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Konichiwa!
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Konichiwa!

by The MoleJanuary 25, 2012

Congratulations, we are all Japanese now. Welcome to eternal ZIRP and an economy trapped in the doldrums for about a decade, if not longer. Thanks a bunch Banana Ben! Not surprisingly equities have been on a rampage since today’s FOMC announcement.

Things are getting complicated again as that VIX sell signal is pretty much shot to hell now. My own personal rule (it’s not official) for disqualification is either a push beyond the recent high on the SPX or a drop below the lower BB on the VIX. We got the former just now and although it’s still possible we see a little correction the odds of the signal resolving have now diminished significantly.

The weekly SPX chart is showing us an inflection point right here and right now. If we push above 1320 then we are in the clear and there will be little resistance into 1386 or possibly 1400. Now, how does that square with the volume chart above? Well, Rome wasn’t built in a day, grasshopper – expect some twists and turns on the way while we shake out some retail retards. The volume profile should adjust in the process, but for now/today there’s little fuel looming above.

And in the twilight zone world where bonds move with equities that of course means that our ZB trade never got out of the gate. Well, we had an ideal entry and a stop only a few ticks away. However this thing moved way too fast and unless you have super sonic fingers you probably were unable to flip this trade into a long. If you happened to be long this morning then it’s time to take short term profits and wait for a reload.

Seems the AUD/JPY had it right the entire time but it’s now time to take profits and wait for instructions. Maybe we’ll get a little correction here but the way things are bubbling up we could just gyrate around sideways for a little.

As a matter of fact all of our currency trades are way way ITM – which is why I keep pimping this stuff on an ongoing basis. Look at that EUR/JPY go – I would hold it all the way into 102.5.

Sorry for the typo on the chart – things were moving fast and I had to produce a post. Anyway, my recommendation on the EUR/USD is to lighten up around 1.31 and to keep a few lottery tickets into 1.33. Fat chance of me getting a decent exchange rate this spring – damn it! Spain – how about going back to the peso?

Cable – same story – after eviscerating that 25-day SMA and its NLBL we are now near T1. You can hold a few lottery tickets into 1.573 if you like.

Even the AUD is killing ole’ bucky today – are you seeing the unfolding theme here? I actually think this beast could run a bit higher but if you have been riding this one then I’d start to lighten up today.

And last but not least cocoa is finally at T1 – also time to take some partial profits. I am keeping a few positions with a stop roughly below today’s low. This trade took us four entry attempts and finally paid off in spates. If nothing else this is a textbook example demonstrating that sticking with your system and not yielding to human emotions will pay off handsomely in the long term.

Before I leave you here’s a bit of long term bear pørn. This is a chart of the Baltic Dry Index, which tracks worldwide international shipping prices of various dry bulk cargos. The index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).

Although the SPX continues to point toward 1400 on a medium term basis the BDI now joins a growing list of long term indicators/measures which suggest that 2012 may turn really really ugly. If you trade the long term then you may keep an eye on this.

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://practicalt.blogspot.com/ Gold_Gerb

    The PnF SPX chart is targeting 1412.
    but that’s price target, not time.

  • Anonymous

    Very true Mole, an old chap and I at the bank I worked at we would talk about how we were playing the Japanese game. Looks like we are pretty good at it too.

  • Anonymous

    vix is a rising

  • Anonymous

    Need that thing to wake up, possible woody tomorrow:)

  • http://evilspeculator.com molecool

    For some reason your avatar is broken – just FYI.

  • Anonymous

    change of stragey here. Im taking the profit off table now in AUD/USD. Re-setting the sell order at 1.07 full lot. and a half lot 1.0550 (short)

  • TwinTurboRX7

    We have neg div building up on Zero Hourly, do we wait for zero to go negative for possible reversal?

  • http://evilspeculator.com molecool

    Please reload the page, folks – I just added the BDI chart.

  • http://evilspeculator.com molecool

    I have to run off to a meeting – will update the daily Zero later this evening.

  • Schwerepunkt

    The Marquis de Sade would love the BDI. Ouch. That divergence is nasty.

  • Anonymous

    Not much of a Rampage  /NQ showing negative Divergence in RSI Ditto /TF

    I guess AAPL has much to do with the /NQ

  • Anonymous

    Reminds me of an old joke…

    The masochist says “beat me, beat me”, and the sadist says “no”.

  • Anonymous

    Captain obvious wanted me to post this chart.

  • Anonymous

    Bernanke dancing around the Truth about Dollar losing it’s buying power by more than 2% per year in the interest rate environment that he has engineered for the good of Banks not for consumers or savers at all

  • Fibz
  • Anonymous

    Will this replace adobe flash plug-in – always seems to wreak havoc with browser(s)

  • Fibz

    I’m not too familiar with its capabilities, but have seen some impressive ports of flash games/apps to HTML5.

  • http://profile.yahoo.com/6UCEGRUZGLJFRKA5YVSCPU7UUY brian

    euro fx seems to be missing this move so far

  • Anonymous

    Ok!

  • nyse

    Thanks. 

  • Anonymous

    unreal…savers are enemy of the world….kill them all

  • Anonymous

    Yep drive them with low interest rates into the teeth of the waiting equity markets dangling the mirage of higher yields.  

    “Munch Munch MORE” scream the markets!

  • Anonymous

    russell -43 tick…

  • EvilTrader

    Market wont implode….maybe long-term trend for SPY is now BUBBLY up….

    but short-term…you have to laugh at so many text-book negative divergences at multiple time-frames and many reliable indicators…and now RSI above 71…and VIX making a double bottom after closing outside BB a few days before…

    if it looks like a dog and barks like a dog…its probably not a cat…and i say, SHORT-TERM we are due a strong correction…even a mini-crash….if monetary policy is inflating another bubble over multiple months…thats very possible…but another story.

    Ya know, selling at tops was never for the faint-hearted…

  • Fibz

    just noticed the illinois attorney general is suing S&P for ratings fraud. finally some action.

  • Joe_Jones

    Right now is more like bears were murdered today

  • Anonymous

    It hopefully will, but the specification isn’t final yet – though some parts are already considered stable and implemented in current browser versions.

    Here’s a presentation demonstrating some of the capabilities:
    http://slides.html5rocks.com

    In the long run HTML 5 could not only replace Flash on desktops – a fact that even Adobe appears to have accepted by now – but solve the problem of having to create native apps for multiple platforms (iOS, Android, possibly Windows Mobile in the future). A lot of the major players in the tech sector are already leveraging HTML 5 in some form (like Google) or are in the process of implementing it (like Facebook’s “Project Spartan” for mobile devices).

  • Fibz

    a lot will probably cover now too, which would be a mistake imo.

  • Kudos

    Anyone see where the 30 year ended up? back under that 100day

  • Anonymous

    Thanks MrM!. I just dont like adobe running secret things in background on my computer, plus with vista, flash plugins seems to suffer problems (or maybe just me!)

  • Anonymous

    Baltic dry is dependent on supply and demand. Demand is quite often weak into the new year (holidays). At the same time you have had huge buildup in ships over 2011 (200 ships = 160mt of capacity). Same situation in 2012. That equates to about Rio Tinto’s annual iron production, so huge. Except for year start weakness (Christmas+Chinese New Year early this time around), it is all about supply. A shipper needs just 1 average year in 25 to have a new ship pay the capex. Given the Chinese dont care about return so much + like to gamble, they have no reason to cut back. The only thing hindering Baltic Dry to go to zero is the current fuel price which should prevent the index to fall to below 500.

    Looks scary, but is not – sorry bears! Find something else!

  • Kudos

    100% agree, glut of ships made index irrelevant to how the economy is doing. Its like saying that Oil prices in the US should fall because of where natural gas is or that natural gas should rise. In the short term the oversupply is what counts, over the next few years the market can readjust. better to look at copper or iron ore. They are not telling you anything negative

  • volar

    totally agree- same problem with RIG, NE, etc… too much capacity…

  • Galazkiewicz

    Yesterday’s bar was the 3rd hammer candle this month on the SPX.  Two of those made 1R w/in 3 days (including today).  Still seems like this is one of those short squeezes that CS has mentioned many times in the past.  Who knows how long it lasts, but there’s obviously been too many trying to top pick.

  • Galazkiewicz

    The pattern on the SPX daily chart since beginning of the year has been gap up or strong uptrend day on day 1, then 4 days of consolidation.  This has repeated three times. 

  • Wave_Surfer

    Oh, you used to work at a bank, too.
    I wonder how many of us used to work at a bank, at one time?  Mole? Scott? Volar? others?

  • Anonymous
  • Fibz

    speaking of water, there’s a huge weekly pennant on CCC.

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

    I saw two cats on the way to work today!
    and now a mention of cats.
    cat-n-mouse today with the events.
    http://www.youtube.com/watch?v=XqdHyinGj4U 

  • Fibz

    there’s a dead cat on the road in front of my house.

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

    post mortem on my SLV.
    did I do the right thing?  I could have squeaked a little more coin.
    heck, maybe it gaps up tomorrow.

    rules are rules.
    http://i39.tinypic.com/t971wi.png

  • Anonymous

    You can get on the other side now and get some coin on the way down!

  • Joe_Jones

    volume looks quite strong too.

  • Joe_Jones

    I often see one shake up before and one after the top to get rid of the weak hands.

  • Joe_Jones

    Lemme check  BPSPX
    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&b=5&g=0&id=p67137594354 mmm…Kinda undecided right now…

  • Anonymous

    What do you see. Looks topped out.

  • Anonymous

    Yes, not sure why but will get on it right now:)

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

    yep.
    zero yesterday.  zero today.
    neutral I suppose.

  • Joe_Jones

    certainly divergent

  • Joe_Jones

    certainly divergent

  • Joe_Jones

    http://wallstcheatsheet.com/breaking-news/facebook-halts-trade-for-three-days-as-it-prepares-for-ipo.html/
    This could turn out to be one of the biggest swindle in recent memory.

  • Anonymous

    hey hey a new Fed t-shirt…I only spent a  few trillion with risk to run away inflation and all I got was a couple up ticks in S&P and this t-shirt..very cheesy I know. sorry you had to read that.

  • Anonymous

    Definitely they are trying. We are getting some stagflation for now. Runaway inflation is impossible under the current monetary system. Whats the fed going to do? Mail people money? The only inflationary force is the govt spending and that will get reigned in at some point.

  • Anonymous

    you knew what I meant 😉 deflation, inflation, etc,etc really in the end does it matter? No.

  • Joe_Jones

    AUDJPY looks like a good short now

  • Anonymous

    He thats what I thought yesterday!

  • Fibz

    if online gambling becomes legal in the US, facebook could win big.

  • Joe_Jones

    I’m in for a run. Looks really toppy this time.

  • Anonymous

    Have to play if you want to win. Got the signal and follow the rules:)

  • http://www.facebook.com/people/David-Spears/100000424557856 David Spears

    Be careful, it might be due for a small pullback now. But the BOJ will be reporting a slew of information in 21Hrs time. Could be good for another parabolic spike up, then see the guts drop out of it.

  • Joe_Jones

    Thanks for the heads up. Don’t trade news though and the odds are quite good. Worth the play.

  • Joe_Jones

    Helps to clear doubts! 😉

  • Anonymous

    I thought so too and was eager to get my hands on some borrows ASAP. Then I read this article:
    http://uncrunched.com/2011/10/24/facebook-will-probably-be-more-profitable-than-amazon-this-year/
    I find those numbers rather impressive and Michael Arrington can be considered a credible source, so I’m really curious to see where this goes.

  • Anonymous

    Nothing wrong with having a target. Scaling out over here.
    http://screencast.com/t/wsnkvV0nnNTx

  • Kudos

    Your using the march contract, I was using the rolling active month. It is now over though.

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

    Are we repeating this?

  • Anonymous

    21:00 EST?

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

    Copper short term overbought, but longer term could be on way to 439

  • http://www.facebook.com/people/David-Spears/100000424557856 David Spears

    10:30AM EST tomorrow.

  • Anonymous

    /DX currently at gap support, see if it holds. Otherwise higher prices.

  • Anonymous

    after a while you just know forex like the back of your hand. AUD/USD near 1.07. I will now comfortably enter short.

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/0147ca62-cda1-47cc-898a-82db42db561a/2012-01-26_0635.png
    the bulb that was forming was another reason why I decided to take short position quickly off the table yesterday. 

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

    gracias hermano!

  • Anonymous

    I was considering exactly this last night when looking for another instance of “beeline” tape. A few other longer term indicators (SP100 over 200DMA, blowing past previous support resistance, etc) are telling me this thing could go up a lot longer than is rational. Last few days I shorted based on bullish sentiment, put/call ratios, than the VIX and sitting on an .08% loss today. If we don’t immediately turn down I’m pulling them of the table. My best case hope is we’ll get that quick drop circled as a good time to selll my shorts for at least breakeven. Than take a closer look to see just how powerful this move is and maybe go long.

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

    I’ve been thinking this for weeks.
    ..had several T’s that were good reversals.
    and the Market just refused…every day, never stopping.
    just like that Sept long ago.

    still, now just watching for any ice cracking, trap doors.

  • Anonymous

    my aud/jpy upper BB is higher than Mole’s for some reason,
    but it hit it anyway
    http://screencast.com/t/ijK2mKH5Evs

  • Anonymous

    Rule #1… Avoid the “H” word! :)

  • Anonymous

    Mole, can we get a daily zero update?:)

  • Anonymous

    Can someone please ring this bell when the top is in :-)
    http://www.1-800-4clocks.com/images/Big-Ben-Clock-Bell-London.jpg

  • Joe_Jones

    When I see parabolic moves i know the end is near

  • Fibz

    MMs are backing themselves into a corner with prices up here.

  • Anonymous

    Type your reply…

  • http://www.facebook.com/people/David-Spears/100000424557856 David Spears

    I agree, however who knows how long this meltup can go on. Trying to shorting this market to anticipate a top is a chumps game right now.

  • http://www.facebook.com/people/David-Spears/100000424557856 David Spears

    …and buying into it is too risky, who knows when the algo’s pull the trigger. I want to see a pullback before I even consider taking a position (be it long or short).

  • Anonymous
  • Anonymous

    interesting ZL5

  • bshah

    where is everyone ?

  • Anonymous

    Rats. I know most are wondering “wow the Fed must be worried about future of economy carrying forward blah blah for them to commit to keeping interest rates lower until 2014”..Iran is what the CBs are bracing for IMO and are planning ahead in the event of risk off environment rearing it ugly head again aggressively. Essentially what I think the Fed has done is weaken the dollar because of the deflation risk of a regional conflict “discounting in reverse” if you will for this event. The caveat of what I just said of course is longer term play. 

  • Fibz

    the fed is just helping the banks recapitalize. nothing about inflation or unemployment on their mind.

  • Anonymous

    VIX is looking pretty jumpy today

  • Anonymous

    Moves can remain parabolic longer than you can remain asymptotic :-)

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/36a1d31c-00b3-4026-abae-5ec38878904a/2012-01-26_1040.png
    Giant red oval is gone in this chart.. going forward I will be looking for middle line in yellow oval before I shift back into bullish mode as I was before.

  • Anonymous

    Iran has nothing to do with it. Much much more basic principle involved.

    It’s really quite simple the USA has an Astronomically Absurd Debt Level it is unserviceable at normalized interest rates but at almost nonexistent interest rate levels it can be maintained until that sham is broken.  So the Fed is  doing the only thing it can do  . . . .

  • Anonymous

    the russell is skiing downhill with a little focus

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

    [long term]
    how many times does a ceiling get hit 4 times, never to be touched again?

  • volar

    LT we are going thru that and much higher IMO

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

    woohoo!
    I can finally sell those Tech Stocks.
    double top! [4750]
    😉

  • Joe_Jones

    Why you say that?

  • Anonymous

    The value of the Dollar will continue to fall so the price of all assets should continue to rise

  • Joe_Jones

    Why you say”the value of the Dollar will continue to fall”?

  • Anonymous

    QE_N+1

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

    SPY Luv.

    Month End paint the tape?  nervous nelly T/L slamming?  Mutual Fund inflow?
    http://i39.tinypic.com/eqdq4k.png 

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

    OMG, the UUP.  I forgot!

    http://i41.tinypic.com/2w6hq4g.png

  • Anonymous

    That’s assuming the Fed is able to control the value of the Dollar.
    The Fed can give free money to the banks as much as it wants, but that won’t make those banks actually lend that money to anybody instead of stashing it somewhere for bad times.
    Look at the ECB’s LTRO operation. The gave away billions and what did the banks do? Deposit all that money right back with the ECB.
    An operation like this is only inflationary if the additional funds are actually used to do anything.

  • Anonymous

    plus they get paid .25 via Fed on reserves….better then lending…

  • Anonymous

    Watching for a div to set up on the 5 min.

  • Joe_Jones

    ultimately perhaps but right now is just ZIRP

  • Anonymous

    In 2013 we will be in another commodity bull market in my opinion but the contest that we are talking here is as the Fed creates more debt that creates more money and lowers the value of our dollar.  that is not against the value of other currencies like the dollar index but against goods

  • Anonymous

    Maybe he thinks that energy costs will be relatively lower.

  • Joe_Jones

    I think you’re right for 2013. For 2012 though I am not so sure. Plus it’s an election year, which usually favors strong bucky policies.

  • Anonymous
  • Joe_Jones

    I am seeing a descending trendline connecting the tops on zero 5 min. If it breaks, I’ll go for long scalp.

  • Joe_Jones

    just did.

  • Anonymous

    I think you would agree that war is a pretty basic principle for astronomically absurd debt levels. And Iran is the only non- western puppet left. The conditioning of public is well set in place for it. And not to mention the very obvious state that wants no other regional power in the area. No matter what. So IMO to say Iran has nothing to do with it may be narrow sighted. The US has targeted the Iranian central bank, and has done a job their currency. Killing it essentially. “Nothing to do with it” is a bit tough to swallow. 😉

  • nyse

    You got it.

  • Fibz

    Bush’s former CIA director recently said they decided war with Iran isn’t feasible and that war would only increase the chances of them creating a nuclear weapon. He argued the only way to prevent them going nuclear is through clandestine operations such as popular uprisings, etc. Apparently it’s not that the US doesn’t want them going nuclear, they just don’t want this current Iranian regime going nuclear.

  • Joe_Jones

    I think we should all leave politics aside and focus on banking coin in this tough market before we bring onto ourselves the wrath of our Dear Leader
    😉 

  • Anonymous

    http://www.agenceglobal.com/article.asp?id=2722
    Why worry about Iran, When Pakistan is loaded up already….its a canard…but most likely will be a tonkin gulf, yellow cake incident that eventually is known as a lie

  • Anonymous

    You read my mind. I was about to say that. Those opinions of mine were not any sort of trading advise for intra day positions at all. Nor was it for casting an overly bearish shadow on this forum. I only wanted to point out that I see a very muscular bull market with testiculars the size of peanuts. That is all, but yes but no means a trading setup. 😉

  • Anonymous

    The signal was good, just weak price action. Don’t like these small range candles on the 5 min either.

  • Anonymous

    Might have something now. Even if it is BTFD:)

  • Schwerepunkt

    Hard to buy a multi-year high.

  • Anonymous

    Target 1300 with the mini H & S pattern on the 5 min.

  • Fearless

    Buying around October 4 2011 levels is what kept me quiet these days. Just chilling out…

  • Fearless

    I will post a long market update post one of these days.

  • Schwerepunkt

    Please do . . .

  • TwinTurboRX7

    zero signal just went beyond the -1.0…

  • Anonymous

    yeah there was also an RTV Buy on the 20 min, only got 1R

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    very briefly…

  • http://evilspeculator.com molecool

    How about several little ones? People always think long posts are better but not necessarily so. Also, planning on long posts keeps you from writing them. It’s much easier to produce several short posts, IMNSHO. And people seem to appreciate multiple short post more.

  • Joe_Jones

    Yep I did not overstay my welcome. Just broke even.

  • Anonymous

    I was thinking about your position just yesterday, and wondering if you commit more than just a few percent of your risk capital when you take a long term position like this?  Reason I ask is because I’m trying to determine what my own levels are, and how much to commit to a longer term trade. Obviously you were certain of the level you entered at, and that gives you a certain level of comfort.

    Perhaps this is something you would be comfortable addressing in a post? If not, I understand, as it is going to be unique for everyone.