Just An Illusion

As so many times before in the past two years the inflationists won the game:

Every once in a while I put this chart up for everyone to keep an appropriate perspective. In gold the SPX as it’s trading – in purple the SPX as measured in gold (yes, I should swap those colors next time). In the end what you see in your equities portfolio is nothing but an illusion.

That’s right – I’m hip! I’m with it! Down with the man!

Alright, let me snap my lower back into place as it’s time for my long overdue trend chart roll call:

Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.

Please login or register for Zero Data Feed (non-recurring) or ES Gold (non-recurring) or geronimo/ES (recurring) or evil.rat/ES to view this content.

This entry was posted on Tuesday, March 29th, 2011 at 2:21 pm. Both comments and pings are currently closed.



  • ds2

    Great post Mole. Very helpful charts as usual.

  • http://chartsandthat.blogspot.com/ ultra

    Nice charting mein Freund

    // really like the NYA50/NYDNV concept!

  • http://evilspeculator.com molecool

    Thanks, I haven't lost my mojo – was just a bit busy lately finishing ZeroFX ;-)

  • skynard

    A breach of 1319.74 will drop my shorts

  • http://evilspeculator.com molecool

    Four comments? Where is everyone?

  • OllyVaradi

    Here Sir!

    Apologies, had to put the kids to bed, walk the dog and beat the wife, all whilst trying to watch England Vs Ghana. Big match that.

  • http://chartsandthat.blogspot.com/ ultra

    It would certainly make an arresting new profile pic…

  • jigdaddy

    aud/jpy – quite the fucking move in last week or so…

  • amokta

    Im feeling sluggish – seeing as its not just me, it must be global effect (warming, sunspots, equinox, moon, radiation?)

    Good stealth recovery by SPX today

  • BobbyLow

    I be here boss.

    Thanks for all the charts. While going over them, I couldn't stop the strange visualization of the band playing while the Titanic was taking on water.

  • http://futuresrhythms.blogspot.com/ Scrillhound

    Bruce Krastings blog has some similar charts…. Fed balance sheet laid over the S&P/ CRB index. Winning!

    https://lh3.googleusercontent….

  • http://futuresrhythms.blogspot.com/ Scrillhound

    what can one do? I always buy a little physical every month, a little OTM put insurance here and there…. Play the long side… Working on moving outta here like half my family has already done.

  • Southern

    When skynard started talking about dropping his shorts, I was out..

  • http://thefxspeculator.blogspot.com Onorio
  • jigdaddy

    massive last minute volume

  • http://notionalvalue.blogspot.com/ Pitchman

    Re: Just An Illusion Great update!

    I republished at http://notionalvalue.blogspot….
    Stating; From: The Evil Speculator – with link
    and
    Home to Zero Data Feed, Evil Speculator Gold, geronimo/ES & evil.rat/ES trading tools and some of the best market commentary on the net. Visit: The Evil Speculator – All with respective links

    If you are not happy with it Please let me know.

  • http://chartsandthat.blogspot.com/ ultra
  • finansreven

    Those after hours spikes are starting to annoy me. Second time I have a long position at closing time. Always sell half a couple of minutes after the closing bell. Then I try to wait some more minutes before selling the rest. And today, just like when that massive fat finger spiked the market after hours last week, I sell and it blasts higher one minute later.

    Nice comments on the zero today, btw Mole. I had a short based on the possible divergence, but decided to reverse it based on the comment and the not too good price action.

  • http://thefxspeculator.blogspot.com Onorio

    That would be a epic goodbye kiss :)

  • BobbyLow

    I think they ran the ES up about 3 Points between 4:00 and 4:15 and the SPY keeps moving as well. Last night they moved down between 4:00 and 4:15. I think this is what they call “settlement time”. Or maybe it's “screwing time”. :)

  • ds2

    I think you are thinking what I am – use the 15 min.

  • skynard

    Nice chart! Seen that we closed that gap and by the looks of it made an attempt today at a retest. Will be watching that scenario.

  • skynard

    LOL, yes was wandering if a reply was forthcoming. HAHAHAHHHHHH;-)

  • volar

    to quote the Gerb

    14:00 *Market Closed*

    14:15 * Casino Closed*

    And u all know my view on AH trading- useless as news

  • Brishort

    Mole, I think the ZeroFX may be stuck. Time is updating, but not the chart.

  • skynard

    Euro holding support, if we get a break will be looking to short.

  • raised_by_wolves

    Nice trend line. Check out my channel.

    http://content.screencast.com/

  • raised_by_wolves

    I had the same issue, which is resolved now.

    http://www.screencast.com/user

  • raised_by_wolves

    I started buying bulk food. Quinoa is my staple because of its high protein and the ability to grow at high elevations (even though I live near sea level, I always fantasize about living in the wilderness at 8,000+ feet).

  • raised_by_wolves

    And here's the bloody channel zoomed in.

    http://content.screencast.com/

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

    Purple & Gold, ooooh, so close. (next time maroon.)
    we'll make a devil out of you yet.
    ;-)

    http://i.cnn.net/si/multimedia

    https://www.ispstadiumseating….

  • skynard

    Short Euro from 1.4101, so far so good. Pulled the trigger a little early.

  • makethatmoney1

    Any recs on fx books or sites? I am new to trading fx and I am finding it hard to find legit material

    Also, whats your target for this short trade? 1.39650 is what i have but may be a bit ambitious.

  • raised_by_wolves

    Inspired by Mole's SPX:GOLD chart, here's a Goldman divided by gold chart.

    http://content.screencast.com/

  • skynard

    If that trend line on my previous thread is taken out, my target is the longer term trend line just below @ approx. 1.38

  • http://evilspeculator.com molecool

    At least you have your priorities in order – I can respect that – LOL :-)

  • finansreven

    It seems a tough nut to crack the 1.4060 area.
    I have just taken a long at 1.4075.

  • Zero % forever

    Guys !
    When you say forex ,you are all (+Moles' chart )trading IMM futures and not spot forex right ?
    Also when every one mentioning entering/exit , stop etc all near month active future contract prices right ?
    I thought inter bank spot forex had a lot more liquidity.
    Just a forex newbie question.
    Recently the only forex I have done is buying puts or calls on FXE.
    But in the past I used to buy/sell spot Euro or 1/2 week forwards as an import/exporter regularly from HK /Sing banks.
    Thanks.

  • chronographics

    Hey mate, some trade futs some spot fx. I trade exclusively spot fx due to execution and liquidity (old hobits die hard )although there is a lot traded on the IMM as well and its pretty liquid. Most I think make it clear what they trade when giving levels. feel free to ask questions, everyone here is very helpful :-)

  • volar

    tyler durden might make u famous if you send him that :P

  • finansreven

    Took a short gbpusd based on this divergence: http://bildr.no/view/853881

  • skynard

    Yes, holding that trend line means up.

  • finansreven

    But when it breaks…

    A break, then a retrace back to TL which now act as resistance, and we have a very good short.

    That is my “plan”.

  • DarthTrader

    Silver has completed it's Bull Flag and seems to be running up a new flag pole will likely get to last Thursday's high of 38.18 today then consolidate for the next move . . . a break out to new highs and completion of the ABC to 39.84 . . . Certainly possible to continue higher than that but with the Divergence RSI reading and a powerful Astrological turn date this weekend. If Silver reaches 39.84 this week I will be loading up with short positions as this week ends in anticipation of a sharp sell off next week. With Appropriate Stops of course

    http://www.screencast.com/user

  • skynard

    Ascending triangle on STOXX just broke down?

  • ronebadger

    Is the Daily Zero important? Is doesn't seem to get updated promptly. It appears to be two days behind…am I reading that correctly?

  • captainboom

    That's what I see. Last updates I saw were 3/21 and 3/25. Also curious how important it is.

  • skynard

    IMO bulls running out of time. If they do not take 1332 now we should sell off. It looks like that completes a five wave move up. Lets see what happens.

  • volar

    Watching RUT here…

  • Bob the Horse

    Just been skimming the cream off my long exposure. Bit wary of a smash-down into quarter end. Will be a dip to buy if it happens but need to raise of a bit of cash to have some ammo. NOT going short though.

  • raised_by_wolves

    I think he's going to make me wait on the porch . . . forever.

  • raised_by_wolves

    I've seen things you people wouldn't believe. Attack ships on fire off the shoulder of Orion. Equities remaining steady while copper falls 1%. All those moments will be lost in time like high frequency trading liquidity effects. Time to buy.

  • volar

    correlations matter until the dont… aka /DX or /HG

    AUDJPY (barely)

    but i never trust them too much

    Watch RUT/TF/IWM if they make new highs IMO

  • raised_by_wolves

    A simple comparison between gold and daily charts shows that since gold has declined the past few days while silver has remained flat, this *should* theoretically be a mere correction prior to the next leg up. Practically though, I'm not long (yet) because silver isn't showing an sustained outperformance against SPX and copper is going to hell.

    http://content.screencast.com/

  • raised_by_wolves

    I hacked into my dad's 401K yesterday. I'm planning to reallocate him to 100% small caps if $RUT confirms /TF's new high.

  • DarthTrader

    Sickening, how the truth is perverted to do statist bidding

    http://www.zerohedge.com/artic

    http://www.zerohedge.com/artic

    Here is man creating Silver coinage to help people survive currency debasement enacted by Fed Reserve to offset the Greed of the Bankster State & it's Ponzi Dollar. And they label him a domestic terrorist when the actual truth is he fighting the domestic terrorists.

    Ignorance or corruption . . . both I guess

  • skynard

    It's way FN overdue for bucky to see some positive retrace.

  • DarthTrader

    The News may not matter but the anticipation of news can certainly Stymie the market from acting out it's inclinations.

    AS it appears to me that so much is being held back as the market waits on the ECB to tighten it's rates.

  • rg64

    This move in stocks could be just getting started with a ending in late may or june

  • DarthTrader

    If ECB tightens rates as most anticipate you will get a spike down in Dollar then perhaps the Dollar can get it's rally

  • DarthTrader

    An android raised by wolves . . .?

    Yeah . . could happen

  • volar

    that is my thought… i am waiting for that “panic” selling in bucky before I dip in…

  • volar

    i think a cup in candle is very possible… but given this stage in the market and the VIX i would own a few OTM puts just for the hell of it… if i were buying small caps for my pops per say :-)

  • raised_by_wolves

    If I'm interpreting the Book of Revelations correctly, the harlot is corruption and the beast is oppression, and the author had the Roman Empire in mind. During the golden years of the Roman Empire, the harlot was in Rome but the beast wasn't there so much. The beast was instead on the periphery of the empire where other peoples, non-Romans, were being conquered and ruled over. The beast turned inward though when the empire started to decline and contract. Basically, the beast devoured other peoples for a long time before devouring its own, but devour its own it eventually did.

    I won't go so far as to say that the author also had the American Empire in mind, but I will say that I think the same behavioral psychology of the state is applicable to us with the harlot having long been in Washington and New York and the beast at the periphery of the American sphere of influence. Now, I think, the beast is turning inward. Already, political and economic freedoms seem like illusions, eh?

  • volar

    have a look at this:

    seasonally….there is a much better time for a top. (Which was in both of the Zero Emotion posts)

    the math below would imply that we could see 1400

    http://content.screencast.com/

  • amokta

    Is this a moonshot, or Apollo 13 situation?

  • raised_by_wolves

    One could say that Bob the Horse trades the news successfully, but he isn't trading it like most people. He seems to know what 99.8% of the news should be ignored and what 0.2% shouldn't.

  • rg64

    this apears to be very very real

  • raised_by_wolves

    Thanks for letting us know. You're the only trader I know that successfully trades based (primarily?) on fundamentals. Question: Do you have any perspectives on Mole's charts here?

  • raised_by_wolves

    Based on this, it would be “normal” to be either higher or lower going into summer, and it would be “normal” to be the same or lower going into winter, right?

  • raised_by_wolves

    I keep switching between two scenarios in my mind: one where the rally will be ending sooner than later and another where the rally has not only further to go but significantly further to go . . . as in a wave three up yet to come.

  • volar

    based on that we could test the low into the summer, or go to say 1400.

    All I am saying is the bear case is best about 121-157 trading days. If we go lower hear- odds are we rally into JUL and then eat some real crap.

    If we continue to rally, a selloff looks better around a month from now

  • amokta

    There is still a lot of fear / uncertainty about, so does that preclude a 'major' top?

    In 1999, were people 'fearful' of an imminent collapse in their pets.com shares?
    In 2008, what was the fear situation, (before financial collapse)?

    Also, lets factor in inflation/quant-easing, does this mean rising stocks for sure?

    More importantly, silver is still a bit anaemic, although no signs of exanguination as such

  • volar

    I think we are in a 5 of a 3, so odds are this is our next to last move. The five (not the 5 of 3 we are in), usually is short lived.

    So bulls should be cautions here regardless, but Bears should be patient IMO

  • Joe_Jones
  • http://evilspeculator.com molecool

    Oops – will do it at the EOD today, sorry.

  • raised_by_wolves

    To clarify, do you think this could be a 5 of 3 since the 2009 bottom or since the July 2010 bottom?

  • finansreven

    OK, call me silly, but I'm shorting that ECB bullshit spike. Short Eur 1.4131.

    Still in the GBP short.

  • volar
  • raised_by_wolves

    Gotcha.

    Hey, RUT just made a new three-year high. The all-time high is 20 points away.

  • amokta

    edit – make that 2007 not 2008

  • captainboom

    I like that better than any other interpretation I've ever heard.

  • ds2

    Mole – I know you are not into metals, but I keep thinking of that chart at the top of the page. Zero-Gold?

  • volar

    good luck counting from the bottom as i think there is a potential (like most others from Attilla to Pretcher) for all of this to be corrective.

    however, my count is from the bottom in JUN

    And here is why it is so confusing… the one thing to keep in mind is the REAL bearish cases will take some time to develope

    http://content.screencast.com/

  • BobbyLow

    “In 1999, were people 'fearful' of an imminent collapse in their pets.com shares?”

    “In 2008, what was the fear situation, (before financial collapse)?”

    In 1999, I had absolutely no fear. In fact, 1999 was my best year ever and I've been chasing that high ever since. In the background there was a certain end of the world Y2K Fear as certain CNBC Pundits called it. Some of these same Pundits are still on BTW. I was a relative newbie back then and actually thought that people on CNBC told the truth. LOL

    By March of 2000, Naz 5,000 was upon us and there would be no end in sight. If I remember correctly as the shit began to hit the fan, it was explained away as just a correction and after some significant drops it would come back just enough to suck more people in. Finally it collapsed under its own weight and hasn't recovered since.

    In 2008, a lot us had already begun to call the housing bubble back in late 2006 and throughout 2007. Of course being very early was also being very stupid. Being right is no good if you end up broke. Anyhow, Politicians and Pundits made this one pretty difficult to trade initially because you didn't know if come Monday morning, there would be a 300 Point Gap Up or a 300 Point Gap Down. I think from the time Lehman went down through the Fall killed a lot of traders. We were supposed to get an Obama Rally in the Fall. That didn't happen and we sunk into the abyss. Then we hit March 2009 and it was off to the races.

    This short history lesson was brought to you in memory of all the traders who did not survive through all of this mayhem. :)

  • raised_by_wolves

    Okay, I'm going to enter what I think is my first ever trade based on the monthly chart because there is a hammer candle in an uptrend with a new highs both in /TF and $RUT. I'm doing this Mole-style, where I enter near the end of this candle instead of waiting for the next one to confirm. However, if the next month doesn't confirm within one week, I'm out. Another time-based mental stop is that $RUT has to make new all time highs within two weeks, or I'm out. Also, I'm thinking about putting a price-based mental stop here. I don't think that's too tight of a stop because my reason for the trade is that $RUT is breaking out. If it turns out that $RUT actually isn't breaking out, then I'm not going to wait for the March low to be breached before I'm out.

    http://content.screencast.com/

  • captainboom

    Is your x-axis number of trading days in the year? I assume the y-axis is SPX/200 SMA.

  • Smiddywesson

    Prices are going parabolic in tech. That's concentrating a lot of retail buyers on one side, and, better still, there hasn't been enough price action to shake out the ones with small stops. The only people taking the other side of their trades are professional providers of liquidity (Hmm, retail vs. professionals). Maybe Ben and the Boyz CAN ramp this market forever (doubt it) but there's going to be shakeouts in certain sectors so the providers of liquidity can get their money back. They are not in the buy and hold business, they need the liquidity to stay in business, and tech is an avalanche waiting to happen IMO.

  • OllyVaradi

    We need some real CNBC positive news now for a burst higher…here's a few I can think of, anyone else?

    Archduke Ferdinand found alive and well: WW2 a terrible mistake

    Ancient tunnel underneath Atlantic to Gaddafi's gold bunker found in NY. Bernanke's trucks on way to collect.

    Bernanke invents new branch of mathematics, universe cracks and debt disappears

    Ralph Elliott found working in chip shop in Liverpool: We have him in tonight to explain what wave we are in

    Palin explains nuclear fission and moves to solve Japanese crisis

  • http://futuresrhythms.blogspot.com/ Scrillhound

    $VOLD – Volume diffs never followed that move down this morning. This is one internal I think that usually ID's fake moves –
    http://content.screencast.com/

  • http://evilspeculator.com molecool

    NO WAY.

  • Smiddywesson

    Administration announces new jobs training program for fundamental and technical traders in the new millenium of Ben, along with coopers, fletchers, the other useless professions of the 19th century.

  • raised_by_wolves

    Okay, I'll forget attempting to count from the 2009 bottom.

    Hey, would this scenario fit with your count there?

    http://content.screencast.com/

    By the way, I'm not forming scenarios just to speculate; I'm forming them so that I know what I'm going to do if certain conditions happen.

  • raised_by_wolves

    Please. . . .

    MARLA
    Would you do something for me? I need you to check and see if there's a lump in my breast. I can't afford to throw money away on a doctor.

    JACK
    I don't know …

    MARLA
    Please.

  • raised_by_wolves

    Yeah, this interpretation seems to work whether the author was inspired by God or just writing avant-garde Greek poetry. If John is in fact divinely inspired though as Christians believe, it still doesn't follow that a Left-Behind-series interpretation is anywhere near correct. To me, Left-Behind-like interpretations are like trying to count Elliot Waves . . . without any rules!

  • volar

    I dont see why not… I need to go through and see my sentiment indicators, but I am fairly sure they say 2-4 more weeks of bear rape

  • volar

    that is nuts… but if RUT makes a new high (all-time) then this will be like 99 fun…

  • volar

    Yes you are correct sir.

    trading days and price vs. 200SMA

    These are selected bull market years- or years starting out with positive momentum.

  • raised_by_wolves

    People just don't get my sense of humor, I guess.

  • OllyVaradi

    Volar,

    Would the drop in sentiment with the market pushing higher not indicate a divergence or doesn't it work like that?

    TIA

  • Smiddywesson

    No, it's Elliott Wave is a religion, and like all religions it must be accepted on faith or one is labelled a heretic.

    You must also wire Prechter $100 a month to be absolved from your sins

  • raised_by_wolves

    I just need someone to tell me my most privately-kept memories to confirm.

  • http://evilspeculator.com molecool

    New poll!

    Please vote for your favorite ZeroFX period pair in the poll widget on the right sidebar —>>

  • volar

    check out (Call upticks-call downticks) – (put upticks-put downticks)

    the green is what u look at the RED is the call uptcik data

    http://content.screencast.com/

  • raised_by_wolves

    Hehe.

  • http://chartsandthat.blogspot.com/ ultra

    Divergence ES/NQ today – techs lagging..

  • raised_by_wolves

    WW2?!?

    CNBC can't even get its history straight ;-)

  • http://futuresrhythms.blogspot.com/ Scrillhound

    I will try watching that.. thx

  • amokta

    Great rewind !
    My mistake was subscribing to ewi in april 2009 (otherwise would have been less bearish, even bullish. even evilspec was bearish tilt then (soylent green/orange)

  • amokta

    Applying advanced fourier analysis (using chart, ruler & compass), silver could hit 45-50$ in 6 weeks time, provided we have not made 'the' top in equities/PMs.

  • volar

    i think it does work like that, but my sentiment has been rising with price as of late- I have just found that once I have a buy signal with sentiment it usually takes 3 weeks minimum for a sell to try to appear

    not that the market wont ebb and flow-but a major swing trade short will likely take time (mole's momo jives with that too)

    this is as off last week

    http://content.screencast.com/

  • Smiddywesson

    Prechter talks like he was doing a Craemer imitation in March 09 (buy, buy, buy) but there was a whole lot of bear in their publication then too. The gimick is they have three publications, so at any time, all the bases are covered. In their defense, you can't discuss the possibilities without covering both sides, and I don't think EWT is a waste of time, but you can't trade this market with it.

    EWT is based on the proposition that the markets are a particularly good place to reflect human sentiment. However, with this level of manipulation, all EWT is going to get you is a reflection of Ben Bernanke's ass cannon-balling into the pool. This market reflects government manipulation, and market reaction to that manipulation. It takes a whole lot of kentucky windage to trade it.

  • volar

    more easy to see here- sorry about that. And for clarification I use an average of AMEX, CBOE, PHLX (which just makes the math long, but CBOE by itself is just fine IMO)

    http://content.screencast.com/

  • BobbyLow

    That might be because of AAPL being down which I think makes up a big chunk of the NDX. AAPL has been flat for a couple of days and down today.

    I don't want to try to make anything of this because when it comes to this market, I'm like Sergeant Shultz, “I see nothing – I know nothing”. :)

  • raised_by_wolves

    This home made index, which includes AAPL, is at an all-time high.

    http://content.screencast.com/

  • raised_by_wolves

    Techs are still slightly outperforming gold though.

  • ds2

    When did that buy signal trigger?

  • ds2

    Sector rotation?

  • volar

    Was kindoff my entire last two posts….

    Essentially any sell off had limited chances of going very far, and all my charts were screening BTD (presuming we are still in a bull market- which appears to be the case)

    part 1

    http://evilspeculator.com/?p=2

    part 2

    http://evilspeculator.com/?p=2

  • captainboom

    I think the Boyz are keeping AAPL down in order to burn off theta prior to ramping it for April earnings.

  • amokta

    There are so many polls on this blog lately, i feel like im in Warsaw :-)

    Not sure what the best time frame for currencies is, if using zero-methods (i.e. some back testing perhaps?)

  • raised_by_wolves

    Below this line . . .

    http://content.screencast.com/

    short copper, long gold, and/or long SPX.

    If silver continues to outperform gold, then substitute long silver for long gold.

    If silver starts underperforming gold, then long neither silver nor gold.

    If RUT keeps outperforming SPX, then substitute RUT for SPX.

    If RUT begins underperforming SPX, then long neither RUT nor SPX.

    Therefore, if this line is breached to the downside, then (1) forget gold and SPX and (2) (a) short copper, (b) long silver on condition that silver outperforms gold, and/or (c) long RUT on condition that RUT outperforms SPX.

  • rg64

    I am looking for follow through to the upside tomorrow….should be good

  • raised_by_wolves

    Further:

    If copper dropping < inverse silver rising, then forget shorting copper.

    If copper dropping < inverse RUT rising, then forget shorting copper.

    If silver rising < RUT rising, then forget longing silver.

    If RUT rising < silver rising, then forget longing RUT.

  • BobbyLow

    That's some good stuff.

    Ya gotta love the almost straight vertical ramp last fall in these. So do you think it's onward and upward from here? It doesn't make any sense by any human thought process but from a buy bot prospective?

  • chronographics

    Care here I think Bobby P may have cut some of his recommended short SPX position, wouldn't it be market humor for it to tank in the next few sessions? :-)

  • volar

    RUT/GOLD ratio clearly giving bullish equities/bearish metals signals

    http://content.screencast.com/

  • raised_by_wolves

    I'd be surprised if they don't hit 1600. After all, they barely even got embedded in the lower BBs during flash crash period. If the surprising thing happens where they tank, they would most probably have a retest so anyone trading the underlying has very low risk in my opinion. If the surprising thing happens and one is trading options though, it could get ugly because of theta-burn occurring before a retest can complete.

  • raised_by_wolves

    That's valuable information, but if you're going to chart RUT (equity risk) to gold (precious metals safety), I think you also should chart SLV (precious metals risk) to SPX (equities safety) to assess trend and risk reward there.

  • raised_by_wolves

    Alright, I prefer the risk to safety format (e.g. silver to gold instead of gold to silver), but I've down too much looking at charts this way so will temporarily inverse the format so that it is safety to risk.

    I'm starting my charting over beginning with gold to SPX (even though it is equity safety, I consider it less safe haven than gold). Reverse or breakdown likely. . . .

    http://content.screencast.com/

    If breakdown, then equities will kick some precious metals ass.

  • rg64

    Many think that tech is lagging but it is just delayed and will join and outperform starting tomorrow in my opinion.

  • http://chartsandthat.blogspot.com/ ultra

    GBPCHF sell setup on the daily

    http://tinyurl.com/5vgcsww

  • raised_by_wolves

    Actually instead of safety to risk format, I'm going to temporarily put everything in “last/current move is down” format.

    You can see that the pace of down trend has been slowing for RUT to SLV . . .

    http://content.screencast.com/

    . . . suggesting that silver may no longer have an edge if it goes sideways from here or may lose its edge if it crosses the MA(20).

  • finansreven

    I would like to discuss the different divergences.

    Been testing some small trades and having some luck with them (poor management of the last GBPUSD trade made it a bad trade, but that is a part of the learning process, I had a nice profit, but chose not to close it).

    What is a good divergence? Is this one a decent set up from the 30 min? http://bildr.no/view/854278

    Or is it too much noise in the chart?

  • BobbyLow

    I hear ya RBW. Between Theta and Vega, the Option Market has us by the Balls.

    Believe it or not, I'm still short SPY, QQQ, and DIA ETF Stock. I've been experimenting with various Option Offsets to Skew my position Long or Short. One thing I've given up at least for now is out and out Option Purchases. What I've done lately is to use a 3:1 4:1 or 5:2 Back Spread where my Short Option Credit helps to pay for my Long Option Debit. This way when they fuck around with IV and Vega fucks me it also fucks the short side as well.

    Anyhow, I'm net Long now and my account has been like a YoYo between Net Long and Net Short while trying to keep my Delta under control so any moves against me doesn't croak my account. All of my indicators tell me to be Net Long so we'll probably tank now. None of this shit makes any sense whatsoever so I'm trying not to over think it.

  • amokta

    Julius Cealver, circa 1AD: ” iCame, iSaw, iSilver”

    -any views on our friendly preciosu metal?
    -let me guess – your bullish :-)

  • raised_by_wolves

    Weekly charts of NDX to SPX . . .

    http://content.screencast.com/

    . . . and RUT to SPX . . .

    http://content.screencast.com/

    . . . show that RUT is currently the place to be.

  • raised_by_wolves

    Okay, to be more objective than my NDX to SPX and RUT to SPX charting, let's do a weekly chart of RUT to NDX. . . .

    http://content.screencast.com/

    There's an inside week buy there. Unless one really thinks those BBs are a brick wall there, it seems that long RUT is the long play.

  • rg64

    I think Tech short term will outperform….by a longshot

  • raised_by_wolves

    I'm setting the silver bar higher. It needs to outperform RUT, not just SPX, to attract my interest. I'm picky though, very picky.

  • rg64

    Silver could go to 55………I really dont have a clue but it is consolidating for a big move and the trend is up.

  • raised_by_wolves

    Compared to SPX or compared to small caps?

  • finansreven

    Why?

  • raised_by_wolves

    Maybe someone else more knowledge about Zero will comment too. I don't think that is a good divergence because you are cutting through price action instead of connecting highs with other highs or lows with other lows.

  • amokta

    As long as you the direction right for the correlated markets, thats the main thing – picking out the best performing horse is a secondary bonus i suppose!

  • finansreven

    Yeah, that sounds plausible. That's why I asked if it was too much noise.

  • rg64

    both

  • rg64

    they will play catch up…..people have been using divergences between certain sectors since the beginning of the rally in 2009 to no no no avail. when one sector is weak it will typically play catch up. I expect qqq to start moving up nicely and powerfully tomorrow then will see where we stand.

  • raised_by_wolves

    The way I see it, it isn't a question of noise so much as you're breaking what I think is or should be a rule.

    If you connect the highs with the highs like this, you see that there isn't a divergence whatsoever in that area of the chart.

    http://content.screencast.com/

    I hope Mole sees our comments so can confirm or disconfirm what I'm saying.

    If he doesn't, you could email him a link to yours and a link to mine and pose the question directly.

  • volar

    nuts… i have to think about that one… but i like risk/safety

    Like AUDJPY as opposed to say AUDCAD or something

  • raised_by_wolves

    If you apply your logic to a larger time frame, NDX already surpassed its 2007 high, and it is time for RUT to catch up by also surpassing its 2007 high.

    Maybe we're just using different time scales.

    Ignore my ramblings if your methods are working for you.

    I'd like to see both NDX and RUT outperform an SPX which is also rising anyway.

  • raised_by_wolves

    I usually like risk/safety best because it tends to correlate with market direction.

    However, my eyes are becoming desensitized to risk/safety so need to use another format for a little while.

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

    Is it just me, or do you also think that ratios tend to be a lot less random?

  • http://chartsandthat.blogspot.com/ ultra

    Keep it simple: all you are looking for is the indicator not confirming the price action.

    http://tinyurl.com/6jm3dp4

  • convictscott

    Disagree. If you look at a chart superficially the lagging sectors play catch up, but over time the leading sectors outperform the lagging sectors. What I mean is that typically the leading sector will still gain more, percentage wise, than a lagging sector. This is as true for superconductors v financials as it is for gold v silver.

    IMO buying strength and selling weakness is the highest probability strategy over the long term.

  • rg64

    Well in that case the QQQ wins in both that it is the strongest since the 09 bottom putting in higher high than the point it collapsed and short term it is lagging making it the catch up go to right now as in tomorrow.

  • convictscott

    Agree 100%

  • raised_by_wolves

    I admire your fine motion skills and subtly. Very martial-arts-like. Wash on, wash off; fade in, fade out; manage theta while exhaling, manage delta while inhaling, etc.

    I dare you to figure out how to use options to short long- and/or short-leveraged ETFs (only the most liquid ones with good spreads) and balance them by shorting short- and/or long- non-leveraged ETFs. I keep thinking that there is free money on the table when these leveraged ETFs go through periods of rapid decay, but I haven't worked out a method to get that free money without taking on too much risk. Do you have enough time/energy to experiment in your paper trading account?

  • http://evilspeculator.com molecool

    What I am seeing is the need for patience for anyone trading ZeroFX. Look, we now have a market that trades six days a week around the clock and thus there is no rush! What really seems to stand out are those signal spikes/drops to the -/+1.0 marks. Those are usually the safe trades IMNSHO – especially if they are followed by a divergence. Wouldn't you guys agree?

    The standard deviations from VWAP are also helpful, especially on the 5-min version. If we get a push outside the 2.0 bubble plus we see a divergence then I think it's worth trying to get positioned.

    Finally, what I'm seeing is that ZeroFX is fucking early! Those divergences often start developing way ahead of the actual move so the timing is something we still need to perfect. I could of course slow down the signal a bit and thus it would become more obvious. You may look at the signal and think – 'why is it dropping when the market is still going up?'. Especially the 5-min does that a lot and I propose that we do not get positioned on the 5-min unless there is some push near/outside the VWAP bubbles.

    What do you guys think?

  • volar

    I think the are.. certainly better for charting IMNSHO

  • BobbyLow

    Thanks. Now if I could only make some money. My bait has been set very nicely for a couple of weeks now but the market hasn't been too cooperative. I feel that I have to be beyond patient now. :)

    I'll be glad to take a look at some possible Levered ETF Combinations tomorrow when I have a fresh set of eyes and will get back to you.

  • raised_by_wolves

    “What really seems to stand out are those signal spikes/drops to the -/+1.0 marks. Those are usually the safe trades IMNSHO – especially if they are followed by a divergence.”

    Amen!

    “The standard deviations from VWAP are also helpful, especially on the 5-min version. If we get a push outside the 2.0 bubble plus we see a divergence then I think it's worth trying to get positioned.”

    If people try using the 5-min like the 15-min, they may get in too early. But if they trade the 5-min different, specifically looking for a push outside the 2.0 bubble plus a divergence, then that's providing another way of trading. People would have to filter out divergences that occur at other times when there isn't the bubble push or a divergence on the 15-min.

    “What do you guys think?”

    I haven't observed carefully enough: Does the 30-min do any tricks the 15-minute doesn't do, or, relative to the 15-min, is the 30-min like a woman who just lays there (another sex analogy coming from a virgin)?

  • http://evilspeculator.com molecool

    I do like the 30min a bit better – seems calmer and more conducive to supporting swing traders. But I'd be curious to get everyone else's take of course.

  • raised_by_wolves

    Good, I'm not crazy (because of that anyway).

    This, I think, validates that I should start with (two-component) ratios and then move to the individual components (probably not starting with three-component charts though since a decision tree has to be worked out each time).

    The logic is that I have no business trading SPX or gold if I have no idea what's happening with the less random SPX to gold.

  • raised_by_wolves

    Hell, let's use all three!

  • finansreven

    Thanks, I may get too hungry for action, that is my main weakness as a trader. I know it's the waiting that probably will make me the most profitable trades, but the urge to trade is a bit too strong.

    I have been looking for divergences and actually have found some nice ones that I have posted screen shots from and traded with a nice profit. The thing I have seen is, like Mole says, that they take time to play out, and we might get in too early.

    So far it looks like a great tool, and I must learn to resist the urge for action. I know it is enough with a couple of nice setups during one day, and with a 30-40 pip profit a day, it will have an immense effect on the trading account when months goes by. At least if I don't do as I did last year, and blow the forex profit away on stupid shorting of the SPX :(

  • finansreven

    BTW, here are the divergences that I have traded:

    First one long with a nice profit: http://bildr.no/view/852259
    Here is a short one: http://bildr.no/view/852994
    And a long one: http://bildr.no/view/853086
    And the last one, where i fucked up the exit: http://bildr.no/view/853881

  • raised_by_wolves

    Thanks BobbyLow! Only do it if it it isn't a distraction though.

  • raised_by_wolves

    So far, it looks like people are preferring the 30-min based on the 30-min/15-min and 30-min/5-min carrying the two top spots. If those two get the most votes, you should have a face off between the 5-min and 15-min that way the “losers” who liked the 15-min/5-min also get a say about whether it's going to be the 30-min/15-min or 30-min/5-min.

  • http://chartsandthat.blogspot.com/ ultra

    Well played.

  • amygdala7

    Short /TF OVERNIGHT @ 838.7 Target 833

  • amygdala7

    Dr. Copper feeling a little woozy.

  • OldChicago

    Did you noticed that since FED started pumping money, from 666 low, there is rarely a bottom that is tested. Most correction were rewarded with e V shape moon-shot. It almost feels like teenages are behind the wheel at the FED trading desk…

  • OldChicago

    We could also have an ugly pull back on the last day of quarter end, the mid-west sling shoot-out at the fundies… Pump it up before hand, and pull the rag once everyone is on it. … Just saying…

  • kbmck

    Yeah the FED probably have outsourced their trading desk to China.

    http://www.ritholtz.com/blog/2

  • http://futuresrhythms.blogspot.com/ Scrillhound

    Have you tried it on tick charts?

  • http://evilspeculator.com molecool

    Indeed!

  • http://evilspeculator.com molecool

    You mean – like 15,000 ticks or something? I may try that actually – let me play around with it.

  • http://evilspeculator.com molecool

    I wish but how am I going to get that on one screen? I think we'll have to make a choice…

  • raised_by_wolves

    Yeah, I knew that was a pipe dream.

  • raised_by_wolves

    Volar and Scott, check this out:

    http://content.screencast.com/

    This a quarterly chart of GLD to RUT that I've turned into an imaginary half yearly chart. (Think of the candles as half years, not quarters). It's one big retest variation sell-gold/buy-RUT pattern. Fundamentally, it doesn't make any sense to me to sell gold and buy small caps because a real economic recover is doubtful. But fuck it hell, we have one of Scott's price action patterns here. I think already being short gold and long RUT based on shorter time frame setups is the way to play this ahead of this big RTV potentially triggering.

  • raised_by_wolves

    The more I look at this chart, the more awesome I think it is. I did a chart up at the top of this thread showing that a move above your green line (below my white one) triggers a RTV sell-gold/buy-small-caps. This idea is sort of mind blowing to me.

  • raised_by_wolves

    Scott, I realize your on vacation, but if you have time would you take a look at Volar's RUT/GOLD chart and my GLD/RUT chart (my eyes are so biased that I had to flip it upside down to see the RTV).

  • raised_by_wolves

    No, we're going to forward test this bitch. :-)

  • raised_by_wolves

    Time for you, son, to get yourself a unique avatar.

  • convictscott

    RBW I dont know anything about ratio charts, and I'd want to do some serious backtesting of the patterns across all different ratio charts before I'd start thinking about it.

    But in theory it kinda makes sense

  • convictscott

    For people trading the zerofx…. one thing I'd really like to get a handle on, is whether or not the wyckoff sign of strength concept is valid.

    If it is it totally changes the game up, we have both divergences, and a sign that divergences might not be trusted

  • convictscott

    What stops are you using? Can you pull up the charts of the divergences you took and we can maybe figure out some kind of mechanical basis for taking the trades, something like an atr based stop or maybe backtest pattern based retests of highs following divergences

  • convictscott

    I think a 4000 tick chart could be *perfect*

  • convictscott

    Look at 4000t

    One other thing I do in ultra short term currency trading…. whenever a session has an expanded range directional move, I ignore TA for the following session. When there is too much profit on the table some people try and take it, latecomers get in, weak hands get stopped out, it gets messy for a while.

  • volar

    That chart is insane, but I am not sure I have ever traded a monthly chart ;-)

    But I agree that the RUT/GLD is showing some LT and ST signals

  • convictscott

    One other thing I'm noticing about the zerofx is that its predictive and not descriptive. Meaning that you need to take a trade later than you ordinarily would

  • http://futuresrhythms.blogspot.com/ Scrillhound

    Would prob depend on the pair. I pretty much live and die by tick charts for the reg futures but haven't really tried them on fx pairs. I just popped up eur/usd intraday chart and checked out some divergences using plain old RSI, not sure how it'd look with ZeroFX. I like using a trailing ATR, scale out half and trail the rest up with the ATR or until overbought, negative divergence etc.

    http://content.screencast.com/

  • raised_by_wolves

    On the one hand, ratio charts may not benefit from stops breaking at predictable places. On the other hand, ratio charts often seem to be less noisy and more signally.

    I'll plan to do some manual back testing using some of your patterns on weekly charts over the weekend and let you know the results.

  • raised_by_wolves

    Insane in a good way, huh?

    I did my first trade from a monthly today. That may have inspired my quarterly transformed into half yearly chart.

  • ds2

    From what I am seeing a “safe” trade it finding a divergence and waiting for the zero to cross either above or bellow zero. It's 8:15 CA (Zero) time and this is occurring on both the Euro and Pound right now. Let's see if I'm right. Anyone else have thoughts on this?

  • raised_by_wolves

    Yeah, let's try ticks! I use 3200 and 400 ticks all the time when charting SI and GC.

  • raised_by_wolves

    Did you catch the entire 30-min red bar?

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

    Convictscott, ever since March 1, i've been fixated on that candle range.
    http://i55.tinypic.com/v2tslk….

    there was six days of pennant forming, and then 5 days of drop.
    now after 6 days of rise, and a few more days..we are back in the range of the SPX Mar 1 candle.
    what do you think? should I drop the spoon?, or just put a fork in it?
    -GG

  • ds2

    Yes I did.

  • http://evilspeculator.com molecool

    Yes, it seems almost like the holy grail but it's one of those examples of being careful what you wish for. It's easy to jump in too early and get stopped out.

    BUT – I really think there is potential here – and I'm not saying that because I wrote it. After all, I just put this thing up – give me a few weeks/months to fine tune this thing and I am sure it'll kick ass and take numbers.

  • http://chartsandthat.blogspot.com/ ultra

    Yen reacting to daily support

    http://tinyurl.com/5vtqnoz

  • http://chartsandthat.blogspot.com/ ultra

    Could be RTVS brewing ES 240 min – 2 hours to go but check it 1000 CET – retracing the shooting star from 12 hours ago

  • finansreven

    Small short taken after this divergence: http://bildr.no/view/854483

  • Hungry_Joe

    Or does one wait before the Zero itself drops below 0?

  • convictscott

    Agree, and 60 min 50 EMA as well :)

  • convictscott

    Gold gerb, I've seen this type of stuff before, from people indicating that the high of xyz day had some kind of mystical meaning, that it *couldnt* be bested, or similar…Not saying you are implying that :)

    I like to keep technical analysis simple. Can you backtest this concept? If not then its probably not that much use

    Personally I fail to see how price action several weeks ago still has much relevance to today, but I could be wrong.

    What I suspect is reasonable to infer is that the high of that candle and other factors, will indicate that this is resistance, and early stops are loading up. What this means is that either the resistance will stop the rally, or we get another round of popped stops and positive feedback to new highs.

  • convictscott

    In this case I'd wait until there was a divergence on the 30 before taking a trade on a solid negative reading on the 5. Remember its *early*

  • convictscott

    My opinion on the current price action is that I see no edge in spx. There is clear signs of upside capitulation and professional selling at highs… but price keeps going up. Its a no shorting zone for me, and I am not happy with the way price is behaving as a predictor for further upside.

    Standing aside until it sorts itself out, the only position I have right now is in the yen

  • convictscott

    Because it seems to work well on the second divergence I'd consider waiting for retests of hypothetical highs with divergences, should save some failed trades

  • convictscott

    Monthly charts backtest very well on my patterns

  • convictscott

    Look at a monthly chart of usdjpy

    Its a kickass trade for april 1 :)

  • finansreven

    Sounds like a sound advise. I got stopped out, but it seems like there is a 30 min divergence. Will not trade it, just want to see how it plays out.

    http://bildr.no/view/854503

    The right tuning will probably be profitable.

  • Bob the Horse

    Agree in short-term. I have taken my portfolios down to flat. The dream day for me is a bit of a collapse into the european close where i will get long again. Last day of the quarter is always tricky, particularly when a lot of funds have effectively been bailed out by the strong rally of the last week or so – you often get people trying to lock in this get-out-of-jail card by reducing exposure so they can report to investors that a) numbers are okay and b) they have been cautious to reflect the risks. I wouldn't do that of course, ahem!

  • OllyVaradi

    Here's my take for the remainder of the week for the Dow. I'm expecting either no further highs and a drop to at least 12,160 OR new highs above 12,444. Obviously the new highs look to be the odds on favourite but 60% of the last 10 sessions have had no downside and that is taking the piss a bit. Hasn't been lower for a 5 or 9 day intraday downside average over the last 21 years. Usually it works off this condition moving sideways then higher.

    So, no crash on the horizon just yet but very strange tape. Rydex Trader's very bullish according to that Cobra chap. Too many people expecting blast higher or crash lower to happen, so perhaps no knock out blow for either will be the order of the day.

  • volar

    that is a new concept to me… but i really like the idea. Your RV trade has really really helped my trading.

  • http://www.hervey-bay-holiday.com kea11

    Just to put it all in perspective. http://www.43folders.com/2011/

  • finansreven

    Now I'll try the short at 1.4206 based on the 30 min.

  • kbmck

    RE to Gold Gerb I'm thinking that IF we can close above yesterday's high today (and today only) then we will have a bullish confirmation of the bullish ADX cross on the SPX and we will light that candle (;-)

  • DarthTrader

    Greenspan squanders his final reserve of credibility Funny Stuff I thought

    http://blogs.reuters.com/felix

    Greenspan then moves on to the Volcker Rule, complaining that it puts US banks at a competitive disadvantage. Well, yes. If you have a central bank which takes its regulatory function seriously, then less fettered banks are likely to be at a competitive advantage to your own. Ask Canada. Which is feeling pretty smug, these days, about putting its banks at a competitive disadvantage.

    Similar piece with diff areas of focus
    http://www.nakedcapitalism.com

    As Table 1 shows, these losses are multiples of the static costs, lying anywhere between one and five times annual GDP. Put in money terms, that is an output loss equivalent to between $60 trillion and $200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK. As Nobel-prize winning physicist Richard Feynman observed, to call these numbers “astronomical” would be to do astronomy a disservice: there are only hundreds of billions of stars in the galaxy. “Economical” might be a better description.

  • ronebadger

    “daily snapshot of the SPX zero indicator. This chart will be manually updated once a day”

    It is 3 days behind, does anyone care?

  • Schwerepunkt

    I know news does not matter, but look at this line from the Chicago PMI.

    Mar Feb Jan Dec Nov Oct
    Prices Paid 83.4 81.2 81.7 78.0 70.4 67.8

    And we are told there is no inflation . . .

  • volar

    Yup why news is irrelevant…

    I am fairly sure by charting the commodity index(s)…one could have made that guess months ago. Many are parabolic from the lows or making new highs.

  • amokta

    Ok, time for true 'test' as to if we re'test' the 1340 top, and if any re'test' variation sell (if any valid set-ups) will work, or will fail. Testing time indeed to test us.

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

    thank you for your reply.
    I agree.

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

    Personally, I have found historical price several years ago, have effect.
    pivot points work for me. “but to each their own”
    I caught the bottom.
    http://practicalt.blogspot.com

  • skynard

    GEEEEZZZZ, are we back to BTFD mode?

  • captainboom

    /HG is 4.277 as of 11:32 EDT

  • apeakunderthehood

    Fed Speak… Gotta Know The Enemy

    http://apeakunderthehood.blogs

    Enjoy evil rats

  • MrBF

    Just updated my subscription today. come on mole

  • http://evilspeculator.com molecool

    Three strikes and you are out.

  • amokta

    Complete disregard, i don't think said person gives a damn!

  • Darkthirty

    Thanks…..

  • Schwerepunkt

    To top it off, he also badly needs a proofreader and editor.

  • bluprint

    Triangle forming on 30min EUR and an inside period just formed.

    Zero doesn't seem to reveal a whole lot. On the five min the down moves (in the last few hrs) are flat on the zero and the up moves are reflected in the zero, maybe this indicates up is the way today. I'm taking whatever the inside period signals on the 30 min.

    http://screencast.com/t/COATws

  • BobbyLow

    ZZZZZZZZZZZZZZZZZZZZZZZ

    Wake me up when EOQ ends. In the mean time, I'll set my alarm for 4PM EST. :)

  • OldChicago

    Did somebody say something?

  • BobbyLow

    Not me. I'm sleeping. :)

  • 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„¸
    ¨°º¤ B I T C H E S ¤º°¨
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • OldChicago

    Well, same here. So, keep quiet :)

  • OldChicago

    So, I wonder where are the dip buyers? Will tomorrow be “another” day that matters?





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