusted without any kind of LKGB proper retesting of the line.

    Said otherwise, money moving out of bonds and into equities. But the old “stock going up with rates going down” may no longer be the current correlation of such assets.

    https://uploads.disquscdn.com/images/fb9e27b6beb6d5ee40afd20a4fe1e0da9a4e2e64879074a8f06781ec44116313.png

  • HD

    GM, SPX 8 day rally now from 24(89), will be +(55) at 2544. The OPEX pattern has been a low before almost every month. Would be TH/F PB if continues. Maybe a simple TL under this rally would signal.

  • Yoda

    What goes straight up….

  • HD

    The $EXAS trade…. those bastardos, they eff you in the drive thru. Will cut them Friday no matter what.

  • Mark Shinnick

    I can understand an accelerated trendline. Those seem to show pretty good in the 3x instruments :)

  • HD

    impulses

  • Mark Shinnick

    Do you ever wonder if that happens to be the majority thinking?

  • Mark Shinnick

    ….sometimes with happy endings.

  • Mark Shinnick

    An ok scalp pop, Standing aside for time being.

  • http://evilspeculator.com Sir Mole III

    Interesting approach – let us know how it unfolds.

  • Julie

    KEM Taking 3/4 off …. Made approx. 80 cents …. Volume dropping …. moved stop up 22.55 on remaining 1/4
    JULIE

  • http://evilspeculator.com Sir Mole III

    How’s my crew? I have been swamped on my end with office related chores and coding duties :-(

  • Brishort

    Well… you know. At the moment all good but clearly the next move is the most important! https://uploads.disquscdn.com/images/7cf3bdee1c1836176b8c0dc0d5d726e5f670b5ad67bd5957f4cec7a24272aeda.png

  • Julie

    Great Mole Have been following the events in Spain. Wish you and everyone there that things will be ok !
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • ridingwaves

    surprised it is holding up strong here, thought it would back off….
    had a chance to triple this bet early on and man would that have been sweet, put it on another symbol…press when your rolling the field or 7-11 dammit matey…

  • Julie

    Mark Checkout RUT 30 min chart from 1st week of September.
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Brishort

    Take care GG!! hang in there!!

  • Mark Shinnick

    Hardcore there :/

  • Yoda

    Banking coins.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I’ve lost more blood in options trades.
    😉

  • Mark Shinnick

    Yeah…that gets old too.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Julie

    Yoda I was thinking about a small short probe SPX (SDS) EOD if a bearish close below the 60 min 8 ema No cigar
    JULIE

  • Julie

    GG is tough He will be ok !
    JULIE

  • Mark Shinnick

    I’m thinking about shorting the s out of miners, myself :)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    you go girl.
    2 times the Focals you did.
    😉

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    ..sounds like an emotional statement. you be the judge.
    it’s a trading range Bro! not a trend.

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=6&dy=0&id=p79685278629

  • Mark Shinnick

    Just watching a model getting setup…does something to me.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    if you great enough to see a model forming..it’s (most likely) ..a trap.
    LOL.

  • Julie

    Mark definitely worth watching GDX as volume is declining going up into it’s daily declining 21 ema approx. 23.56. I knew there would be a bounce. Tomorrow I would wait to see if it took out today’s low of 23.24 matching the daily 5 ema approx. 23.27
    JULIE

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    +1
    Price is king, but volume is context. ©

  • Mark Shinnick

    Traps within traps…within even more traps. This is the real deal multi-level marketing.

  • Julie

    GG Someday Dollar is gonna be King Rat …. Doug and I are glad that you are doing better !
    JULIE

  • Julie

    GG Those envelopes are great that you do Great Job !
    JULIE

  • Yoda

    I think today’s price action was actually more bearish than the opposite. A 9 years strong bull market just doesn’t die in a day. If bears failed to take charge in September, they may have another go at it this month. I like SDS now as the risk/reward is appealing to me. However, personally I wouldn’t touch 3X ETFs for more than a day trade.

  • Yoda

    One of us will make money

  • Yoda

    Yes volume is declining which is not bullish. Let’s see what USDJPY does overnight.

  • Yoda

    Man, one I want

  • Mark Shinnick

    Today looks like we both did.

  • http://evilspeculator.com Sir Mole III

    I should print cheap aluminum Evil Speculator coins and sell it to you guys at a high premium. Who’s first? Supplies are limited!

  • http://evilspeculator.com Sir Mole III
  • http://evilspeculator.com Sir Mole III

    Some people clearly lack a sense of self preservation.

  • StockTalker

    I want