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Lucy Van Pelt Market
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Lucy Van Pelt Market

by The MoleJune 1, 2017

At least once per year markets across the board for some reason flip into a sideways high volatility period I call Lucy Van Pelt mode. No matter what sectors you’re trading, no matter what symbols or what systems. You’re going to get stopped out. Not just once or twice or three times, but repeatedly and within a very short time period. Which is exactly what happened to me over the past few days. It’s frustrating but instead of getting upset I prefer to simply address the problem at hand. Which is me of course.

2017-06-01_spoos_update

Quite simply I need to reduce my trading activities until conditions change for the better/easier. Nobody forces us to trade after all. And the longer markets remain in this whipsaw mode the less of a chance for a directional resolution. Of course that doesn’t mean we won’t see a further increase in volatility – I did already cover that yesterday. If you look at the hourly panel on the E-Mini then you’ll notice that our Bollingers are squeezed pretty tight. And that usually is a precursor to big moves near the horizon.

The issue at hand is that the long side still overwhelmingly has the odds and while I’ve written this post the E-Mini has already pushed higher into ES 2415. The short side is not an option and it’s a bit late to get exposed long for a second time which doesn’t leave me much of a choice. For now I’ll simply have to wait things out. By the way if you are still long and holding then congrats and do absolutely nothing – let it play out.

2017-06-01_VIX_easy_time

A short position here below the highs may appear juicy especially with the VIX so low. However there is little technical justification for short positions in equities right now plus there’s my complete lack of confidence in the bears’ ability to even marginally slow down this run-away train. Sure we may get one or two sell off sessions but yesterday’s instant reversal teaches us that it was either EOM rebalancing or simply a good old fashioned late stage shake out.

Besides my VIX momo chart above still shows us in easy time (see green sections) and that means the bulls are running the show until further notice, irrespective of opportunistic and quickly reversed stop runs.

2017-06-01_SKEW_VIX

SKEW:VIX tells a similar story – we are nowhere near a sell threshold. By the way I’m pretty elated to see how nicely this ratio nailed the previous medium term lows. The little remark I added to the chart as a general guideline however rings double true in conditions like the ones we are in right now. Throughout the past few years market lows have been a lot easier to anticipate than market tops. And lacking any convincing evidence to the contrary I have to continue looking up, all market rumors, political brinksmanship, or perma-bear predictions to the contrary.


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

    Mole, thank you for being honest. That’s a rare quality this Century.

    For me, I never enter trades at month end. And looking at this open today, it saved me yet again from an eager short entry.
    [S&P]
    http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=2&dy=0&id=p89843007220

    Next Thousand Trades
    -GG

  • Tomcat

    Bobby, continuing from the previous post. I agree with your response. Nothing more to say. As you have said before, this is not your first rodeo. You can tell bullshit, when you see it.

  • BobbyLow

    Yes. It’s refreshing to know that we all can run into tough sledding from time to time and there is absolutely no individual who can trade winners 100% of the time.

    Mole mentioned sideways high volatility and I got cought up in it. I got a signal to short the miners via DUST yesterday morning and did so. The trade started off well and then began to deteriorate but not badly enough to get stopped out. As we got near the COB, price improved and just barely kept me in the trade enough to hold overnight. I was rewarded for holding DUST as it had a decent gap up at the open. But most of that gap has already been sold. I now have my stop set at a -.3R Loss and with this type of price action, I expect to get stopped out.

    It is what it is. . .

  • ridingwaves

    the key for psyche is if loss is contained to a couple trades….a losing streak above 6-10 wears on it, at least for me

  • Tomcat

    Thats why we need robots trading, no psyche. We are our worst enemy at times…

  • BobbyLow

    Yep. And nobody likes to lose least of all me. :) One of the hardest things for me to do was to “totally accept” losses as part of my game. Another thing that was and still is difficult for me to do is to dump a trade when it looks like it’s going to end up in the toilet before it hits my full stop. This is especially true while prices are extra volatile because of the possibilty of price action turning around and hitting my target at anytime. BUT and this is a BIG BUT, when it comes down to when I have to rely on hopium more than relying on what I can see reading price action, it’s time to say good bye to my trade regardless of what the future outcome might be.

    Speaking of which, price has begun to come back a little and “might” still become a winner today but I made the correct decision to pull that bandaid off quickly instead of keeping my fingers crossed to rely on luck to bail me out. :)

  • Mark Shinnick

    Yet, I’ve found that training the psyche yields great personal satisfactions…which is a portion of my motivation to trade..

  • Mark Shinnick

    Something to consider with miners now is the nature of the local environment of extended inflection area that many systems don’t account for too well so can get thrown off the position bus. For example, my own miners sells are still holding while looking for low risk entries, or re-entries after range type gains or losses.

  • BobbyLow

    Certainly is a consideration and I wish I could be a better range trader but I suck at it. I’ve had more success shooting for short term MOMO plays. They don’t work all the time but they do work for me more often than not.

    I also think that as Scott said, whenever there is a rollover in Gold Contracts it can screw continuous contract charts up for awhile and I think by extention screw up the Miner Charts. Things should straighten out shortly though.

    All in all, I had a decent month of May. I’ll be leaving for a vacation next week and will be looking forward to getting back into action when I get back.

  • Scott Phillips

    I’m finding it quite weird that ES is rocketing while NQ hasn’t been able to break yesterdays daily high.

    Weirdness

  • Scott Phillips

    No, that is a fallacy.

    I’m convinced the best way is to feel your feelings deeply and authentically so you aren’t scared of them.

    You know what? It SHOULD piss you off when you get stopped out 10 times in a row. Trading like a robot isn’t a solution, when we do that we don’t understand why we inexplicably missed a setup, or why it is emotional torture to take the next trade, or why we go on tilt in a drawdown to “make it all back”

    The number and ways we have of fooling ourselves in the markets is truly amazing.

    The only way to stop lying to yourself and seeing things in the charts which aren’t really there, is to not be afraid of shame, or powerlesness, or frustration, or arrogance, or any of the other common trading scenarios.

  • BTrader

    Totally agree and is very meaningful. NQ has been leading the entire rally so far.

  • http://evilspeculator.com Sir Mole III

    We always keep it real here at Evil Speculator. If I pretended that I never lose I would lose credibility quickly. Plus I’ve been banking coin very nicely over the past few months. A few losing trades don’t break the bank.

  • ridingwaves

    XLF-FIRE showing strength along with biotech/healthcare, industrials making up for it…
    biotech looks ready to breakout now…..

  • Scott Phillips

    I admit to being confused by it. The indexes are unequivocally bullish, but that shouldn’t be.

  • Mark Shinnick

    Yeah….its been said that the only way out, is the way through. Just have to confront whatever is really there..and trading forces that requirement most consistently maybe better than anything except combat.

  • Darkthirty

    Normal market……..

  • Scott Phillips

    Exactly so. Give me a decent fight any day, physical pain is nothing compared to the shit trading brings up 😉

  • Yoda

    The great George Carlin to celebrate the end of the Big Lie:
    https://m.youtube.com/watch?v=BB0aFPXr4n4

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

    I don’t think you are getting his point…or the point of thousands of scientists. But wtf do they know right?

  • Tomcat

    I had the fortune to hear the more extensive version of this information first hand from an MIT student on a flight to Thailand for a round robin muaythai tournament back in 2005. It blows my mind how many dimwits don’t get this. Sure earth will be fine, we are talking about humanity. Frankly though as George said, we probably dont deserve to survive.

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

    Science behind it is rubbish.

    http://www.climatedepot.com

  • Tomcat

    Thats a good book and was an easy read CB. I kinda didnt care for the ending though. Too hopeful. 😉

  • Mary

    It just depends on which group of thousands of scientists you choose to believe.

    Feel free to check out this site, including the FAQs.

    http://www.petitionproject.org/

  • Yoda

    So much negativity, we’ll be all fine. We may all have to buy a thicker winter coat though or move to the tropics for the next 2 decades:
    http://www.iflscience.com/environment/we-could-be-heading-mini-ice-age-2030/

  • Mary

    None of what the propeller heads want to do will affect our climate. It is a massive scheme to distribute money to the “correct” groups. Crony capitalism to the extreme.