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Live Tape Reading W1317
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Live Tape Reading W1317

by The MoleMarch 28, 2017

In case you missed it last evening, check out my ‘Ultimate Guide On Raw Edge Discovery‘ which I hope you will find informative if you are considering to build your own trading systems or even steal one from someone else. Now if you hunger for setups please do not despair as I have posted some juicy entry candidates in the subscriber section below (if in doubt you know what to do). But first let’s look at a few charts on the futures and forex side as this is a good time to cover this week’s live tape reading course.

2017-03-28_spoos_update

On the E-Mini we’re seeing a failure to recapture the 100-hour SMA on 3/21 which resulted in a fast 40 handle sell off into 2335. Once volatility had kicked in there were two attempts to recapture the 100-hour but failed almost immediately without as much of a retest. This tells us that gravity is strong and that sellers are using volatility jumps higher to reload positions.

2017-03-28_ES_RV

When I see the range in volatility remain expanded (i.e. the bubble remains wide) then I’m less hesitant to go bottom fishing especially if there are no clear signs of support on the daily, weekly, or monthly. Sure a perfect entry here may net me some quick profits but at the same time I could get kicked to the curb rather swiftly. Which means I’ll wait for things to ‘settle down’ – and that more literally means I am waiting for volatility and price to bottom out a little.

Looking at the daily panel on the first chart – I don’t see much in terms of support here. I could try to be clever and use the 25-day and the current spike low as a reason to be long. But if I was still short here I may easily consider more room for continuation. The biggest argument against that right now is the big daily spike low and if the tape slows down today or tomorrow and perhaps drops slowly toward the previous lows THEN I may throw my hat in the ring. But for now I’m staying aside here for the reasons elaborated.

2017-03-28_gold

Gold us a great example of a medium term trend. Quite interesting here is the fact that it’s been gyrating higher using both the 25-hour and 100-hour SMAs as spring boards. Great buying opportunity assuming that the 100-hour doesn’t start dropping – right now it’s drooping a little and it’s time for gold to get a move on or that daily NLBL may actually pose as resistance.

2017-03-28_bonds

Bonds currently show us a textbook example of a solid slow motion medium term trend. Those can actually persist for weeks on end and I think we may easily see 153’12 as a new target. Noteworthy here is that the 100-hour SMA isn’t even being touched. Now that’s my personal lens and perhaps you’re using an 80 or 200 or whatever. In almost every case it should be clear however that reman reversion kicks in incredibly quickly after a few ticks of correction.

2017-03-28_soybeans

Soybeans based contracts are all in excellent formations right now. Here’s ZS which you may remember was being pinched strongly last week which is why I suggested a violent resolution was forthcoming. A hypothesis which turned into reality shortly after highlighted by a merciless sell off with practically no counter response (it’s a small contract) until yesterday afternoon. Note how price remained outside the lower 100-hour BB since the point of recognition (short after my arrow) and only now is trading back inside.

It’s tempting here to anticipate a floor pattern, especially since we’re back inside the BB. But lacking any technical context on the daily you are basically relying on momentum only to risk your trading capital. So at minimum I would recommend you wait for a retest of the current spike low near 960 and if it holds then perhaps slowly accumulate your way up. The current ST pattern looks a bit premature to me personally although some would disagree.

2017-03-28_soybean_oil

Soybean Oil – where do I start? Clearly this is not a contract for anyone taking heart medication as it’ll throw against the wall, shake you silly, and then ask you what you’re getting all excited about. I was actually anticipating a run higher here last week and it came fast and hard. But then suddenly turned on a dime, perhaps in part because of the falling channel pattern on the daily chart.

Now pay attention here because this is important: Note on the daily how snap backs are often initiated by a long wick in the current trend direction. Those long wicks appear to be much more rare inside this pattern. This again is a textbook swing trading signal you can use to get exposed contrary to the signal candle. So you see a long wick preferably near the lower or upper channel boundary – take a reversal trade and put your stop below the spike low or above the spike high.

2017-03-28_soybean_meal

And here’s Soybean meal – as if we haven’t had enough of soybeans yet. Great chart though – note the last kiss goodbye followed by a violent sell off which may actually continue all the way into 310. If you are a trend trader and you happen to catch a run like that – do yourself a favor and trail it near the 25-hour SMA and Bob’s your uncle.

Alright, let’s do setups – please step into my 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.
  • Dyellowflash

    I am still holding on to my 30% shorts from Thur and Fri, whatever was added on Monday either got SL out or I had removed them for slight gains. I have enough loose fills to be roughly equals to 6 Dow contracts, so let’s see if i have the stamina for some more. Feeling a bit ill from trading through 3-4 nights in a row.
    My 4 hrly strategic chart still shows bear having the edge, but this first 4 hours of mkt opens must be bearish.

  • http://evilspeculator.com Sir Mole III

    “so let’s see if i have the stamina for some more. Feeling a bit ill from trading through 3-4 nights in a row. ”

    I really think you need to take it easy, mate. A lot of emotional flags in your comment which suggests you are over trading. Less is often more 😉

  • Dyellowflash

    Yeah, I can see that too. Didn’t trade as smoothly yesterday. But got to chew the bullet and trade for another 3.5hrs as this is the last 3.5hrs for shorting, or if the mkt is bullish during these 3.5hrs, even that 30% will have to to be cleared.

  • OJuice

    It is only Tuesday. Would have been hard to trade on Friday and/or Saturday night.

  • Dyellowflash

    Its the added on effect from last week. Trading though the nights from Tue-Fri makes me weak on Mon despite sleeping through Sat and Sun.

  • OJuice

    Then Moles comment is even more pertinent…

  • Dyellowflash

    Since the Odes of March, every attempt to overcome a red bar on the 4hrly timeframe above the 10DMA has failed. So has today… so far. But roughly 2.5hrs to go. https://uploads.disquscdn.com/images/c6bbc292ab2d9f20de4c20b0082562dd4627eb36f6d9349b93771df9e3069444.png

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

    it’s three or four red bars down, the rest is sideways noise.
    I don’t see any sweet spots to ‘get short’.

    It’s hold your nose, grab a short position, and ‘hope’ for another stair step down.
    anybody agree?

  • Mark Shinnick

    Long miners, tight stop.

  • Yoda

    Both L and S sides look iffy for the time being

  • OJuice

    I like the Oil set-up above. Keep in mind inventories tomorrow at 10:30 am EST. For arguments sake, we may get a spike down to re-test the lows or it may go full rocket mode. Coin flip either way. Just good to keep in mind for positioning.

  • Mark Shinnick

    standing aside

  • BobbyLow

    Mornin Folks,

    There’s a very long time before today’s close but after holding my nose and opening two new trades “by rule” yesterday, long Nutty Gas and short Miners it has been proven to me once again that it pretty much doesn’t matter what I “think”. I established my rules so that I don’t have to think. My thinking almost wiped me out more than once. Speaking of thinking, my opinions about world events and all the bull shit that goes along with it doesn’t matter when it comes to this business. All I need to do is establish technical criteria for entry of a trade, how to manage the trade after it’s filled, and most importantly, the technical criteria for closing the trade. This is not Rocket Science however as Scott says, “it’s simple but not easy”.

    I expected both of yesterday’s entries to gap against me this morning and they didn’t. In the end, both of these trades could very well be losers but it still comes down to one of the oldest rule of all and that is “cut your losers short and let your winners run”. Speaking of winners, Silver has been in a sweet low volatility melt up since March 15th. How sweet it is. :)

  • Yoda

    bulls win

  • Tomcat

    I am on the opposite side of Copper. Been short since 2.73 (Dec contract). Whats keeping this up is our Deal Maker keeps promising infrastructure spending… Seeing how healthcare turned out, I hope some of you can understand my opposite bet. Good luck.

  • OJuice

    Sold /ES at 47. Stop at 49.

  • Dyellowflash

    Shorted Dow 20610 to 20640. SL 20665

  • Dyellowflash

    My 5m trigger the short, but need to break 20614 to confirm, then wait for a good 5m red candle below the 10DMA as anchor to fill in bulk.

  • Dyellowflash

    Just a few pts away from 20614 now…

  • Yoda

    Weird that we don’t get a more powerful short squeeze. Where is the mojo?

  • AcoBrasil

    Maybe waiting for this afternoon’s Yellen speech.

  • ridingwaves

    SI is about to get a golden cross on weekly…that might attract some interest out of the norm

  • Yoda

    Wow, I have not realized that 4 FED speakers are due to chat today.

  • http://evilspeculator.com Sir Mole III
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    ..so you’ve done this a few times? 😉

  • http://evilspeculator.com Sir Mole III

    You tell me – you practically live here! 😉

  • http://evilspeculator.com Sir Mole III

    Which reminds me – rent is due!

  • OJuice

    I did. Missed an entry at 25 in the morning and then I didn’t see a spike down that I was ready to jump on.

  • http://evilspeculator.com Sir Mole III

    Challenge accepted – no biting, no kicks below the belt.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://evilspeculator.com Sir Mole III
  • http://www.captainboom.com/ captainboom

    Give it a kick up through 2360, and I’ll be impressed 😉

  • BobbyLow

    Cool. I’ve been charting and taking trades off of the USLV Hourly and trading USLV/DSLV. What worked out great was that I had a big winner on the short side from March 3 until I took the trade off prior to the FED Ann. on March 15. Then on the March 15th 1:30 PM Close there was enough of a boost in price for me to go long and I’ve been long ever since. At some point this thing will be a short again but for now . . .

  • Dyellowflash

    2nd chance to short today if you can get in at Dow 20645 with a 20 pts SL at 65. There should be 1 or 2 more chances to enter if this thing goes down.

  • Tomcat

    Mole,

    I have asked this before (but didnt get a clear answer), any chance you could create a running spreadsheet of all campaigns for the current year for the subs?

  • Dyellowflash

    Stays at 20645 for quite a while. Now need a clean break of 20620-14 area. Should not have any more strong 5m green candles showing up. This is getting delicate…

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

    That’s life. I have pulled my SLs of my shorts from last week’s high all the way down to 65 now. MM only need to push it by 20 pts up to have one less bear shorting this mkt. I have already held my shorts for as long as i can.

  • http://evilspeculator.com Sir Mole III

    Working on that…

  • http://evilspeculator.com Sir Mole III

    Anything can happen… :-/

  • http://evilspeculator.com Sir Mole III

    Yes I can but only going forward. However I am knee deep in three other projects right now and only have two hands and two feet. Patience grasshopper 😉

  • http://evilspeculator.com Sir Mole III

    To clarify – my internal trading log is enmeshed with other discretionary campaigns I have been taking. So I will have to start recording blog only setups on a separate sheet moving forward.

  • http://evilspeculator.com Sir Mole III

    I actually have a strategy that I used for snapshots and which I could convert to log via my logging module. It’s a weekend project and I will do it when i’m through the quantopian stuff I’m currently engaged in.

  • OJuice

    One more attempt at 49. Stop at 52.25.

  • http://evilspeculator.com Sir Mole III
  • OJuice

    It is a bit of a long shot for a re-test of the low. I have potential resistance at 2350 and used the slight divergence and mole signals on the zero for entry. I may have interpreted the zero incorrectly in this case. Or I am just walking out in front of the steam roller…

  • http://www.captainboom.com/ captainboom

    In looking at this again, I realize I didn’t absorb your comment re: if it remains flat…

    I’ve always viewed a flat Zero as lack of participation, and have been reluctant to go long or short. i.e. If price is increasing (or decreasing), yet the Zero is flat, I’ve treated that as a ‘negative divergence’ that would have kept me from going long (or short).

    Yet, that is exactly what happened yesterday. A fairly flat Zero, with a steadily increasing price. Can you comment on what happened there?

  • AcoBrasil

    …or nothing can happen :)

  • BobbyLow

    Quite a “DUST” Storm going on making new highs and up around 10% on the day so far. Of course these Storms can stop as quickly as they began. :)

  • http://www.captainboom.com/ captainboom

    With all the work that Scott, et al, have put into the system development articles, I wanted to share an interesting take on neural networks. Pay particular attention to the second image in the article, as that seems to best describe the system I want :-)

    https://www.bloomberg.com/view/articles/2017-03-28/neural-networks-and-suspicious-edge

  • ridingwaves

    good work…

  • ridingwaves

    who was it that mentioned a dry bulk carrier symbol?
    MS just upgraded the whole sector…

  • OJuice

    That dollar rip took /GC down to that 100 sma. Find out here if it will continue to act as support.

  • BobbyLow

    Yep and it’ll work too as long as it’s not GIGO. :)

    Regarding other parts of the article, I get a kick out of how some of the big boyz never get prosecuted for any perceived wrong doing. It is what it is.

  • Mark Shinnick

    Long miners w a tight stop

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

    You should crowdsource this to the community here.

    Maintaining an accurate log is a lot of work, more work than actually blogging.

    Personally I’d want to see some evidence I wasn’t wasting my valuable time

  • Mark Shinnick

    Flat at the close.

  • Mark Shinnick

    Yeah, a nice little pop :)

  • http://evilspeculator.com Sir Mole III

    Well, as you know my logger is pretty accurate. I would have to run my semi-manual strategy however, which isn’t a huge hurdle. Quite frankly this is something I meant to do a long time ago but system building keeps me busy. Maybe if i have some time this weekend.

  • http://evilspeculator.com Sir Mole III

    Actually no – not always. If price starts moving hard in low participation then it’s driven by institutions. I now this sounds like cop-out post analysis but I have mentioned this many times here.

    The Zero only shows you what the tape does and how it’s correlated to momentum and participation. It’s our job to analyze this type of information as building a system around it is extremely difficult. For example attempt to define a signal divergence and the right moment to act upon it. Not that easy even for me and that’s just one single type of entry opportunity.

    When there is low participation and very little movement then odds have it we’re going to see a range bound session.

    If the tape drops or ramps hard on a weak signal then fewer participants are driving the tape plus there appears to be less resistance against that move.

    A ramp or drop on a strong signal is the most reliable and suggests a trend day. It is also when leading divergences are most valuable as a drop in ‘mojo’ with the tape advancing suggests later comers which are ripe for the taking.

    Clearly there are a ton of variations in between which is why I have often produced demonstration videos to explain my thinking.

    If nothing else look at the smoothed hourly panel (middle left). See that divergence that was unfolding? It was still premature but it was a possibility I chose to highlight.

    Hope this helps!

    https://uploads.disquscdn.com/images/a74dc0c589c274552e22564a312fe6c336a3e0467224f43f6488f8244a699a8d.png

  • http://evilspeculator.com Sir Mole III

    Sorry for the late reply – dinner time over here and I was attending an online presentation.

  • http://evilspeculator.com Sir Mole III

    The Mole delivers 😉

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

    (GG claps)

  • http://evilspeculator.com Sir Mole III

    I should also have pointed out that the session at a glance can provide you with a lot of information. For example look how we ran up today with barely a dip below the zero mark. And VWAP was never touched even though there was profit taking near the EOS.

    This teaches us that this may be a break out attempt and that further dips have a good chance of being buying opportunities. Of course tomorrow’s Zero signal needs to keep agreeing 😉

  • http://www.captainboom.com/ captainboom

    Thanks for the clarification. In retrospect, the smoothed hourly Zero had a nice divergence that would have supported a long at the open on Monday for a gap close. Assuming whatever system you are using also supported a long.

  • http://evilspeculator.com Sir Mole III