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The Big Tease
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The Big Tease

by The MoleMarch 4, 2011

And we’re back to scaring the children – today it’s the bulls’ turn to get chased around the woodshed a little bit.

However, the big tease has now navigated itself into price territory that allows us to draw fairly clear support/resistance lines. Which is great from a trading perspective – I’m sure Scott (who loves price patterns) is going to have a field day with this.
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At this point we can basically draw two Maginot lines separating the bulls from the bears. Bernanke’s panzer divisions have consolidated around the 1305 mark, which is near the support cluster that was painted early this week. Not so coincidentally that is also the 78.6% fib mark of the initial push down. We drop through that and you’ll see a boatload of stops being triggered – oh so tempting…

The grizzlies have dropped their paratroopers at 1330 which not so coincidentally is the 23.6% fib mark of the initial push down. If we push beyond that mark the odds will strongly support the notion of painting new highs.

As long as we bounce between 1330 and 1305 we remain in what I call 1/2-1/2-hell – the bears think it’s an a-b-c preceding a major drop and the bulls naturally think we’re at the onset of a third wave to the upside.

For us stainless steel rats it’s an opportunity to let the pundits and the top/bottom callers wear themselves out – once their ammunition has been depleted we swoop in and line up to fuck the prom queen. For me personally that means I will take contrarian positions as long as we keep bouncing inside the 1305/1330 cluster. If I get stopped out I will immediately take an inverse position as I am the trading equivalent of a back stabbing sell out who flips allegiances at the slightest change in wind direction. It’s the only way to survive nasty tape like this – which btw, is completely and utterly engineered. If you are a Zero sub you most likely know what I’m talking about. Those cattle prod donning market makers have had their fun this week – and they weren’t in the mood of taking prisoners.

Stop watching the news – keep watching the tape. Once you fade out all the noise there is order in our little universe.

Cheers,

Mole

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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.
  • Joe_Jones

    I would say that Bernank's Panzer division now stands at 1332.

  • jigdaddy

    daily low on SPX still not taken out..

  • Clint

    I would agree.-Can't wait to see how we move on Monday. – 1294…”if” we get down there, will be interesting.

  • jigdaddy

    mole is it better to refresh ZL every 5 min or 1 min?

  • ronebadger

    AHHHH, green and orange arrows again…. NOW, I know the directions to choose….

  • volar

    1/2 1/2 I felt that way last night.

    Hence i have been blogging all day-not trading. No point in over-thinking the obvious

    There are gaps everywhere. If anyone thinks they KNOW what is going to happen they are very biased and fooling themselves

  • OldChicago

    It was the bear squeeze yesterday, bull squeeze today. USD seems to be irrelavent. Oil is driving the market. From the 5-min chart, it chops slowly up, and tentatively. So, the fear is not quite there. So, until everyone is in oil, the price will keep going up?

    Technically, the hourly trend has yet to be broken. DJI, DJT, SPX are closed though.

  • finansreven

    Taking a long, with stop and positional reverse 1 point under LOD. Will sell half if we get to VWAP and move stop on rest of position to BE.

  • Joe_Jones

    As Mole said unless we brake the support he indicated we are just fucking around. IMO Bernank needs to crash the market and increase the unemployment rate in order to be able to sell QE3 to Congress. Wash, rinse, repeat. The pundits on CNBS today were all about oil price impact on recovery, inflation, etc. Plus this article on Bloomberg: http://www.bloomberg.com/news/
    Signals are being sent and I think Wall Street is now short until enough damage is done. Still, these are just my views.

  • volar

    Green Hammer and PIT HOUR GAP would support that trade…. but i am staying out until i know what all this 1/2 1/2 ABC stuff is

    http://content.screencast.com/

  • http://evilspeculator.com molecool

    The server refreshes it every 20 seconds – I think every minute is just fine. Don't blow up my server! 😉

  • ds2

    The butterfly on the 5 min right now looks a lot like the one on the hourly yesterday.

  • http://evilspeculator.com molecool

    The more drama on the news the more bullish I get. Think about it – any sudden drops have come completely out of the blue. As much as the gray unwashed masses like to ignore this simple fact: The tape cannot be predicted – you can only move with the punches. That's why Scott and I continue to suggest scenarios that benefit both sides of the equation. The odds often support one side stronger than the other but there's always the possibility of a curve ball. I mean – come on – no matter what anyone claimed the tape clearly pointed up last night.

  • amokta

    Ok, out of shorts, only holding slver long (and oil long couldnt help myself buying again -might close at eod)

  • Joe_Jones

    Despite you being most of the time right with the tape direction, I respectfully disagree with your last statement Mole. For me, the classic ABC correction pattern needs to be disproved first before the tape can be considered bullish. Again, JMO.

  • amokta

    could go long, but enough excitement for one day

  • convictscott

    Yup, no two ways about it the tape was bullish last night. The failure of bulls to take it up when everything was in their favor is very very telling, especially since its not the first time we have seen this.

    Today was the bulls game to lose, and they lost

  • convictscott

    Not correct Joe :) EWT works better at the minuette level than bigger timeframes IMO but even so an ABC wave can “morph” into a motive wave very easily. Maybe not in the textbook (which was written by an idiot so maybe we shouldnt take his stuff as gospel)

    Make no mistake, if we got enough strength on open to cause the last of bearish capitulation, and dip buyers rush in, we would be talking about new highs right now.

    At the open today, this tape was balanced on a knife edge with the edge to the bulls. Now its the same with the edge to the bears.

  • Joe_Jones

    last 5min TICK candle: 1165 (highest of the day)

  • volar

    NOBODY knows if this is a 1/2 1/2 or ABCDEFukPretcher

  • Joe_Jones

    Ok, won't argue. I am no expert in EWT anyway (for whatever it is worth in an engineered market). Scott, at what price level, according to your own rules, would you consider that the retest of the former high (1344) has failed?

  • amokta

    Is it worth buying a silver short over weekend (a low risk coin-flip, in that less risk of gap up given strength today, so could exit on monday if price goes against)?

  • convictscott

    Exactly. I stand aside until we get clear direction. I think dx is going to be the game to play next week anyway

  • volar

    FYI I will put out the COT for FX markets (among others) in less than 50 minutes from now (not out for 20 more minutes)

  • convictscott

    Joe, its not that simple. I'll put an explanation for you in the weekend post, but the crux of it is that we get more information with every bar. Its not as simple as yes or no.

  • Joe_Jones

    OK, we just got a rejection of the 75 MA on the 15 min SPX (thanks Brishort). Going down into to the close.

  • finansreven

    Closed the long at BE. Was a good shot after the Zero showed divergence. Now I'm short again.

  • convictscott

    BTW the dx is at that trendline you talked about. If the bear trap happens it happens here

  • Joe_Jones

    Thanks. Looking forward to read it.

  • volar

    Ya it is.. i have been just adding positions here… UUP and futures now.

    630 every morning a shitload of selling and not much to show for it IMO, so odds favor a big rally.

    A bear trap could happen, and i would prob buy more then.

    My stop is a NEW low.

    From a swing trade/position trade i dont know if they dont get much better than this given the amount of shorts in the market

  • convictscott

    ABSOLUTELY NOT! What possible rule or setup could you be basing this on? When silver has a day like today (the equivalent of a trend day, open at the lows close at the highs, expanded range) The odds are backtested 90% that the high of today will be breached within the next trading week.

    10% bets are for slopeofhope, not evilspec 😉

  • convictscott

    Only confusing thing to me is the action in jpy which is a decent chunk of dx, had a weird 120 min period with a 100 pip range.

    Agree with you on sentiment perspective, long term trades dont get any juicier

  • amokta

    Thanks CS – ok will not hold anything (anyway AGQ stopped out at 204, bought at 192avge) – might go long on monday next week depending on tape :-)

  • volar

    Damn… Time to kill sheep folks

    Look at the shorts in combined US$ COT

    THIS is thru TUES

    http://content.screencast.com/

    %OI
    http://content.screencast.com/

    Net spec + net Small trader
    http://content.screencast.com/

    Hedgers net long- or smart money
    http://content.screencast.com/

  • http://evilspeculator.com molecool

    You gotta love those charts… hey, did you email me??

  • chronographics

    Hey CS lots of big boys playing on the EURJPY cross atm. Think this will continue till we get a significant break on dollar direction then the yen will go with it as well and we will play catch up in DX . have a look at daily yen chart .

  • Joe_Jones

    I like mutton grilled on the BBQ with thyme, rosemary, served with mint sauce on the side

  • chronographics

    Steak with bearnaise sauce or is that Bernanke sauce?

  • Joe_Jones

    Covered shorts

  • volar

    AND OIL…

    holly crap 3x more spec than 08

    http://content.screencast.com/

  • volar

    just did

  • amokta

    Im out of everything, even oil longs (made ~$100 on 2 round trip etf trades of approx $8000, at least no loss – was buying high and selling slightly higher!!)

    I dont know future, but surely spx will bounce on monday (it is now, but lets trade monday)

    By the way, i seem to be having generally more successful trading recently – im sure its only a coincidence that CS (and Volar & others) started posting here at around the same time :-) Of course Mole is always around, but new angles from new folks!

  • jigdaddy

    they sure know when to pop that viagra

  • rg64

    higher low as of now….huge huge buy volume end of day.
    Could be as low as she goes. Only a gap lower monday or complete breakdown would stop for new highs. MADC in uptrend confirming the higher lows.

  • Joe_Jones

    The thought almost made me barf.
    😉

  • rg64

    not quite…..moon shot up into close

  • BobbyLow

    Really? Do you think it could just be weak handed Bears too scared to be short over the weekend?

  • chronographics

    can understand that especially if the steak was from the bulls rump :-)

  • EvilTrader

    I think oil is posed to at least a 10-15% drop as soon as Lybia situation stabilizes, and supply risk vanishes.

    I wouldnt be long oil now, for the short term.

    Shorting is risky too, because thing can get worse before getting better.

  • Joe_Jones

    Don't mind the steak. It is the thought of the chairsatan's sauce on it that is horrifying.

  • Joe_Jones

    I would force the Squid to eat it.

  • OldChicago

    It seems that all the rats on the Evil board have covered their shorts for the weekend :) So they said …

  • convictscott

    Volar do a guest post on this stuff. This is the exact right time for a demonstration how powerful COT (Instead of the crappy daily sentiment index that EWI uses) is

  • rg64

    Maybe….but it does not look like that

  • convictscott

    Thats chrono, you can see clearly that the price action on usdjpy is hard to understand, and eurjpy is the obvious driver here.

  • convictscott

    unusual for you to post on a down close day 😉

  • volar

    Will do. Mole is setting up the admin deal. Timing is good really good.

    Interestingly we kindoff have buy signal on stocks/ and the dollar?

  • convictscott

    I think stocks are inconclusive. To me the last few times the bulls have seemed ready to slaughter the bears they have not done so.

    To me this fits with the thesis that we have either made a major top, or we are about to (double top or similar). In order of probability IMO the top 3 options are

    1) We break the high of today, go up, and that attempt fails either at the old highs or just before, then fall
    2) We break the lows of today, and fall hard for a while. Game changer.
    3) We break the high of today, new bulls rush in, the dollar cant rally at support, and its game OVER for bears and dollar bulls. Bernank wins. Its a reasonable probability but I just cant see it)

    I dont really have any logical reason for placing (1) as the highest probability option, just bias and gut feel that this would fuck the greatest number of people.

    Similarly the bears have been clown raped so many times their asses are sore. The bears cannot win from here, it has to be the last buyer buying that will end the trend.

    I see *evidence* that we are approaching or at that point, especially yesterday when the bulls really should have at least made an attempt at new highs. The lack of any sort of attempt is very disturbing for the bullish case.

    So what do we know for sure? We know that the market *feels* different, is behaving *different*. VIX @ 20 is a diffrerent animal IMO. This sort of volatility indicates a topping process underway, whether or not we are there yet is unclear

  • convictscott

    Agree

  • convictscott

    Can you explain the %OI chart :) Very interesting stuff

  • rg64

    I posed yesterday on a close up day saying I thought today would be down.

  • Joe_Jones

    This is what you said:”
    Quick pullback tomorrow?

    Looks likely….for another higher bottom then blast off to new highs on all major indexs. Be ready”

  • volar

    I think u r correct in that things are different and that the bears cannot win from here, it has to be the last buyer. Its acting diff. bc bulls that want the dip are eager, and impatient bears see some light in the tunnel.

    I think topping will take a few months- and this perfectly stated *inconclusiveness* is all that matters. Livermore said, “when we tried to make a new high and no longer could.”

    So 2 thougths (like medium term)
    We could have a big ass ABC here and the bears get 60 or so ES points- whoopty doo that just means the top will be higher and take longer bc the bulls that have been waiting for a dip will finally step in

    If we go to new highs then we may have a chance of forming a top sooner as buyers will be forced to buyer higher

    But i think the dollar could rally a bit before equities turn- I say that because that disconnect can last a few months. Equities continue to make highs and the dollar has been in a megaphone since basically 07

    So equities requires patience and i think seasonality will need to show up. OR basically MAR is not a good time to be a bear, like say spring or fall. Never December.

  • rg64

    Yes I know what I said…so far so good. Maybe Scott should check next time before posting some off the wall comment.

  • volar

    Oh that is the Net spec contracts divided by the total contracts outstanding- it helps bc liquidity has increased so 150K contracts in 2002 about = to 300K contracts today.

    It clears things up. Also this data includes options and that activity has picked up over the years. The options are “delta” adjusted so 2 short calls with a -.5 delta= 1 future. So its not total option open interest.

  • convictscott

    “Livermore said, “when we tried to make a new high and no longer could.””

    This is *all* that matters at this point. Either we do or we dont, I wont guess, but just follow along whichever way happens

  • http://evilspeculator.com molecool

    You mean – you are normalizing the data to account for the increased liquidity – right? That's exactly why I use ratios on various measures – it takes care of that implicitly. Especially on very long term charts it avoids jumping to conclusions. I should do that with my ISEE chart which has been swinging wildly as of late.

  • http://evilspeculator.com molecool

    Ha! EWI only uses sentiment measures when it back up their outlook – and even then thy get in way too early.

  • http://evilspeculator.com molecool

    I like seeing to smart guys swap thoughts – very much makes up for those 'he said that I said yesterday that he said' comments 😉

  • convictscott

    DSI is complied by Jake Bernstein, who wrote several books I read, which were utter tripe, I mean terrible junk. Google “jake bernstein scam” and you can see clearly his data isnt to be trusted and neither is he.

  • convictscott

    Thats crazy stuff

  • http://evilspeculator.com molecool

    I was talking about the ISEE mate – different chart 😉

  • volar

    Similar… it is more simple. If 100K cars used to be alot in the DX- now its not, bc more people are not using FOREX but futures (think of tradestation/backtesting/algos etc) allows for liquidity. Basically it just tells you that if there are 1MM contracts outstanding how many is net spec. Some markets useful, some not so..

    But I do Normalize the ISEE- i had those bastards send me the daily volume in an email for a while. i dont have much data but it helps. I use a 5 day sum of calls/ 5 day sum of puts

    However I was able to normalize the CBOE data back from 2003 and it helped when i made this chart

    http://content.screencast.com/

    So basically a low vol holiday does not shew up

  • volar

    I dont calc the options data- CFTC does

  • skynard

    Stalemate in copper last few days with doji's. That must mean something?

  • convictscott

    Outside day = longs got screwed AND shorts got screwed. Outside days start happening very close to, but not at the end of, trend.

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

    SPY was an inside day, correct?
    http://stockcharts.com/h-sc/ui

  • raised_by_wolves

    No. While the open and close were inside yesterday's open and close, the high and especially low were outside yesterday's high and low.

  • Clint

    Probably could be either scenario. If this would have a Mon or Tues I would have jumped in short and held.

  • OldChicago

    $VIX is also showing a triangle on the daily. USD has touched prior low. Oil is at 52wk high, but overhead resistance is around $107-$110.

  • raised_by_wolves

    Risk/Safety

    Relative to SPX:

    http://content.screencast.com/

    Channel:

    http://content.screencast.com/

  • convictscott

    ¤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„¸

  • convictscott

    Inside day = Price makes a lower high AND a higher low. Yes

  • convictscott

    sorry SPY was not an inside day. But SPX was. Take al charting of the real index, SPY candle in this instance is an illusion caused by opening time differential

  • OldChicago

    The Egyptian dictator's exit took at least one more week after he said he'd step down. Gadhafi is still fighting…

    Comparing the rise of gold from 113 – 139, I think Crude oil has more room on the top. We may chop around until we get there.

  • convictscott

    Good. Silvers non-confirmation with gold (and the potential bearish setup on gold) indicate caution from the longside but still no reason to get short. Basically Id be very aggressive banking profits, which is what you have done

  • Brishort

    Mole, what web tool do you use to do the screengrab and upload an image at a regular interval. Not market related, I may need such a tool for work.
    thanks,

  • Brishort

    Volar these are sooooooooooooooo excellent dollar COT charts! Bravo!