FOMC Day

Once again this afternoon at 2:15pm the high priests of finance will descend from their retreat above the clouds to share their visions of the future with us lowly disciples. The common expectation on the street is that the crackpipe of quantitative easing will most likely continue to make rounds in order to keep everyone in a frisky mood for buying equities.

There are good things about FOMC days – according to this paper there’s a real edge in getting positioned ahead of the announcement:

This chart plots the average cumulative one-minute return on the S&P500 index (SPX) over a three day window. The solid black line shows the average cumulative return on the SPX from 9:30 a.m. EST on the days before scheduled FOMC announcements until 4:00 p.m. on days after scheduled FOMC announcements. The dashed black line shows the cumulative return on the SPX over all other three day windows. The gray shaded areas denote the pointwise 95% con dence bands around the two means, respectively. The sample period is from September 1994 through March 2011. The dashed vertical red line is set at 2:15 p.m. EST, the time when FOMC announcements were typically released during that period.

Be this as it may – it’s not my style but it’s still worth noting that the bias ahead of Fed days is heavily to the upside. Not that anyone in their right mind would bother being short ahead of the announcement.

Meanwhile the Dollar has set up permanent residence over at the woodshed. The only pertinent positive news is that our short entry thus far has been working like a charm. Of course anything can happen during FOMC days and I recommend you watch that 25-hour SMA when emotions are starting to run high. Fortunately we got a great entry so if you keep your original stop above the daily NLSL you should be in decent shape.

Our Soybeans trade is running high and may be getting ready for taking partial profits. My final target is the dropping 100-day SMA – once we touch that I’ll be out and wait for new instructions.

Corn – you subs hopefully got that memo yesterday and if you did then you should be long right now with a stop below the 100-day SMA.

Wrapping things up with silver – good long there off the 25-hour and 25-day. I’m taking partial profits as there’s double resistance looming above. Let’s see if she can pop above that NLBL and that 100-day and then we’ll talk.

As you know I hate FOMC days. No new setups for today as I don’t want you guys to get chased all over the place. I already saw some monkey business over in bond futures this morning. Tomorrow is another (and better) day.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

This entry was posted on Wednesday, January 30th, 2013 at 1:41 pm. Both comments and pings are currently closed.

  • http://dartht.blogspot.com/ Darth_Gerb

    bonds? yes, bonds!
    looks like James is getting the Gold-finger.

    http://stockcharts.com/h-sc/ui?s=TLT:$SPX&p=D&yr=1&mn=0&dy=0&id=p32961461149

  • BobbyLow

    It’s 2:21 PM. Are we there yet?

  • AmazingLarry

    Nope. Still need those last minute stragglers on the other side of the ship. In the mean time, continue to cry wolf. 

  • http://ibergamot.blogspot.com/ i Bergamot

    This is stupid.
    Is the first move a fake-out , or what?
    Question:
    Do you think that few years from now people will consider these years as a best example of buy-n-hold?
    Buy SPY and IWM and hold ‘em regardless of news, fundamentals, politics and TA. That worked like a charm from 2009, except nobody told me
    LOL

  • http://dartht.blogspot.com/ Darth_Gerb
  • Skynard

    Hehehe, go get’m Bucky.

  • http://dartht.blogspot.com/ Darth_Gerb

    In 2007, news mattered, or so I believed.
    In 2008, news mattered, and it was so bad.
    In 2010, news don’t matter – I was skeptical
    In 2011, news don’t matter – I believed
    In 2012, news don’t matter – I resolutely knew

    In 2013, news don’t matter – I evangelize

    -Gerb

  • DudePlunger

    News is to complicated to read, interpret, figure out how everybody else is interpreting it, & then act on it.  Only thing that pays is price, (imo)

  • http://evilspeculator.com molecool

    The first move is often a fake-out but I usually just let them sort it out. Tomorrow is another day.

  • http://dartht.blogspot.com/ Darth_Gerb

    that’s why I believe your mechanical system has a shot.
    eliminates the emotion.

  • BobbyLow

    What better day than an FOMC Day to re-post an article about news in general by Dobelli.  I don’t know who this person is but  it was an article that I bookmarked.

    http://dobelli.com/wp-content/uploads/2010/08/Avoid_News_Part1_TEXT.pdf

  • http://dartht.blogspot.com/ Darth_Gerb

    Sky is real quiet, must be makin coin.
    Last Kiss Goodbye?
    http://s2.postimage.org/kvnaveso7/temp2.png

  • captainboom

    Yes, this is an excellent article.  I downloaded the pdf so that I never lose it.

  • http://dartht.blogspot.com/ Darth_Gerb

    thanks, I’ll shall tuck it away for later gnawing.

  • Skynard

    Lol, the failed breakout today was key, POUNCE!

  • ridingwaves

    making bank in ABIO…mm’s and shorts drove it back down to .50 c…goofballs…small float large volume with news….always an interesting game…

  • Steve Hikes

    Hi All
    Long time lurker, but free 7 day zero finally got me joined up.
    Some quant stats for you. (using daily market hour data back to 1999)
    - The longest run for the Dow not touching the 7 day ma is 13 days… That is today. The previous record set in May 2012
    - The gradient of the 20day MA is +44pts per day. The only other time it has been greater than this while embedded in the 140 day Bollinger is August 09 which was the breakout from the 09 lows.
    - AAII Long term bull-bear vs. short time-bull bear is at +20%… only ever higher in Feb 12, and Jan 11.

    Not sure what this means, but we are definitely seeing stretched statistical anomalies. 

  • AmazingLarry

    Wow, thanks for that. Was looking at the DJI daily last night for periods where it went parabolic since the 09 bottom and only found one that corresponds to the  early 2012 run you just mentioned, but not at the same degree of arch as this year’s. 

  • convictscott

    FYI there is an excellent little book called “the quantifyable edges guide to fed days” – It is close to the definitive work on this subject

  • Skynard

    Hehe, SPX 1500 cat bounce no go:)

  • http://ibergamot.blogspot.com/ i Bergamot

    Buying SCTY again (half position)
    Stopped out of half IWM – must be the bottom. (LOL)
    Selling half pos FB and keeping remaining half for announcement. That will be real show

  • http://dartht.blogspot.com/ Darth_Gerb

    maybe that red blip will widen.  but aud/jpy isn’t exactly falling.

    http://chzlolcats.files.wordpress.com/2012/08/funny-cat-pictures-i-hate-water-but-i-love-to-make-it-rain.png

  • Pat Malloy

    400k spy bought on close- do we chalk the flat zero as divergence on spy drop or fomc wonkathon?

  • Skynard

    If futures tank more than likely will not get the re-test now. Would like some dollar strength to go with it for giggles:)

  • Skynard

    Broken clock:)

  • http://ibergamot.blogspot.com/ i Bergamot

     Horror show that is

  • http://dartht.blogspot.com/ Darth_Gerb

    HYG credit, BAM!
    i knew it was too hot.  nothing like one day to wipe so much out, eh?
    no bias, it could go either way from here, right?

    http://stockcharts.com/h-sc/ui?s=HYG&p=D&yr=0&mn=6&dy=0&id=p30871272349

  • Th3_Acist

    Been short USD/CHF and EUR/USD since the inside day NR4 setups…for 139 and 87 pips respectively, where in the world do I set these stops? Part of me just wants to cash out of USD/CHF as the daily looks like it has hit target, any help would be appreciated as this is the weakest part of my game lol.

  • http://evilspeculator.com molecool

    Yup, one of my favorites.

  • http://dartht.blogspot.com/ Darth_Gerb

    can’t recommend stops, you should of had them before putting in the order.
    however, you give me a lot of likes.

    Bullish on EUR/USD in the near future.
    http://s14.postimage.org/ffma94va9/temp3.png

  • http://dartht.blogspot.com/ Darth_Gerb

    a little bit more.  (Gerb holds back an evil smirk)
    I thought it would register 0.00 today.
    [BPSPX]
    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=4&dy=0&id=p61511725933

  • Th3_Acist

    I guess I just never know how long term I should be thinking with Inside day setups…

  • AMCabrera

    CS. What would it take landing a forex job in Singapore. 

  • Skynard

    Congrats! Taking profit is always good, generally if my target is hit would take profit and leave a ticket w/ trail if mojo is still evident. That one could still run and looks very bullish now (Hum, very bullish?). JMO

  • Skynard

    This is the budget cuts which start this year and for the next ten years in defense.

    http://www.bloomberg.com/news/2013-01-30/defense-spending-plummets-in-biggest-decline-since-vietnam-era.html

  • http://dartht.blogspot.com/ Darth_Gerb
  • http://dartht.blogspot.com/ Darth_Gerb

    Bullish.  I’m taking out a second mortgage now.

  • Skynard

     Hehe, that’s allot of dough. Not many items produced in the states so the domino effect could be substantial:)

  • http://dartht.blogspot.com/ Darth_Gerb

    The less news you consume the bigger the advantage you have.
    Afraid you will miss “something important”? From my experience, if something really important happens, you will hear about it, even if you live in a cocoon that protects you from the news. Friends and colleagues will tell you about relevant events far more reliably than any news organization.

    and cue Skynard! ;-)

  • Darkthirty

    Noticed that with EWT, few years back 3rd wave due on soybeans, went long over the weekend,missippi valley flooded before monday….hmmm. Elliot caused the flood!?

  • Skynard

    Don’t trade it, just an FYI. Some families depend on it. No 3 will be having 30% haircut before the first qtr.

  • http://dartht.blogspot.com/ Darth_Gerb

    Did you peek over the weekend?, explainable by schroedinger’s cat.
    soybeans didn’t flood in another multiverse.
    http://www.youtube.com/watch?v=IOYyCHGWJq4

  • Skynard

    Nice, yes good volume today.

  • http://dartht.blogspot.com/ Darth_Gerb

    I won’t.  everything is priced in, or isn’t.
    the tape will tell us, eventually.

  • Skynard

    Good test for Bucky, think we get the bounce now. Another fake out complex H & S:)

  • Skynard

    Shorting this bitch, weekly generally don’t lie:)

  • Skynard

    AUDUSD last kiss w/ crossover on the hourly:)

  • BobbyLow

    Th3 Acist,

    Earlier in this thread you said you were having problems setting stops on your Short USD/CHF because you believed it hit your target on your Daily.   Someone said earlier to maybe take some profit and let some run which might not be a bad idea.  

    I had been using Daily charts and had  similar problems with Stops until TOS fucked up their Daily Forex Charts.  Somebody here (it might have been you) mentioned 4 HR Charts.  After tiring of reconstructing Daily Forex Charts, I changed everything over to 4 Hours charts.  So far, it was the best thing I could have done.

    FWIW, my stops are derived from ATR.   Or in the case of Forex, my stops are set 2XATR +10 Pips on a 4HR Chart.

    I’ve had a +162 PIP run on my still open Short of USD/CHF so far.  My stops are reset every 4 Hours if needed – actually four out of the six 4 Hour Candles (Got to sleep through 2 of them).  The last Action Candle of the day for me was the 5 PM or 9 PM Real Time EST.  My current stop is set.9167.  I will revisit this Tomorrow at 9 AM EST.  

    This guarantees me at least +1 and 1/2 R on this trade.  It also should protect me against normal sized stop runs.  However if it still gets stopped out it was meant to be and I’ll take my 1 and 1/2 R.  If it proves it still has more to run then that was meant to be too.  We’ll see what happens.  :)

  • Rightside_ot_trade

    How about that credit today?
    HYG saw the largest drop in 4 months on heavy volume, taking out the last 17 trading days.
    JNK had the biggest 1 day drop in almost 8 month & made a new low after making a new high 3 days ago. also on the heaviest volume so far this month

  • JackSparow

    right there with you :)

  • Skynard

    Bounce at the lower BB, will re-evaluate then.

  • BobbyLow

    I would enjoy Forex even more if I didn’t have to sleep.    

    Oh well, my positions are in play and Stops are set. 

    Catch up to you guys tomorrow.  :)

     

  • convictscott

    Pretty convincing downmove. For me the level that has to hold for the bulls is the low of the daily candle. If that gets breached (on a closing basis preferably) odds are high we trend to the downside. At this point if I was short I’d be holding for a while, as for sure buyers accumulated at support and it will take time for all of them to capitulate and sell, driving prices to the downside.

    What do we know? We had a big move up, which looked very convincing which was totally erased and more in a single day.

    That by definition has brought all the sideline shorts back into the game. Therefore right here, right now, we are seeing selling power at its most ferocious.

    If that selling pressure is enough to break the low on the chart, the bulls are effectively fucked. We should start trending down.

    If, however, the best the bears can do CANNOT break the daily low I have marked on the chart, then something totally different has happened. 

    If the bulls can take the best shot of the bears, then the fix is in and we have a much higher probability of going long. This is the same concept the retest buy setup and retest buy variation are based on.

  • Skynard

    Sleep? What’s that?:)

  • convictscott

    AMCabrera – I really am an ex con who has spent years in jail – they wouldn’t let me in the building of most prop trading forex houses.

  • Skynard

    Thanks, you have been very informative! Yes, nice red streak there!

  • convictscott

    I just spent a few hours chatting to Dudeplunger on skype. I tell you, it is quite REMARKABLE what hard work and dedication can achieve. 

    I can confidently say he is now twice the trader I ever was, through pure grinding effort in internalizing the statistics of his method. 

    I have absolutely no doubt he will ultimately be a professional trader managing money for others and paid millions to do it.

  • Skynard

     Is Dudeplunger a Forex trader? Think he might want to change his avatar name first:) J/K

  • convictscott

    He is now an extremely good forex trading robot

  • http://dartht.blogspot.com/ Darth_Gerb

    put down the coffee and step away.

  • Skynard

    Ah, my half brother. That is very encouraging!

  • Skynard

    Kiss that sucka good bye!

  • Skynard

    Coffee and sleep is for closers, you know that:)

  • Ronebadger

    Did we get an RTV Sell on the NDX, with the spike high on the 23rd?  Anyone confirm or deny this?  Good nite…see you guys in AM (NY time) …  If we did get the RTV Sell, what should we be seeing next to confirm this?

  • http://dartht.blogspot.com/ Darth_Gerb

    do I look like I’m sleeping?
    I’m gunning hard for second prize, cause third prize is crap.

  • Skynard

    LMAO:)

  • http://dartht.blogspot.com/ Darth_Gerb

    what would he be doing hanging around here?
    there he goes…out the door.  wait! come baaaack.

  • convictscott

    Aaand the AUD long I posted the other day is dead

  • Darkthirty

    Schrodinger’s cat, if a tree fell in the woods…., does a hobby horse have a hickory dick, quantum physics = mental mastubation for eggheads, in all fairness the answer to the above is, who really gives a stainless steel rats ass?

  • Skynard

    If 1.04 is back testing will add to my position.

  • Skynard

    It is carrying a div as well.

  • Skynard

    Think my /NG is turning short now. Not sure to have any longs here:)

  • convictscott

    Euro is painting a very convincing looking top, cascading through the timeframes

  • Skynard

    Cheers, may get an early start on tomorrows action, maybe wait for the re-test to save some aggravation.

  • JackSparow

    would this be a concern?

  • convictscott

    ” Is this low confirmation of the down move and would you say 80% probability? At what point would you add to the trade?”

    I would totally remove the trade if at the end of the day it is painting a shooting star candle, ie it has tried to go down, broken the lows and failed to hold. If it then shows signs of strength I’d consider getting long.

    I would consider adding to the trade if it closes below the old spike low

  • Skynard

    Euro-land coming online, should get better.

  • Skynard

    Would an hourly close suffice your appetite?

  • http://iberianviews.blogspot.com/ catracho

    EURO..

  • convictscott

    Nope, not yet. The attached chart is my take on it. 

    Look at the big black candle 6 from the right. That was the hourly candle that broke the old low from a few days ago. It is where my stop would be, it is where a LOT of traders stops would be. That right there is stop running, classic version.

    So we have a lot of bulls selling there. Thats not the point, we look to the FOLLOW THROUGH. The following candle is a hammer, indicating 2 things

    1) Just after all the aud bulls were stopped out, some other traders thought it was value and bought
    2) the market tried and failed to go down further.

    This not bullish yet. Still bearish, but following that we see another attempt by the bears to drive the price down through the new lows, which was reversed 1 bar later. This could be another bear flag, or it could be a retest of the lows before rising again now the bus is empty. The bears have to pick the ball up and run with it, or the bulls will try again.

    Bottom line, odds favor the bears, but its too early to be getting carried away or adding to positions.

    IMO wait until the price action is confirming your hypothesis

  • convictscott

    very interesting price action textbook top on the 1 hr

  • convictscott

    Nothing should be a concern when trading. Any emotion, any at all, is a strong indicator you should step away from the computer.

    Trading is NOT about guessing market direction. I am wrong a lot of the time. My edges are 65% at best – thats a lot of losing trades.

    Trading is about favorable risk return and playing it out like the casino owner, not like the casino customer

  • convictscott

    though probably about the place euro bulls would mount a defense

  • Skynard

    Took a small position with a stop above the BL, think she sucks wind. Ever sky dive before?

  • JackSparow

    “Trading is about favorable risk return and playing it out like the casino owner, not like the casino customer” very true…  

    I Know I should shake off my upward bias for Euro… before it starts dictating my trade.. old habits.. :) 
    Thanks!

  • http://evilspeculator.com molecool

    Hehe – be the house :-)

  • newbfxtrader

    Someone send Sky to bed please….@sky stop chatting with Aussies all  night!

  • convictscott

    sorry that should read a hammer candle, not shooting star 

  • Skynard

    Busy seasen, got an hour:)

  • Skynard

    /NG wants to go up it seems, not going to fight her:) Let’s bank some more coin today, ah?

  • Schwerepunkt

    Big data dump

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸F R E S H „ø¤º°¨ 
    ¸„ø¤º°¨ M E A T“°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸




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