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FOMC Day Momo Musings
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FOMC Day Momo Musings

by The MoleOctober 11, 2017

As if we hadn’t already suffered enough lately, today’s event roster includes this month’s FOMC minutes being delivered around 2:00pm Eastern (18:00 GMT) plus ECB board member Peter Praet delivering a speech shortly after. Which means markets across the board will most likely be stuck in nail-biting hibernation mode until then. To keep my rowdy rabble entertained I’ll do a quick and dirty momo update as I’m seeing some interesting developments.

2017-10-11_VIX

The VIX continues to curl around the double digit mark and I think at this point we have exceeded the late 2006 to early 2007 pre-crisis period which shows a similar range of irrational exuberance complacency. Those were the days! Unfortunately the ultimate resolution was less glorious but we did manage to have a bit of fun, didn’t we? 

2017-10-11_VXV_VIX

Now the VXV:VIX ratio is plotted here against a combo of Bollingers. I usually look for a pop back > the lower 2.0 for long entry opportunities and a drop back < the upper 1.0 for short opportunities. Which is exactly the type of formation that’s currently present.

2017-10-11_VIX_easy_ride

Before we move on I wanted to point out a little detail that caught my attention on our ‘VIX Easy Rides’ chart. The last one (first green patch from the right) actually brought us another leg down which then was followed by a massive ramp higher. I wonder if that is something worth noting, especially if price does not follow the ROC (bottom panel) lower.

2017-10-11_VIX_VXV

However I also like the see the slightly smoothed signal (SMA(3)) > the mid line which appears to be more reliable. We don’t always get a big correction right afterward but it’s usually a good idea to be out of longs in equities by then. Which we are – check! 

More momo goodness below the fold:

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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.
  • Mark Shinnick

    Good stuff there Mole.

  • Julie

    Yup Mark !
    JULIE

  • Julie

    POT needs a bullish close above daily 5 ema and resistance shown i.e. blue horizontal line JULIE https://uploads.disquscdn.com/images/58a6b401083376e334d3050502eb6bb65962b9ea41a8d8a31268fc7bbc6d79b8.jpg

  • Julie

    YODA GG GDX yesterday held the 5 ema and 21 ema ….. Yea! Today a possible bullish crossover of the 5 ema and 21 ema Today a possible 4th consecutive close above the 21 ema with the 21 ema turning up. Next must get above yesterday’s high GO GDX. One thing to be wary of yesterday’s action was distribution JULIE https://uploads.disquscdn.com/images/aed35ff6e63213e93926628b2045dc1e261917fee718f625b1cb1f5eccf7e2da.jpg

  • ridingwaves

    Wine country getting another blast of the devil winds again tonite….el diablo is not kind to Napa and Sonoma this year….

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

    copper must retain its march upward.
    https://finviz.com/futures_charts.ashx?t=HG&p=h1
    I don’t care what the driver is – Teslas, Batteries, Drones, Hedge Fund,
    U-Name it.

    Until then, don’t wake me until 24.50’ish arrives.

    -GG

  • Julie

    GG You Got It !
    JULIE

  • Julie

    RW Montana was a conflagration this year as was Oregon
    JULIE

  • ridingwaves

    yep, sun is getting hotter, earth is getting hotter….peak earth was cool

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

    plain and simple mismanagement.

    but hey, just think of the new flavors the charcoal soil will bring!
    -Long sour grape juice!

  • ridingwaves

    cab and merlot still on vine, crop gone as grape soaks up smoky flavor….best to go to Pinot on this year…
    nothing could have stopped this fire, management or not…

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

    hogwash.

    http://1ggye33lc4653z56mp34pl6t.wpengine.netdna-cdn.com/wp-content/uploads/2015/01/Monckton-jan-2014.png

    they can’t trade stocks, and they can’t average a chart.
    =P

  • ridingwaves

    that chart is hogwash…..stick to stocks….weather is not your calling….

  • StockTalker

    Weather it happens or not there is a potential for a large move down in crude right here. W2 looks to be completed, should know soon enough. /DX 93.00 should hold here, last resort.

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

    you’re right. my bad.

    The solar minimums have stopped.
    looks like it’s going to get toasty by 2020.

    https://wattsupwiththat.files.wordpress.com/2017/07/clip_image0121.jpg

  • Ronebadger

    Yeah, I got closed out of going to GNP. Had to cancel 4 B&Bs that I painstakenly vetted up there. Ended up in Billings and Red Lodge and spent an extra day in Cody, beg-Sept.

  • Ronebadger
  • Julie

    YODA Red Lodge NICE The Absaroka Wilderness 50 peaks 12,000 ft. Did you travel the Beartooth Pass MT and WY border ? The highest pass in U.S. at 11,000 feet which is only open approx. 4 mos out of the year. YODA You were in some of the most beautiful country in the U.S. Just south of Bozeman is the Lee Metcalf – Spanish Peaks Wilderness which is unreal and just as beautiful
    JULIE

  • Julie

    Lee Metcalf – Spanish Peaks Wilderness approx. 20 miles south of our MT home (Bozeman) We love it here ! JULIEhttps://uploads.disquscdn.com/images/90fc47a5d2d7e67cdc039f53f4c0e4aa3effc93ce97ce4afae7ce59c3161aab1.jpg https://uploads.disquscdn.com/images/965737073f01332894224370ba41b42ce9895c7cbd95096710f708d6178bcb87.jpg https://uploads.disquscdn.com/images/1fc1556ddaedc8f25728eefda8371587ec2daeaaa0b768a95dba84b41a29a76d.jpg

  • Julie
  • Julie

    Yipes A reversal GDX as I type …. As mentioned in a previous post I held off buying GDX as I thought better fish to fry….. KEM waiting for a pullback as posted previous thread. Have a short probe small nibble SPX Everyone Have A Great Day !
    JULIE

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

    10.54 for you, 10.41 for me.
    no real action though until 11.03 IMHO.

    if it does, you know how speedy it is.
    https://uploads.disquscdn.com/images/2ef268af94070f30c44f67d40de15f228e0ac96c400e472485bb44fdd25fdce6.png

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

    is that like a Par 6 down below?

  • Julie

    GG the air is thin …. Moon shot on any drive more like a par 3 The green is fast tho so putt softly and curves to the left !
    JULIE

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

    it’s a slow day.

    two years ago, Captain posted this. A refresher for the newbs.

    https://a.disquscdn.com/uploads/mediaembed/images/3040/383/original.jpg?w=600&h

  • HD

    $CL_F yesterday shared the chart looking to complete a 4-5 for C up. Appears we have potential for resumption of the wave down now. Would want to see previous 4th not hold and sellers into EOW. Above 52.86 wrong. Just 1 layer of probability. https://uploads.disquscdn.com/images/e17adea3e8d02b26c48d403382786c80a84eada75cac4608a37d8f18e66029cb.png https://uploads.disquscdn.com/images/bb933cd200ef54fe686a655709001545f3c7dda379dba0fc8dbaa8df574c774e.png

  • HD

    Sorry dude, I just don’t agree that the VIX measures complacency. SPX has a 0.5% range this week. I don’t care if people are scared crapless the VIX doesn’t care either.

  • HD

    was there last year, mostly to stock up on Pliney IPA but the wine country was pretty amazing. Can’t believe the pics.

  • HD

    Nice! I will be back in the N AZ mnts tomorrow for elk camp

  • Julie

    HD Archery or General hunt …. My husband archery Wolf taken in Spanish Peaks ….. A special hunt on wolfs as there were too many… The wolf is alive and well in MT Very large numbers and MT Fish and Game special hunt A pic of my husband Doug https://uploads.disquscdn.com/images/24c3d0beab15e09f0cafefaa52482a1a55d365813af013c6be2ed7f007e703f7.jpg JULIE

  • HD

    archery wolf! RESPECT. Jr hunt for little HD, elk and any antler deer. We have our work cut out.

  • http://evilspeculator.com Sir Mole III

    How’s my crew?

  • http://evilspeculator.com Sir Mole III

    Actually it measures puppy tears which in turn affects investor sentiment 😉

  • http://evilspeculator.com Sir Mole III

    me like

  • http://evilspeculator.com Sir Mole III

    Now THAT’S my kind of country!

  • http://evilspeculator.com Sir Mole III

    I really love wolves, not sure if I could hunt them. Then again they wouldn’t think twice about eating me! (I’m very delicious)

  • http://evilspeculator.com Sir Mole III

    That sounds awesome.

  • Julie

    N AZ Beautiful country ….. You will have fun …. Flagstaff and surrounding country beautiful. Hunt safe HD
    JULIE

  • http://evilspeculator.com Sir Mole III

    He bitches at me about the VIX but then goes wave counting…

    https://media.tenor.com/images/69f6e0a63d5005d07bc407e50181c505/tenor.gif

  • Mary

    VIX doesn’t measure anything. It is a calculated value of how much premium SPX option buyers are forking over to the sellers above their theoretical value.

    Each buyer is unique and has their own reasons for their buying decision …. some may, or may not, be complacent.

    It’s somewhat more complex than that, but it’s intended as a nutshell version.

  • Julie

    RW His only time hunting wolf ….. He had second thoughts about it afterwards and will not do it again. MT has a large number of wolves and conducts special hunts by permit only through a drawing. I hunt also and almost always elk ; antelope and deer. Quite often MT has 2 deer either sex and an elk either sex depending on numbers. Game is controlled very carefully in MT and MT Fish and Game Dept does an excellent job
    JULIE

  • Julie

    Mole It is so beautiful MT
    JULIE

  • Mark Shinnick

    I like that characterization: This whole psycho game in a “nutshell”.

  • Ronebadger

    Yes, I was on the Beartooth…very nice, threw some snowballs.

  • HD

    ha!

  • HD

    thx Mary, options or no options part of the math is SPX range, where the name originates- Volatility.

  • Julie

    Great Mole Thanks Chief for todays post …. Every post ! Your pictures of the events in Spain are appreciated. Very little in the news in U.S. so please keep us abreast. Please be safe Mole
    JULIE

  • Mark Shinnick

    What have you determined about Global Warming….or its more recent pseudonym Climate Change?

  • HD

    Speaking of wave wanky, 1 month to the day. 60 handles of trading w the wave.
    9/12 2494 SPX
    “The EW, Primary 3 up. Strongest. Zero overlap on the chart since the 2016 SPX 1810 low. New ATH’s today quantifies the wave. The 2 corrective waves we have seen? Humble 5.6% and 2%. Allegedly minor waves 2 and 4 of Major 1 up. Minor 5=1 at 2712 and .618 at 2566. Already +168 since minor 4 low.”

    25(55) seems tuff R. C ya’s in a week or so.

  • Brishort

    Can’t say this is my preferred type of market. I find these central banks constant limelight addiction a total loss of time…

  • Mark Shinnick

    Is this something like the process of dumbing-down everyone’s attention while the knife is slowly inserted?

  • Skidmarkalot

    What I have been thinking for sometime you put into brilliant words!! How deep will that knife go before the river of blood comes?

  • ridingwaves

    the $ is flirting with disaster….
    below 92.90, down it could go
    https://www.youtube.com/watch?v=ojXYCZMAwVc

  • StockTalker

    Agree, 93 must hold

  • StockTalker

    This crap is getting old!!

  • Mary

    patience Grasshopper … you will be rewarded ….

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

    well, well.
    looks like support might not hold!

    http://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=6&dy=0&id=p82794094561

  • BobbyLow

    It’s been “Groundhog Day” since March of 2009. :)

    https://www.youtube.com/watch?v=tSVeDx9fk60

  • Mark Shinnick

    All predation seems to function more or less this way; relies on the victim to haplessly enter the kill zone. Our models seek to do this by identifying statistically probable kill zones.

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

    hang in there, maybe you’ll get lucky.

    https://www.youtube.com/watch?v=0Fdb16Om40E

  • http://www.linkedin.com/in/sharondsessions/ Sharon

    that is my very best chuckle for today, so far

  • http://evilspeculator.com Sir Mole III

    Yup, not looking good at all.

  • http://evilspeculator.com Sir Mole III

    You’re not alone. Participation has been very low here for months and it’s not exactly boosting my business IYKWIM. If you guys think you have it tough – try writing an interesting post every single day in a uni-directional market. Takes it out of me sometimes as well and on top of everything I’m also writing code, developing systems, learning new stuff.

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

    Well, the bears have checked out a long long time ago. This has probably the most violent bull market in history but at the same time it’s also been the most hated.

    Just look at the movie line ups and the TV series over the past years. Every other production is related to some type of doomsday scenario. I sometimes wish I could step into Stewie’s time machine and go back to the 1980s – would very much enjoy the following 20 years until it all finally went to shit on 9/11.

  • http://evilspeculator.com Sir Mole III

    Well, if you can make it work all the power to you – as I’ve said before. Enjoy your time off!

  • Brishort

    Well, I can confirm you are doing a great job doing a post everyday! Always a pleasure to hang around here. I have worked on learning new stuff myself, so much to learn so little time. Graph database Neo4j is what I find the most useful to learn right now.

    I often say the market is a very bad mistress… she takes way more time than she deserves and gives very little in return but short burst of intensity. Ultimately, I understand all those who quit the market….Ultimately, I will probably too… but until then, still around!!!

  • Mark Shinnick

    Mental capital is so vulnerable. Its one reason I prefer trailing stops on my entries/exits once a kill zone becomes entered during local accelerations.

  • Brishort

    Clearly, the dumbing-down can only occur with a willing crowd… that is the curse of the current market: headline driven junkies playing for a scalp, mostly bot driven, systematic investing only knowing the uptrend and Stocktwits junkies only knowing a bull market.

    They have all been right for so long though…that they believe they have become market magicians…. whatever market they want becomes the market they see. But cycles will remain occurring, even if this remains a larger trend bull market cycle. What we are witnessing is the devaluation of currencies by central banks and a repricing of assets, not via visible inflation but all condensed and captured in the equities markets.

    Somehow, it probably makes sense long term since money has to end up somewhere. And since the bond market bubble went as far as it could (i.e. negative interest rates) the money looking for a reservoir has very few locations left to pick as a harbor.

    Hopefully at ES here, we can trade the market we see, not the market we want. And that means no prejudice in believing either side….

    Yet short term, even if the market may ultimately go higher, it can only with the strength of shorts covering…. and for that a scare is needed. There aren’t sufficient shorts in this market to propel it higher properly. Hence what the VIX explanation above from Mole seems to see….(BTW, excellent post!)

    In my view, the cycle is overdue for such scare, but it won’t be time to get uber-bearish, just enjoy the correction but don’t get married with the views, it remains a bull market on all monthly and weekly indicators.

  • Brishort

    Indeed!, Always a pleasure to read your comments Mark!

  • Mark Shinnick

    Hope it helps :)

  • http://evilspeculator.com Sir Mole III

    Neo4j sounds very interesting – I take it it’s implemented in java (per the name). Sounds like it also has hooks for machine learning although I think for now I stick with sci-kit-learn and python as I invested a lot of time into learning that.

  • Mark Shinnick

    Now at the limits of my model support so model sees this as bargain buy.

  • StockTalker

    There you go, lol

  • StockTalker

    Long crude 50.50 for a retrace.

  • Mary

    short /GC 1296.00 stop 1301.10

  • Mary

    moved stop to 1297.50

  • http://evilspeculator.com Sir Mole III

    Really?

  • Mary

    Really. I got stopped out of my long yesterday at 1289.10

  • StockTalker

    Div on /CL 5 and 15 min, inventories out at 11am.

  • StockTalker

    Dollar seemed to have recovered the damage for now.

  • Mark Shinnick

    National Association of Active Investment Managers found them to be more than 90 percent long the market. https://uploads.disquscdn.com/images/31a090a6c662beb04b5655d29e1378ec958448c47af68992a321627d31378a81.png