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End Of This Easy Ride?
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End Of This Easy Ride?

by The MoleJune 9, 2017

A final reminder that equity futures have now rolled into September, which is the official front month contract for the next three months. Time flies indeed! Before I know it I’ll be shopping for Christmas presents again and bitching about the cold weather. In the interim we’ll have to earn our keep, so let’s see if the brand spanking new ESU7 contract offers us a decent entry opportunities:

2017-06-09_VIX

Before we get to that however let’s do a quick detour and have a peek at implied volatility. The VIX is still hanging around in extremely low territory and if you think that this means equities will be correcting anytime soon then I suggest you take a  look at how long it took a decade ago. Equities continued climbing for almost an entire year until all hell finally broke loose. And remember that the Fed has acquired a whole new bag of tricks since then.

2017-06-09_VIX_easy_rides

The reason for the title of today’s post is this chart which shows us what I have termed ‘VIX Easy Rides’, referring to the sections marked in green that precede significant lows and a drop of the VIX’ ROC back below the 50 mark. The easy ride usually ends when the ROC drops through -50 and it usually does. Not always however which is why I’m frankly not sure if this is just a quick tick up or if IV’s volatility (i.e. implied volatility’s realized volatility) will continue dropping back from here.

Historically it seems that once the -25 mark has been breached we enter the cyan periods. And those are a lot harder to read. The tape usually continues higher for a while but can take quite a few creative detours on the way. Which means long campaigns are now getting more tricky because they are becoming more volatile. Makes sense, right?

2017-06-09_spoos_volume

Here’s the volume profile on the 60-min E-Mini – I’m seeing a pretty pronounced selling cluster right above us. So the whipsaw may continue for a while and I’m not exactly eager to get exposed here and would prefer a quick stab lower. If we get that then I may grab a long position on Monday.

2017-06-09_spoos

Another reason for my hesitation is that I have seen a good number of very promising looking setups crash and burn lately and what they had in common was that I was taking entry near the recent short term highs. So another spike low would be much appreciated 😉

Of course the downside of not being long here is that I am risking missing out on a significant move to the upside. As you can see the Bollingers on the hourly are very tightly compressed and that usually means a release is coming. Which of course may be to the downside, unlike IV realized volatility is direction incognizant.

2017-06-09_spoos_volatility_hour

An alternative view on realized volatility – here I’m looking at cycles. Once again it seem an RV expansion is just around the corner. Unfortunately I will have to err on the cautious side and wait for a better entry formation.

Campaign Updates

2017-06-09_silver_update

Silver and gold got stopped out yesterday and have since continued lower. I don’t see any technical support here until we drop back down into 1259 or better yet 1249 where we’ve got the 100-day SMA. And even that one has been completely ignored as of late, so let’s just say we don’t when and where precious metals will find a floor. Not a good entry candidate at this point.

2017-06-09_soybeans_update

Soybeans is looking good and I’m moving my stop up to -0.5R. It’s too early to go for break/even and I’m pretty sure that we’ll see a shake out attempt here in the near future.

2017-06-09_EURUSD_update

I’m happy to see the EUR/USD lower but it hasn’t stopped me out just yet. And frankly I have some doubts that it will if those NLSLs on the daily panel continue to provide support. Either way the EUR is still looking bullish as heck and Draghi’s speech yesterday has done little diminish the appetite of the Euro bulls. At best we’re talking a short term correction here and I’ll be sure to take full advantage of it today (by cleaning out an ATM or two).

2017-06-09_USDCAD_update

USD/CAD is also still in play but I really do not like all that volatility which seems to come out of nowhere. For such a polite country the loony seems to be acting rather inconsiderate and I thus expect an official written apology by Mr. Trudeau personally.

2017-06-09_1534

Alright that’ll be it for this week. See you all on Monday! Prost!


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.
  • OJuice

    And the widow maker still chopping around. Looking more and more ready for upshot at least.

  • saltwaterdog

    Re Beans campaign… 12p EST Crop Report

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

    Hourly chart set-up. Re: Mole’s post from two days ago I believe.

  • Tomcat

    I can’t believe what has become of this blog when we fail to mention that the market King (aka Gartman) has “now” turned short “again”.

  • ridingwaves

    just when XLF breaks out…..Brilliant
    https://www.youtube.com/watch?v=NBh895KdXAU

  • ridingwaves

    Risk Takers…DCTH at .072….float has traded 1x already, 2x possible today….
    250 million shares in first hour is just plain nuts….

  • ridingwaves

    IBB and XBI poised for breakout….man this place is dead Jim……adios….

  • OJuice

    That’s nuts. It it’ll be fun to watch as a casual observer. To see how it resolves.

  • OzarkHillBilly

    Hey Mole, referring back to yesterday’s post, how random are random number generators these days? My rudimentary understanding is that they are better than they used to be as far as being unpredictable. I was just wondering how it would affect the script you were running for those charts.

  • ridingwaves

    a close right here at .0820 would torment bulls and bears alike thru weekend….so far its a buy the rumor event..

  • OJuice

    The AH gap that was closed overnight and now /ES and /NQ at opposite ends of the spectrum. Bizarre.

  • ridingwaves

    NQ might be blowing off steam so to speak but divergence city for sure…XLF is now kind of taking lead, if it gives away, false breakout and red spx

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

    Dude,
    it’s the FULL Moon.
    😉
    {GG ducks}

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

    or 6/9/17
    which is 6, 6 inverted, (7-1) = 6

    😉

  • ridingwaves

    if it was the 4’s I would be very worried…

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

    Goldman opened it’s mouth:

    “Goldman’s Robert Bouroujerdi writes that “while FANG has dominated investor focus, the nature of the acronym has expanded more broadly to encompass mega-cap tech. Indeed, the bigger story in our view is FAAMG – Facebook, Amazon, Apple, Microsoft and Alphabet – a group of five stocks which have been the key drivers of both the SPX & NDX returns year-to date. This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives (e.g. FAAMG’s realized volatility is now below that of Staples and Utilities).”

    I prefer Summer Soltice a week from Tuesday, but hey – whatever works.

  • ridingwaves

    vix instruments running ahead of vix…hmmmm

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

    XLE, too hot. Out $66.33.

    7 calendar days, 1% gain.

    nibble, nibble.
    Next Thousand Trades.

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

    what does that mean? I don’ trust that VIXEN.

    fear is not far away.
    https://uploads.disquscdn.com/images/9ce040ee41bf10295777475536f2795962150bdc3d35f524f688eba531823606.png

  • http://evilspeculator.com Sir Mole III

    Pretty damn random and it can be configured. Here’s the docs:

    https://docs.python.org/3.2/library/random.html

  • ZigZag

    LOL not anymore on that last sentence. Down over 3% so far.

  • ridingwaves

    tried small lot at .053

  • ridingwaves

    XBI was hammered at resistance with tech selloff.. still showing lots of strength

  • Tomcat

    Wake me when we get -1% in the $ES. Or should I say “if”???

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

    Must be the NEW BOBBY-LO curse.
    ;-D

  • OzarkHillBilly

    Thank you. It’s more or less along the lines I assumed. I only know a little because I did some research on electronic gambling machines a couple of years ago.

  • Mark Shinnick

    Well, I had some upside objectives hit earlier and reversed from there….so presently short.

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

    ..had a friend share this chart with me 3 days ago.
    Alphabet.

    Terry Laundry never did like T’s inserted into anything but Major indexes.
    GOOG is fairly large so I think he would approve. RIP.

    https://uploads.disquscdn.com/images/bb75dfd6eafe8942e186594ff2340d82712949d36baeeae65c806d097e631725.png

    Have a great weekend.
    -GG

  • Tomcat

    Good for you Mark

  • Tomcat

    I thought T’s apply only in accounting

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

    wet one’s are the BEST.

  • Mark Shinnick

    …will the water again just end up leaking out the trade :/

  • ridingwaves

    S .064…..

  • ridingwaves

    took small L CL position via UWT…1/4

  • Mark Shinnick

    Ever wonder what it would take to really scare the pants off the Children of the AAPL ?

  • http://evilspeculator.com Sir Mole III

    Have yourselves a great weekend everyone!

  • Yoda

    you too

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

    Mole in doing my weekend reading I see you were hoping for a spike low. I guess from your lips to God’s ears – was that the spike low you were looking for?

  • http://evilspeculator.com Sir Mole III

    Not hoping – waiting – completely different mindset.

  • ridingwaves

    tech sell off almost feels like some kind of accelerant to get rest of market down

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

    Bi-Furcated Market.

    I just love how two days can wipe out 2+ weeks!

    EDIT: Gartman says it *should* be wise to buy. LOL.

  • ridingwaves

    bleeding into other sectors of which I have active trades……bastards…
    XLF still showing strength….
    this could all be about fed move on wednesday
    my GILD and oil long buy are looking good though

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

    I like it too, Children of the AAPL, seven weeks of delusion so quickly slammed away.

  • ridingwaves

    I want reparations….

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

    ROFL!

  • http://evilspeculator.com Sir Mole III