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It’s A Long Way To The Top Or Bottom
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It’s A Long Way To The Top Or Bottom

by The MoleFebruary 4, 2015

Extreme exhaustion – I can smell it here in the comment section and all across the financial blogosphere and media. And if you’ve been hanging around the lair for more than a few days then you already know my modus operandi for dealing with one’s emotions – be those of the positive or negative variety: Acknowledge their presence, count to ten, then smile and stomp on them immediately. For we know what they are: annoying distractions at best and hurdles preventing you from banking your ill gotten gain at the very worst.

Look guys – at this point we don’t know what we’re dealing with here. And you know what – you don’t have to know, embrace the fact that you will never ever know what direction the tape will choose today or tomorrow, let alone sometime in the distant future. Predictions are for pikers. But what we do know is that it’s either a LT top or it’s a sideways correction with more upside ahead. And in each case the resolution will be boisterous and full of entry opportunities. You don’t have to trade today but you always always should prepare for taking trades tomorrow. Because just when the tape looks the most confusing the best entry opportunities happen to present themselves.

So this is what we don’t do:

We don’t get drawn into the swings and we don’t get emotional. Instead consider why the market swings in gyrations right now – the purpose is to exhaust participants and to draw them into emotional decisions. It’s a long long way to the top – or to the bottom. Meaning: Corrections near inflection points can take a lot longer than most retail traders care for or are able to imagine – most employ a lack of patience in combination with wishful thinking.

But ask yourself this: What really has changed from early January? We are still near the 2060 mark and now the resolution is nearer than it was five six weeks ago. And that’s good news right?

So this is what we’ll do:

First we analyze where we are right now and if we have an entry opportunity. Let’s start with participation:

2015-02-04_zero

Of which there is almost nothing today – see that flat line on the Zero Lite? It suggests that buying interest has dried up just when the bulls seemed ready to rip this thing higher and break the bear’s back.

2015-02-04_UVOL

UVOL also looks rather meager today – where are those bots today? All of this smells like either a big bear trap or distribution as institutionals are closing out long positions and prepare for more swings. But how do we know?

2015-02-04_spoos

Well, remember, we don’t. But we don’t need to know as we’ll use the short term panels to guide us until we get closer to our daily inflection points.  We’re still a bit too far from that daily NLBL at 2055 and if I want to get short I would prefer if we climbed a little. On the hourly we look in good shape right now and thus if you’re long I would remain long until that 25-hour SMA stops giving support. Once/if that 25-hour is starting to be threatened then we can talk about possible short positions but I think it’s a bit early for that.

2015-02-04_GBPJPY_setup

Alright, I can’t believe I’m giving this one away for free but here we go: GBP/JPY – once again we’re taking early clues off the hourly. Which means long right now with a stop near 178.2. If that one gives I’d love to be short with a stop above the 25-hour. The potential for this campaign is rather interesting – see the daily and weekly panels. Whatever direction it’ll pick will most likely turn into a runner. So keep your eyes on this one!

I also dug up several juicy futures setups – please join me in the lair:

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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.
  • Vince_Clortho

    Maybe we can call it close enough on the SPX gap close?

  • M E

    Full of booby traps today!

  • Darkthirty

    someone tripped on a computer cord

  • Vince_Clortho

    See you guys back at the bottom. I hate being one sided but this market needs a kick in the nuts.

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

    There’s them 300 point swings I was talking about earlier.

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

    Mother of all stop runs…(5min)

    http://finviz.com/futures_charts.ashx?t=ES&p=m5

  • Skynard

    That is a sell off mate:)

  • Darkthirty

    pull a 30 day ES chart 12-24 hour separations, workable pattern maybe

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

    my bullish percent is flashing a buy signal.
    if it changes I’ll let you know.
    =P

  • M E

    my evil plan for now: long ZB short NQ. two days in one directions is enough in these crazy markets

  • Skynard

    Looks like everyone going for the dollar:)

  • mugabe

    Draghi strikes again! Fascinating the showdown in Europe.

  • HJS

    I grabbed a little volatility play in UVXY and entered a new short in NQH15 because it looked/felt like price rejection when the market finally did move up today.
    I was worried when I read your afternoon update, but I will be happy to jump on the long side tomorrow if it presents itself.

    Should these positions be matched up with some silver and USH15 longs?

  • Skynard

    Not sure it would be helpful

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

    CME closing the pits, leaving only SP500: http://www.cnbc.com/id/102398816

  • Billabong

    Sideways volatile channel depending on your chart time frame.

  • Billabong

    167 years … open-outcry pits gone.

  • http://evilspeculator.com molecool

    Oh man – that sucks. We’re losing a piece of history here.

  • http://evilspeculator.com molecool

    So where is a trader supposed to find his/her maker now?

  • http://www.ProfitFromPatterns.com/ Ivan K

    Same as always … on the other side.

  • mugabe

    a range bound market is a range bound market. what you don’t do is take a position in the middle of the range

  • http://evilspeculator.com molecool

    HEHE – that’s funny 🙂

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

    Spoos 2046…anddddd We’re back. Told you it was a stop run. 😉

  • DarthTrader

    Way to early to tell but this setup looks like a Trend Day could issue forth . . .

    http://evilspeculator.com/tools/cheat-sheet-2/

  • http://evilspeculator.com molecool

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