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Early Warning
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Early Warning

by The MoleJanuary 29, 2015

I hate to burst everyone’s bearish bubble but unless we drop straight down in the next few minutes it looks like the bears are going to fumble this one – again. I just noticed a rather disturbing divergence on the hourly Zero. Wish I had seen it earlier but I’ve got a bunch of Spanish workers crawling all over the place as I’m getting high speed fiber installed in the lair today. Anyway, here it is:

2015-01-29_SPX_update

Lookie here – that divergence on the hourly panel is looking pretty ominous – very bad medicine. In addition flat participation suggests the bots are about to take over and the Mole reversal signals are failing. Let’s not be presumptuous but my point stands: a handle or two more and a push above 2010 and it’s all short squeeze into the close.

2015-01-29_spoos

And that would be extremely bad news as the implications may be a sideways correction like shown on the chart above. We’ll know more by the close, so let’s see what happens here in the final two hours.

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Cheers,


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

    High Yield wasn’t running for the hills, and without their participation, the equities is a side show.

    http://stockcharts.com/h-sc/ui?s=JNK&p=D&yr=0&mn=6&dy=0&id=p20113084567

    like you said last week (?) volatility.

  • http://evilspeculator.com molecool

    Not saying it’s over for the bears – but it looks like we may see a lot more sideways tape. Adapt or die.

  • mugabe

    it’s in the woodshed / range till it isn’t … so probably it’s short tops and go long bottoms until stops working … depending on your time frame

  • http://greenlander1.blogspot.com/ greenlander1

    I just exited shorts. Looking for a re-entry as my 60 min signal turned to buy on SPY/QQQ.

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

    does the volume hole continue to fill in,
    if the range is covered repeatedly?

  • http://greenlander1.blogspot.com/ greenlander1

    This might take 1-2 weeks to resolve. Just a lot of thrashing around continuing

  • M E

    I went to walk my dog and I see my stops have popped. I noticed a spike before I left but it disappeared after a few seconds. I even posted a comment and deleted it :) Looking to get long now!

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

    so be wary of any elephants, eh?

    https://www.youtube.com/watch?v=vLwS5xq3r68

  • BobbyLow

    Woodshed/range = Slice and Dice or “Tiptoe Through the Tulips”.

    And NO this is not one of my favorites. Can you imagine this guy actually became famous with this song.

    https://www.youtube.com/watch?v=zcSlcNfThUA

  • M E

    Just waiting to see how the 2010 will resolve…

  • mugabe

    isn’t that Van Tharpe?

  • ridingwaves

    GENE-31 million shares traded on 4 million float….some folks made a lot of money buying this in the 1.2-5 range last week….weekly resistance here at 4.50+

    planning next trade…

  • BobbyLow

    LOL

    No. This song was released in 1968 and “Tiny Tim” appeared on many TV Variety Shows. I used to cringe when he sang this . He died of a heart attack at age 64.

    http://en.wikipedia.org/wiki/Tiny_Tim_%28musician%29

  • BobbyLow

    Good stuff. RW

  • squirrelsome

    Wow… that was creepy

  • squirrelsome

    I don’t remember such a slo-mo day like this in everything

  • ridingwaves

    I know no one plays in that lunatic fringe space but even off my post this morning, anyone here could have had a clean double in 3 hours…

    now the kraken has been released….poor late buying longs…

  • M E

    Another fantastic trading day, thank you Mole!

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

    LSD, mushrooms, free love. before my time.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • randomuser6789

    Even during the move up, the $TRIN is still looking bearish at 1.40. But price pays, not $TRIN.
    Not a healthy market. Bears are in the woodshed.

  • http://www.ProfitFromPatterns.com/ Ivan K

    View from the cockpit.

    In order to be able to remain focused and alert whilst spending up to 5 hours or so at the helm … it is imperative to have a very well organised view … of all that is required when placing orders.

    The screengrab below illustrates one student’s screen layout … this is not his only monitor … another contains his personalised spreadsheet to create all the various graphs and stats of the results that he needs … to ensure that his ongoing results are in line with those of his back applications.

    By employing a strict RBT approach, some of the more mundane aspects of the L.I.V.E.T.M. process can be automated … position sizing being but one of them.

    In this fashion, 110% focus on the task at hand … being the recognition of the setups … the order entry … and the Campaign Management steps … can be performed with accuracy … even when working with more than one instrument at a RO.

    Naturally everyone will have different requirements for their helm, or cockpit … as well as different software packages and brokers.

    That said, the old saying … ‘A tidy desk(top) is indicative of a tidy mind’ … is still alive and well today.

    Graphic below.

  • HJS

    I saw a giant logging band saw explode once. Reminds me of this market.

  • Darkthirty

    That was comedy!

  • http://evilspeculator.com molecool

    Seriously – this is going to be a rough ride.

  • http://evilspeculator.com molecool

    Seriously – I’m sliding by the seats of my pants here trying to keep you guys out of trouble. Apologies for not seeing that divergence earlier – it’s been too busy on my end.

  • BobbyLow

    And lots of great Pot and Speed. :) This was also the time of some great singers like Jimi Hendrix and I can see some of his style is in today’s music.

    Janice Joplin was another back in the day.

  • BobbyLow

    Hey Mole, thanks for putting a reminder out on the Nick Rage Video again. I had saved it but never watched it until now. Because it’s an hour long I kept on putting it off. Ya I know. . .

    It is definitely worth an hour of time and is as good as advertised. :)

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

    (GG shakes head, come on BL)

    SPX weekly. Elephant sat right on the hood (support)

    http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=1&mn=0&dy=0&id=p99816372048

  • squirrelsome

    I find it useful to play back at 1.25-1.5 the regular speed, depending on how clear the speaker is. utube allows that.

  • M E

    So I grabbed a quick long after your warning and closed my position EOD. Tomorrow can be another crazy day. All I have now is my ZB long that has a really nice profit and is nowhere near any stops.

  • BobbyLow

    To each their own and ya gotta do what you gotta do. I’m still in and using a multiple of ATR on a 90 Minute Chart for my stop. This brings me to a close of a little over 645 on the DJUSEN in order for me to be stopped out.

    Besides that, there was a very large drop in the DJUSEN yesterday. Today the S&P was up about 1%. The DJUSEN was up only .01% today. (+.93 on a base of 629.04)

  • http://evilspeculator.com molecool

    White man magic!

  • BobbyLow

    The most important thing for me was the parts about Draw Downs and other key factors that have been discussed here in detail.

    I could imagine some of our key people speaking while Nick was talking:

    Ivan, “Think the next 1000 trades”.

    Scott, “think of trading as a process and not monetary value” build a system that works and just do it”.

    Mole, “Flat and down periods will occur no matter how good you are”.

    Other keys, allow the account to flow rather then try to force it.

    And one I definitely have to add to my routine and that is:

    Remove myself from the trading environment. . .

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

    nice.

    I tend to think more of price lines incoming.

    http://www.techsavvyed.net/wp-content/uploads/2012/12/missile-command.gif

  • Vince_Clortho

    Sub-creatures! Gozer the Gozerian, Gozer the Destructor, Volguus Zildrohar, the Traveller has come! Choose and perish! Choose! Choose the form of the Destructor!
    ——
    The choice is made!The Traveller has come!
    —–
    In the form of this f@cked up market

  • http://evilspeculator.com molecool

    And ‘forget about the money – it’s just fuel for following the process’. I think we all should take a weekend to meditate on that.

  • http://evilspeculator.com molecool

    I for one welcome our new market overlords.

  • raised_by_wolves

    Hey Gerb, try this.

  • Vince_Clortho

    Hey mole, if you look at the SPX or /ES dailies starting this year, doesn’t it look like a big ass inverse head and shoulders with neckline at 2054 /ES or 2063 SPX? That would have a price target at about 2120. We would be completing the right shoulder this dip. It bothers me every time I look at it.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The View before the cockpit … few realise what is really involved to create a RBT that can (potentially) achieve your / the written down goals and objectives.

    Computer / programming knowledge is not a pre-requisite … the image below gives you an idea of the number of charts that are dissected (manually) in the quest.

    When a student goes live, daily debriefs help ensure that the subC … aka the committee on the shoulder … does not destroy the efforts.

  • Grant

    Are those the market makers eyeballing your subs? J/K

  • http://www.ProfitFromPatterns.com/ Ivan K

    Image below

  • BobbyLow

    Well I’ll be damned! It’s been a Long time RBW.

    Good to see you. I hope you’re back. :)

  • mugabe

    “Panics do not destroy capital—they merely reveal the extent to which it has
    previously been destroyed by its betrayal in hopelessly unproductive works.”- John Stuart Mill (1806 – 1873)

  • Scott Phillips

    Head and shoulders are NOT an edge. Definitively.

  • Scott Phillips

    Speaking for myself, my performance goes through the roof taking frequent short breaks.

  • Scott Phillips

    Trin is not an edge :)

    Read this – it is clear from the interview with its creator that he doesn’t know his ass from a hole in the ground

    http://www.dailyspeculations.com/about%20us/archives/archieve/An%20investing%20tool%20you%20can%20do%20without.htm

  • Scott Phillips

    Well well well, look what the cat dragged in. Good to see you back old friend, I hope life is treating you well :)

  • Scott Phillips

    In my experience you are exactly right. Computer programming experience often stands in the way of just rolling up sleeves and getting dirty with the data.

    Those are nice trading screens, simple and with everything needed. My own screens are just as simple, I would not want to go more complicated.

    The biggest predictors of success IMO

    1) How much time spent preparing to trade, building a system and a business plan.
    2) How detailed the trade records are, and how much time is set aside to go through them

  • http://evilspeculator.com molecool

    Yo!

  • Sean

    Well, he is clearly very smart if he got an index named after him and then made millions selling “advice” to institutions, so I can’t fault him there… the real problem is people using the index at face value without fully understanding how it actually works (but I guess that is really a global problem across domains)… the TRIN is a ratio of ratios, and to me that reeks of intentional over-complication designed to hide the fact that there is really nothing of value to be found there… I’ve recently come to the realization that simplicity is a necessary (but not sufficient) requirement for excellence/Quality and most things that appear complication are just trying to compensate for their lack of Quality (as in Robert Pirsig’s definition of “Quality”).

    EDIT: Also, he is a douche for selling snake oil…

  • Sean

    Good emotional lesson today, I had two trades on this afternoon (CHF/JPY short and EUR/CAD long, in sim mode) and they ran up to ~1R total, then bounced between 0.25R and 0.75R for the rest of the day, and every time they got back near 0.75R I felt the urge to override my rules and “bank profits” because “nobody goes broke taking profits” (or whatever other BS you normally hear), but I resisted and let my rules do their thing. Now, the positions are still open and close to 3R total (and I imagine they are getting close to exiting since two of my competing exits are time based).

    I am finding that paper trading is not just useful in testing the strategy, but also in testing my own emotional responses (I am competitive enough that even paper money has a great deal of value when I’m keeping score).

  • phylum

    Well done Sean, sensible strategy.

  • phylum

    …… and there are many others, that recreate (or procreate) just another stat …. simple is best.

  • phylum
  • Sean

    To provide some perspective from a “programmer” and why it gets in the way of creating a profitable system… it’s not that people think that programming is a way to avoid dealing with data, on the contrary, they prefer to deal with data, all day every day, data is what they are comfortable with… rather, they think programming is a way to shortcut dealing with their own emotional issues. They are smart, so they have read all the books and know that a trader is their own worst enemy, so they decide to build a system that takes that variable out of the equation… problem solved, right? … But what they don’t realize is that emotions (beliefs) don’t just interfere with execution, but can also totally ruin a system even at the development phase, tainting all downstream decisions… If I put myself in my own shoes two years ago and read this, I would call this all esoteric bullshit and go on trying (and failing) to program something… but today, I would say that beliefs matter, more than science can explain, and I don’t try to fight it anymore, I just try to find helpful beliefs and get rid of unhelpful ones, in all aspects of life…

  • raised_by_wolves

    Howdy ho!

  • raised_by_wolves

    Keep talking about great substances and good music, and I may stay awhile. (^_^)

  • raised_by_wolves

    It’s treated me worse so I can’t complain.

  • raised_by_wolves

    Long-AMZN-short-BABA looks like an interesting pair trade. Yeah, my first thought is “too late”, but my second thought is to watch and wait for a possible retracement to that top volume peak.

  • mugabe

    I would have thought that programming must be a huge advantage, if only it is to thoroughly backtest pen and paper-generated theories

  • Skynard

    Looks good, nicely done:)

  • Skynard

    Did not do anything with /CL, waiting for an actual retest. 44.00 or less would be a reasonable entry. Bears seem to be alive:)

  • Darkthirty

    RBW !! Hiatus complete?

  • evilasevildoes

    watching usdjpy

  • http://evilspeculator.com molecool

    ( ) ) ) ( )
    ) ) ( /( ( ( /( ( ( /( ) ) ( ( ( /(
    (()/( )()) ) )()) ( ) )())(()/( ( ) ) )()) (
    /(_))((_)((((_)( |((_) ) ((((_)( ((_) /(_)) )((_)((((_)( |((_) )
    (_)) _((_)) _ ) |_ ((_)((_) ) _ ) _((_)(_))_ ((_)_ ) _ ) |_ ((_)((_)
    / __| | || |(_)_(_)| |/ / | __| (_)_(_)| | | | | _ ) (_)_(_)| |/ / | __|
    __ | __ | / _ ‘ < | _| / _ | .` | | |) | | _ / _ ' < | _|
    |___/ |_||_|/_/ _ _|_ |___| /_/ _ |_|_| |___/ |___/ /_/ _ _|_ |___|

  • http://evilspeculator.com molecool

    Yup I like it.

  • MK Ultra

    Creating a system is the first hurdle, sticking with it when the results are other than positive is the next. To me, this is what separates a hobby from a true full commitment to the goals.
    Cheers,
    -M

  • http://www.ProfitFromPatterns.com/ Ivan K

    MK – totally on the same page … the same comment applies to all fields of endeavours.