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Figure Pointing
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Figure Pointing

by The MoleNovember 2, 2011

Whenever things hand in the balance and I seek more clarity I turn to my trusted point and figure charts to fade all the noise. For one it’s a lot more productive than wasting time on trolls posting outrageous claims and cynically distorting my prior analysis. Don’t even think for a second that I will condone anyone marching into my evil lair and crapping on my carpet. This is not a democracy and I will ban your ass and erase all traces of you quicker than you can whistle yankee doodle. The only thing I care about is banking coin – for my readers and of course for myself. That is why we here after all, n’est-ce-pas? All the rest is just background noise and it’s part of the pleasures of hunting in a rat pack. Whoever crosses the line however is swiftly dealt with – don’t let the door hit you in the ass on the way out. This is Evil Speculator and I maintain a zero patience policy when it comes to dealing with distractions. Now on to the charts:

Let’s start with the SPX – I was rather elated when I saw that my P&F chart pretty much confirms what I already suggested earlier today. The bullish price objective is a bit dinged up but thus far remains intact – BUT we did paint a high pole warning and 1200 appears to be the inflection point that separates a violent short term correction (for the time being) from a lot more downside pain looming ahead. Those are the facts and if we cross over to the dark side I want you to be prepared.

Copper is actually lagging behind equities and we are two boxes away from painting a high pole warning. So at least on that end we still have a clear bullish price objective. Again, two more boxes down and that warning would be effective.

Silver is also  painting a high pole warning but just like the SPX the bullish price objective remains intact thus far. Silver has actually been lagging behind gold and that is interesting in itself – I won’t post a gold chart but take a look at the gold/silver ratio:

Actually I was lying – I’m going to show you something better – the silver/gold ratio mapped behind the SPX. Those are some sweet divergences, don’t you think? Anyway, what I find fascinating (and what the P&F chart inspired me to look into) is that the ratio is actually pointing up right now. It has been painting divergences ahead of every single major correction in the past few years, so I find this fascinating. But no – I am not biased to the upside as I, unlike some of the trolls who occasionally show up here, know how to put on a short trade.

Back to P&F charts – here’s ole’ bucky and it has been bouncing back in a big way since the BOJ Yen intervention. Banzaaaaaiiii! We now have a triple top breakout and although the chart doesn’t say this anymore it was preceded by a low pole warning (or should have been unless it moved too fast). If ole’ bucky stays above this support line (in blue) it could make things very uncomfortable for the longs.

Here’s a pretty bearish chart – my NYMO/CPCE ratio. Frankly I have not looked at it for a while and I was a bit surprised when I saw it today. So, yes – there is definitely some potential for a more thorough medium term downside correction.

The NYSE Bullish Percent oscillator is actually very related to P&F charts (go look it up) – so it makes to show it here. Yes, we are in pretty high territory but that has not stopped the tape from bubbling higher in the past. What I would expect ahead of a medium to long term correction is a pronounced divergence – and right now I see none of that. So I’m slapping the inconclusive label on it but wanted to share it anyway.

Now here’s a chart you AH traders can sink your teeth into: The hourly spoos is currently tickling a NLBL at 1226.25 plus we have two more valid hours left. If we close above it could be good for a push into 1240 and perhaps higher. So keep your eyes on that one if you’re feeling sleepless and ready to get in early. Of course a failure here could have nasty consequences tomorrow, especially if we drop through 1216.5, our current NLSL.

If we push higher overnight that does of course not mean we are done correcting to the downside. It all depends on the energy of the move and if we manage to push above those prior support levels I have been pointing out on many occasions (e.g. on the weekly and monthly SPX charts). If we drop lower from here I would of course keep an eye on the VIX as the may just get a VIX buy signal (noobs: relative to equities) by the end of the week.

That’s all for tonight – I’ll see you on the others side.

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://practicalt.blogspot.com/ Gold_Gerb

    hang…(cough)…hang in the balance.

  • Anonymous

    Does CC post here at night? corporal?

  • http://borasky-research.net/about-data-journalism-developer-studio-pricing-survey/ M. Edward (Ed) Borasky

    Interesting! I’m a huge P&F fan – have been for decades. Yes, a drop below 1200 would be ugly given that the next support level down is 1080. But really, given the VIX numbers I’ve been seeing, I wouldn’t touch this market with anything except a co-located server and a pattern recognition algorithm … I don’t see anything in “traditional” technical analysis, even point and figure, giving a sane way to trade this.

  • http://evilspeculator.com molecool

    LOL :-)

  • http://evilspeculator.com molecool

    ANYONE looking at the spoos tonight?

  • Anonymous

    yep

  • http://evilspeculator.com molecool

    Nice – I thought I was playing this all on my own. Skynard to the rescue? Do you see anything interesting?

  • Anonymous

    i m seeing too…looks weak to me for tmrw..

    usually i think – futures down mean – day wud be up. and vice versa..

  • http://evilspeculator.com molecool

    What looks weak? We just pushed above the 25-hour SMA. Granted, those candles are a bit on the slow side but if we can build support here we may have a platform tomorrow for a push into 1240.

  • http://evilspeculator.com molecool

    Now what really looks weak is the fucking AUD/JPY – everyone seems shell shocked and wants to touch the Yen with a ten foot pole – LOL :-) Just like last time with the CHF, remember?

  • Anonymous

    Lol, been paying attention to that 1230 resistance level and looks like we could break it. Something unusual with the bb’s with an oval looking expansion. Do you see that?

  • Anonymous

    wont be so easy money back for stuck longs i think. And Usually it goes under 20 ema first..not just pierce and back..

  • http://evilspeculator.com molecool

    No, I don’t see that – on the hourly? What chart are you using?

  • http://evilspeculator.com molecool

    A bit more roasting you think? :-)

  • Anonymous

    Currently using TS and it was on both the hourly and 15 min. After switching the aggregation period a few times it snapped back. May have seen it before just i glitch.

  • Anonymous

    roasting or toasting..we’ll see…but IT move up is overdone I see…

  • http://evilspeculator.com molecool

    Alright, have a good night everyone – keep an eye on the E-Mini for me :-)

  • Anonymous

    Alrighty, waiting for that first candle to close above 1230 so insure some gains by repositioning;)

  • Anonymous

    by selling u mean?

  • Anonymous

    No, long from 1220 tonight and would like to move my stop is all.

  • Anonymous

    ok..

  • Anonymous

    Wow! /ES with some conviction, 1230 breached boss;)

  • http://evilspeculator.com molecool

    That’s the way we like it.

  • http://evilspeculator.com molecool

    Are you in Europe or sleepless in Seattle?

  • Anonymous

    Tonight sleepless in Detroit;)

  • Anonymous

    Can sleep better now, large call position on;)

  • Anonymous

    well done my friend! i missed the initial pullback and never got another one to get in comfortably..  should be buying breakouts instead of pullbacks i guess? 

  • Anonymous

    Tried the same trade yesterday and stopped out. Just did not think those bulls are gana give up that easy are ya?

  • Anonymous

    Careful here – we had a 5 min volume spike which generally indicates one more high and then end is nigh

  • Anonymous

    Hum, I do see that spike. What is the significance of that? Is it less volume from previous volume?

  • Anonymous

    Thanks for that;) After shaving a few stopped out @ 1233.

  • Anonymous

    I’ve done several posts on the significance of a 5 min chart volume spike that spikes to at least 300% of the normal, and then falls back in a single bar. I only pay attention where it is a period of one way traffic, like the solid upmove on the 5 min es z1 chart just now.

    If you think about it it has to be capitulation of one side or another, which typically denotes latecomers into the trade. Latecomers into the trade are idiots, and also weak hands, so they jump easy.

    When I have a trade on based on a 60 min or 30 min chart, and I am well in profit, after I see one of these 5 min spikes, I wait for the next or next plus one fresh high and start scaling out some of my position.  

  • Anonymous

    Nice exit mate

  • Anonymous

    above 1237 it’s gonna rip..

  • Anonymous

    Hum, so you use it as an entry/exit type of strategy? Could this most recent up move be another buy or bigger idiots?

  • Anonymous

    Any reason for this move up spx – greece is in worse direction(referendum going ahead)

  • Anonymous

    Should be long again after that volume spike, ha?

  • Anonymous

    rubber band action;)

  • Anonymous

    Ok!

  • Anonymous

    If this thing pulls back to the lower BB – Back on;) Good volume!

  • Anonymous

    Long 1233.75 3pt stop

  • Anonymous

    Euro coming up on GG’s 1.382 road block;)

  • tradem4alpha

    Now the S&P futures daily candle looks like a doji. Usually when breadth is so atrocious (ADI, >98% of liquid stocks have today’s low95% all the day, I exit positions 1 minute before the close; given that yesterday VIX was also up a lot, my options profited from vega also, not only from delta.

  • Anonymous

    Yesterday was a pretty great day for me with some good timing.  Covered and reshorted at opportune times while holding core short position.  Scalped an extra 130 Dow points over the absolute move on the day helped I must admit by that big zerolite divergence which meant I was only on half position when the Greek Pantomime of “Oh Yes he did, Oh No he didn’t” struck.  Added back shorts on the spike and in AH.

    I’m getting more in tune with the zero, I think sometimes I have to accept that you can’t expect it to provide a perfect roadmap to each day’s trading.  But when big divergences occur they are usually obvious enough.  As Mole has pointed out to me, I need to get over the itch to always have a trade on.

    Position Update: holding short, no change to overall view from yesterday.  Don’t think anything has changed in the macro picture despite the market making very emotional “news” based decisions which I am ignoring.  Think the fundamental backdrop remains a significant headwind for equities, and the italian situation is going to become front and centre sooner rather than later.   I cannot attempt to trade on each piece of greek news, so instead I am focussing on the facts.  Which appear to me to be that whatever way this gets cut, whether G-pap survives and there is a referendum, whether the communists get in or Nana Mouskouri goes back and tries to sing everyone back to happiness, the uncertainty pertaining to Greece is not good for the market and removes the all-systems-go backdrop that supported the rally.

    My target remains unchanged from last week with target 1 being 11,500 minimum.  At this stage however, I am tightening stops to just over the premarket implied fair value high at 11,860 as if we don’t make the move soon, I am likely wrong here, and I am conscious that Bernanke is active in the market today, so god knows what could happen, and even though I am playing for the bigger picture I have nearly 600 points in profits overall here and want to keep at least 500 of them.

    Good luck all.

  • Anonymous
  • Guest

    inside day up today probably?

  • Anonymous

    they took it?

  • Anonymous

    inside day up today probably?

  • Anonymous

    Yep, 3.75 points. Bastards! Net 9.25 pts;) Tend to overtrade, it’s one of my new years resolutions.

  • Anonymous

    k….

  • Anonymous

    I am generally getting an uneasy feeling regarding the markets right now, despite the futures being up

  • rhae

    that is what it looks like to me… provided someone does not toss a monkey wrench. 

    Trying to decide how high?  I usually say, as high as it goes… But that is no fun. So SPX 60m strong resistance levels are at 1230 and 1254

  • Anonymous

    long the spoos @ 1229.25 with a tight stop

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

    EUR/USD 1.378 – hourly.
    resistance at the 50sma.

  • Anonymous

    Why? -i.e why now?

  • Anonymous

    I too am thinking this is a staller here

  • Anonymous

    Angela Merkel is getting a right royal Pap smear

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

    aren’t you on probation?

  • Anonymous

    Thinking we take a shot at the gap which looks like /ES~1245 area. What do you think? 

  • Anonymous

    Nice job mate!

  • http://thefxspeculator.blogspot.com Onorio

    AUDUSD 1H RTV sell

  • rhae

    could be…I usually watch momentum, so any sign of exhaustion might be a hint. I really do not know with this pocket picker market

  • Anonymous

    first to admit i don’t have a strong thesis here. since the big shake-out to 1220 we been going up with small pullbacks – see 2 or 5 min chart. figured it may be one of those small pullbacks. overall saw pretty good buying all the way, copper and AUD looking ok. also USD and bonds are in decline all night.  most importantly, my risk:reward was good there. looking for possibly 1240 or 1245, but will be ratcheting my stops up, in case any shenanigans :)

  • Anonymous

    Can anyone tell me what the acceleration line is for spy daily? Thanks

  • Anonymous

    thanks mate, lets see how far i can ride this out :)

  • Anonymous

    bernanke @ 12:30 EST

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/993ab4a3-a868-4325-81b9-965336d05ccf/2011-11-02_0936.png
    T has worked again..or is working so far Im holding on to the buy from yesterdays close.

  • Anonymous

    Thanks. I think everybody is trading on diff timeframes, and maybe different trading aims, so whats right for one might not be appropriate for someone else :-)

  • Anonymous
  • Anonymous

    stopped out at +2 pts..  i’m very risk adverse these days :)  may reposition later..

  • Anonymous

    Out of dowchem long at 6% profit since 2days
    My stops maybe too tight at $28, but i dont care, i can always trade again (new thinking here!)
     

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

    just be careful mate and use your discipline.
    here is a recent example, of a good looking triple bottom spot – then rolled over down into the Oct low.

    http://i44.tinypic.com/s2h576.jpg

  • Anonymous

    Bounced right off Mole’s trend line;) Hehehe!

  • Anonymous

    thank you sir!! you my friend are a good person!

  • Anonymous

    Why, i aint dun nufink govner :-)

  • Anonymous

    no fucking momentum !

    ES

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

    agree.  sitting between 38 & 23% fib retrace.
    and the only bullish T I have is 50% expired.

    then again, it’s still amateur hour – suck in the bears, and then split higher.

  • Anonymous
  • Anonymous

    Keep watching the “imaginary” trendlines on the bottom hourly ZL

  • Anonymous

    IMO this action is more bullish than if the market were to gap up 40 /ES points;) Seems more methodical. OK, Ametuer session over!

  • Anonymous

  • Anonymous

    Looks like the battle is going on in FX: USD 77, EUR 1.38 & AUDJPY at Moles 80.99 level.
    Not to mention the NLBL in ES 1229.

  • Anonymous
  • Anonymous

    I have a target of SPX 1255 or 50% of retracement of the down move by EOD

  • Anonymous

    Again, that dang (1230) battle line!

  • Anonymous

    Guys be very careful here, some very strong divergences.  Equities continue higher while the EURUSD is going in the opposite direction.   Does this mean strong institutional buying as opposed to reflexive risk-on/risk-off knee jerk reactions or something else?  Is this a ramp & camp in advance because big money knows that Ben is going to speak soothing tones soon?

    If I didn’t already have a substantially ITM position already, I think I would be steering clear here until the direction becomes clearer.  Leaving stops at 11,860 but I’m already feeling they are going to be taken out post-Fed.

  • rhae

    SPY 10m just hanging around near the bottom of yesterdays gap… maybe Bearnake can fix that? maybe not…
    http://screencast.com/t/JVm2obRd

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/00374a88-996e-4f8a-a3e5-e37ec9e83150/2011-11-02_1046.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/0827e3ad-dab0-4c81-85b8-e68f7b8cd391/2011-11-02_1045.png
    I have to say eur/gbp is showing real moves before equities react the dow was down monday but the eur/gbp puke on itself monday. Come Tuesday equities then puked. 

  • Anonymous

    What is Ben going to do, buy another Greek Island :-)

    spx going up, but lets see if its a sell the newspaper, buy the ipad moment.

  • Anonymous

    Stopped out taking profits and moving to sidelines. 

  • Anonymous

    whipsaw day?

  • Anonymous

    looks like uptrend d day so far

  • Anonymous

    Holding long until a failure swing presents itself on the Zero;)

  • Anonymous

    woudn’t EUR/USD always move in the opposite direction? Isn’t that just normal?

  • Anonymous

    damit, missed a turnaround while in the meeting :)  still looking for 1240-45 on the spoos, but may end up  with a doji for today

  • Anonymous

    Got it, although the trend line broke it did not affedt bid/ask and the div actually looks like it is being reinforced;) Needs to stay above -0- most importantly!

    How’s that sound? Anyone?

  • Anonymous

    If this div holds up or not, big move either direction;)

  • Tronacate

    AUDUSD…….watching carefully…….lower high

  • Anonymous

    continuation pattern on 30 mins…will go up …might close hod..

    but we know smaller timeframe patterns can be unreliable..

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

    SPX symmetry observation

    http://i40.tinypic.com/28mliky.png

  • http://evilspeculator.com molecool

    Yes.

  • Anonymous

    When this canoe capsizes, someone will get their toes wet.
    Until then, zzzzzzzzzzz…

  • Anonymous

    FED in a few seconds

  • Anonymous

    There you are, Good morning;) Forgot PST

  • Tronacate
  • Anonymous

    Suprisingly held my ground;) (So far) Thanks to Zero that is!

  • Tronacate

    Final FED conclusion…….”well I guess we should have kept our big noses out of it”

  • Anonymous

    5 touch points on the upper (imaginary) trendline of the bottom Hourly ZL, over the past two weeks (4 touch points on the smoothed hourly, above)

    FYI

  • Anonymous

    They closed the gap down below;)

  • Anonymous

    SLV just entered into gap territory, but hardly closed it
    PMs behave differently though, i suppose

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

    (GG doesn’t like the /ES)
    hitting my lower bollingers and 23.6% retrace level line.
    continuing new lows this afternoon would put a bottom target of unknown level
    around midnight EST.

  • Anonymous

    Scare the children time????

  • http://thefxspeculator.blogspot.com Onorio

    Aussie faill to hold 1.0270 will lead us to 1.0120 area

  • Anonymous

    Does Ben B speak at 2pm?
    Might be some sort of news/rumour sell/buy situation?

    My new trading motto: “I know not what tomorrow brings”

  • Fearless

    Your new trading motto should be “ignore the news completely” and “stop trying to guess what will happen”. Just trade the setup, long or short.

    Today’s move is a sandwich so far, just how I liked it. Keep it in the green below 1250 and I will go 90% short at the close..

  • Anonymous

    Thanks for the setup fearless…I have been watching that setup today

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

    Watch out for volatility now…

  • Anonymous

    they better hold er right here then gg or oooopsie lol

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

    there are sooo many possibilities.

    another reason to hang out here. wash away the bias.

  • Anonymous

    mole u mean w uncle ben speaking….he has such a soft soothing voice….lol

  • Anonymous

    yes i have made no trade today….a record…lol

  • Anonymous

    nice change of plan – as the market is..

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

    I like it.
    it’s in harmony with the BPSPX flipping south yesterday.
    (no guarantees of duration, take it day by day)

  • rhae

    SPY 15m channel tracker… which time frame is the best?  gotta be a million opinions on that… day trader, scalper, swinger,  risk tolerance etc.  But for short term entertainment I like  the time frame that fits the regression channel  best.  Some overshoot and some   fail to transverse…. and sometimes the porridge is just right. Of course that can change.

    SPY15m   drawing anchors subjective at major and minor swings… hope not to confusing. For now it looks like purple channel just bobbing around in the larger down channel
    http://screencast.com/t/2yJ6iWxVFc8

  • nyse
  • Anonymous

    Has the hourly formed a div now??

  • Sam H

    Hi, my first post here… Can somebody please explain this zero to me: which one (of the divergences) is it? My red lines or green line(s) (I have not drawn the green ones, but it is obvious several can be drawn)? Thank you.

  • tradingmom

    Big triangle on SPX 60 min about to resolve itself…

  • tradingmom

    sorry — here’s the chart
    http://screencast.com/t/zKUi1S4OTM

  • Anonymous

    Watch the wrap up videos with commentary and you’ll probably understand it better:

    http://evilspeculator.com/?cat=42

  • Anonymous

    Thanks Fearless, good advice, which i need to stick to

    Anyway, lets see how the sandwich trade goes!

  • Sam H

    Thank you. I did. So, regarding this red lines (negative divergences) I draw, the green one (positive) admin draw and several green lines that could be drawn, which should I look at by your opininon? I mean, ex-ante not ex-post…

  • Anonymous

    “The Bernanke shuffle”

  • Anonymous

    lol

  • Anonymous

    Divergences on the 5min usually lasts for up to 24h.On the hourly I would say that they already played out due to a higher SPX high without a higher hourly zero high. We got a big sell off after.

  • Anonymous

    or it’s a low right shoulder, or we wait until ~1250 for nice right shoulder (ala Fearless)

  • Anonymous

    bernanke: “some elements of bad luck impeded recovery.” …lol

  • tradingmom

    Agree — I’d like the looks of that better.

  • nyse

    Mole, You’ll like this: http://goo.gl/jdYA4
    “The game in Wall Street: and how to play it successfully By Hoyle”

    Old school book 😉

  • Carl V

    This market is vicious today- 4 win but 7 losers, and am losing money!! My fault, I should have patiently waited for a zero signal which hasn’t come so far. Better to do nothing! I’ll have a beer. Probably things will become clearer if we get to 1250 (ES)…

  • Anonymous

    I was looking at that too. Thinking of a buy above 1250 which is sitting on the 50, or a sell below 1200 which is sitting on the 200. Not touching it until it does break out though.

  • 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://evilspeculator.com molecool

    Overtrading – never a good idea. You cannot force it. Learn from the kangaroo steel rat – introduced in my next post.

  • http://twitter.com/500spx Pedro Alexandre

    SPX is very very very nervous. It’s like Greece. We need a very good correction. But….there many interventions in this markets. All people is in stress mode.

    So make it simple.
    Make some blind system.
    http://spx500.blogspot.com/