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Melt Up Monday Rub Down
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Melt Up Monday Rub Down

by The MoleNovember 16, 2009

After the overnight ramp up a drop through WVAP was promptly exploited as yet another dip buying opportunity – all averages remain their highly flatulent disposition.

I do see a monster divergence but would warn everyone to not get their hopes up. A drop into the close might have been the start of something bearish but the pattern indicates that more upside may be ahead.

I think I showed you this chart before – we are right at that reversal line again. However, at this stage there is the possibility for a blow off top according to my wave count (previous thread), so be cautious.

Program Trading Update:

resident.evil/ES: +0.75
geronimo/ES: +2.5

I do have a question for all subs and ex-subs: After laboring all weekend I did send out an email to everyone on my list about the progress that was made to turn the Zero into a trading signal further down the line. If you haven’t seen the post – I successfully implemented the Zero Lite in NinjaTrader 7 this weekend. Unfortunately I received only a handful of responses, and I wonder if the majority really cares. So, before I put a lot of time and energy into this, I would encourage you to make yourself heard.

Cheers,

Mole


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 the usual social media waterholes.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    interesting… so according to zero there were today two (failled) attempts to reverse to the downside… what bothers me is that, per information displayed on zer0's page, zero should nail long trends, the quick reversal is worrying (or am I saying something wrong?)

  • davosdax

    I trade options only, no futures, so I don't pay much attention to the geronimo, zero etc stuff.

  • clutchshorter

    Same here, I just trade options and equities only.

  • PRSGuitars

    A DX update while I'm capping it: http://screencast.com/t/YWRmNDQ1N

    Yes, that's a 133 extension from that months-long and old red channel. Tagged on that DX spike day. WTF?

  • centerline

    I can feel (and see) the exhaustion around here today more than ever. Very hard market to play right now. Logic short-circuiting what instinct says is correct trade more often than not over the last couple of months. Missed trades – one after another when you knew in your gut it was going the other way. Now, market has almost everyone right in that uncomfortable place where it seems no end is in sight – and those in the contrarian camp feel like they are strapped to a nuclear bomb that just starting beeping louder (getting ready to chew a limb off to get free). Just saying…

  • TimV

    Im interested in the Zero system. I think I sent you an email about this… but… I really like the zero, but can't really justify paying for a sub since Im not at a computer very much during the day…but if there was an alert system, it would make it more reasonable for me to be a subscriber. Looking forward to it.

  • amokta

    ewi stu today “The blue-chip stock indexes appear very close to the start of a decline, if one did not already start today”

    -are these people on dope-amine?

  • PRSGuitars

    SPX updates both daily — 2nd one closer up showing 133 target 1120… maybe?

    http://screencast.com/t/M2M4YzZmMm
    http://screencast.com/t/NzVlZDBiZj

    Worried a little that nominal SPX lines breached but willing to see if the 133 has its marbles or not…

  • molecool

    How long have you been a subscriber over at EWI? It seems you have an axe to grind – did you lose a lot of coin due to the P3 calls?

  • vision_invisible

    true true, this market is relentless. now normally i'd use this feeling to trade against (obviously using some TA to time my trades), but i've held back and just sat in the trades i have on and not put anything else on. i have been looking into physical gold purchase. let's be honest here, the only exit strategy is reflation and printing money. there is virtually no incentive to do anything else, and the fact that our creditors are probably doing the same thing (stimulus + print). buying here even with a small drop is dollar cost averaging.

  • molecool

    Why didn't you buy gold when it was 700, 800, 900, 1000? Why at 1100?

  • tradejane

    Thanks for the charts. I don't trade futures either but I still find them to be a very helpful indicator. I agree, we're very close – I could list a whole bunch of reasons why I think this is the case – but the bullish talk of “infinity and beyond” has been really getting to me lately and that's always the biggest sign of a top in my book.

  • Joe8888

    Just Came across a chart i did last week , where we had a little more upside til we hit Upper Channel..

    We just hit Today !!!! to my surprise..i forgot about this Chart…

    Dow Jones Weekly :

    http://www.screencast.com/users/chartwiz/folder

  • 4everGrateful

    Build it and they will come Mole!

  • http://www.evilspeculator.com berkshire

    Good chart Joe, nice to see you. I had noticed that a little bit back, but have been too zoomed in on the little picture with it lately to have noticed. Thanks for bringing it up…

    Skål!

  • davosdax

    It can take a while to play out though. Greenspan gave his “irrational exuberance” speech in 1997, over 2 years before the market eventually topped.

  • amokta

    no, not lost a lot yet, but puts going into red now i think!
    no axe to grind, maybe im being a bit over-dramatic
    they do provide counts & commentary, just their top calling is a bit off – they shouldnt call them so categorically then

  • Schwerepunkt

    Meredith Whitney Advisory Group (MWAG). “Meredith's Wild-Ass Guess?” Ironic acronym, because I think she's spot-on.

    I just listened to her comments for the first time. She thinks ALL the banks are expensive. Heck, she said the entire S&P is overpriced. She never said short, but I expect that's what she's doing. I wonder if she likes FAZ here?

  • vision_invisible

    About this time last year, I bought $5k of '10 call options on Yamana, and got a double in short order and sold…I would have obviously could have made a lot more but c'est la vie.

    But this isnt about trading. I have no physical and that is bothering me. These numbers should bother you (@$1000/ounce):
    Gold in existence $4.5 T
    Gold in private hands $3.2T
    Gold in banks/govts $0.98T
    Gold real supply (guess) $0.645T
    Gold production per year $80 Billion

    At one point, it looked like a deflationary collapse would unsue, we'd default on the debt and dollars would be worth more. Now we have Buffet telling you that “Deflation is inconceivable to this administration” – going “all in” on real assets – goddamn trains! If stocks are going down by 30% in short order, why would he buy at the top? Because it won't matter over the long haul thats why.

    When we are printing $100 Billion a month, does it make sense that this can effectively buy the yearly production in gold? How does it sound when we have 1/10 people on food stamps and there is no end in site? Do you think the entitlements will stop? Does it make sense that the world's biggest landlord (the Fed) will allow deflation, when they've put all their chips into reflating the banks, extending to pretend on the belief that the dollars demise will cause values to rise in deflated dollars… It may not work, but the strategy is place. Finally, US banks short COMEX gold contracts went from 75K (aug) to 116 (sept), to 123 (oct)…so we can see what is at stake. In my mind it is entirely likely that even a major fail in the reflation – some companies will just not make it, the consumer aint coming back – gold will just keep marching because the central premise of paying back money you dont have is to make mo money.

    So in those terms, while gold may have a $950 downside target on the lo end, who cares because the end game is very very clear and I've never heard any convincing argument against it.

  • tradejane

    Oy. That could mean staying in the short-scalping loop for quite a while. Maybe a vacation is in order.

  • amokta

    Im giving EWI until friday to russell-up (no pun intended) a P3 !

    on a serious note – the divergence between 1/2ndry indexes – could be explained that secondaries climbed faster first, so may on a little dip – i.e. doesnt herald a major stockmarket decline

  • de3600

    Meredith Whitney for president 🙂

  • vision_invisible

    Trend is your friend:

    $US / Gold

    http://tradesystemguru.com/images/stories/Newsl

  • Rush23

    Mole-

    I really like your site and content. By far the best content I've found. I haven't posted much, but am an avid reader. Thank you and yours for all of your work.

    I was lamenting my short position this morning and reflecting on an enlightening article that I read this weekend. It occurred to me that the article may actually explain the shenanigans that we’ve witnessed recently in the market. It inspired my first post. Maybe everyone figured this out already, but I'm new to this game so I'm still learning.

    Here’s the article on ZeroHedge.

    http://www.zerohedge.com/article/guest-post-how

    Now obviously the article is about oil speculation, but it seems to be fairly obvious that the same sort of manipulation can be applied equally well to all other market-priced assets held by speculators or institutions. Now, if I was a bank or some sort of other under severely under-capitalized institution (or, scarier, a government official with the task of re-capitalizing such institutions), what’s the fastest and cheapest way to get re-capitalized? Sell stock into the open market? Make money through regular operations (hah!)? Loan out almost free money from the Fed at loan shark (30%) rates? Maybe, but far better, arguably, is to take an existing stock position, and bid the price up by trading back and forth with other institutions in the same undercapitalized position that I’m in. If I have a billion $ in stock, a 60% ramp over 8 months, nets me a cool $600 million for my balance sheet and all I had to do was have my computers play with your computers. Add leverage ($ carry trade) and my balance sheet looks even better.

    I have no idea if this is really what’s going on, but I certainly suspect something similar to what the article described. If that's right and this is going on widely, when the shit hits the fan, whichever institutions are last out are toast. And those dominoes will fall quickly.

    On an equally dark note, if you’re in the mood for some more reading / listening and want to see another reason why we’re really screwed in the long run, have a look at this article.

    http://www.npr.org/templates/story/story.php?st

    The upcoming book may be worth a read. If he’s right, we may see a perfect storm in the next 2-3 years (residential, commercial real estate, LBOs, ick).

  • http://oahutrading.blogspot.com/ steveo77

    anyone have a data feed on TF Russell futures. My charts on TOS show no bids, no asks, very odd.

    Prophets charts apparently does not have Russell futures.

    http://screencast.com/t/MzhhNGI2Njkt

  • http://www.aggressivelyuninformed.com nepharis

    Looking into some lottery ticket plays: options on ETFs. For example, the APR10 30 call on FAZ is going for ~$2.5 right now… could be fun. BGZ calls are also cheap, but don't tend to have the HUGE swings that FAS/FAZ sees. Any other ideas?

    Remember, (and this is mainly why I really consider them lottery plays: just because the market crashes, doesn't mean FAZ will shoot sky-high… those triple ETFs can get owned in a choppy market. That said, a solid trend will turn them into rocket ships to the freaking moon.

  • Publius Federali

    Thanks for the links, now get yourself an avatar.

    I don't think many people on this blog have much hope for this country's economy. Although 99% of our country would think that we are all crazy doomsdayers, I personally feel more comfortable having the majority of this country disagree with me. Especially considering that those who think I am nuts are the ones who allowed us to get to this situation in the first place.

    Sure the markets are manipulated. Liquidity and the dollar carry trade are being poured into equities and creating a new bubble. Our government is only concerned with saving the broken financial system. The problem is that the banks themselves know that they can not be saved, so they are taking the money from the Fed and gambling with it so that they can steal as much of it as possible before the fairy tale ends.

    Don't concern yourself with the manipulation, it can not go on forever. My thought is that when someone wants a reason for something they can always find an answer. According to our government the market is going up because things are getting better. According to me it went up because of manipulation. Does it matter who is right? It's like watching bobble head CNBC. They always have a reason for a market move, today it was good retail sales. The truth is that the market went up because it wanted to go up, however, human beings insist on having answers. We only feel comfortable when we can explain something, so CNBC finds an explanation for us and we go home happy. Sheeple, that's what we are.

  • http://www.finz.tv/posse bhbgrouptrader

    I am in for the zero program and highly reccomend it for everyone here…..I took 3 weeks off from trading for myself but I am ready to hit it hard once again….sometime when you don't have a clear picture of things its best to watch from the sidelines….nuff said!

  • Marc45

    Mole,

    Another vote for the new Zero system…and thank you for the great effort with this truly useful tool.!

  • TomOfTheNorth

    With all the talk of CRE, has Private Equity slipped off the radar?

    http://thereformedbroker.com/2009/11/15/the-com

    h/t naked capitalism

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    ¤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://sshamster.blogspot.com/ Stainless_Steel_Hamster

    not as strange as it seems, trend confirmation and closing some counts.

    most likeliest count would now place a bottom at 950, the previous seemed to pint to the 600 region

    that's why I just shorted equities instead of doing 50/50 between short equities and long gold (was I wrong or what?)

  • yudhisthira

    Apparently full moon nailed the high of day. I'd like to see pop tomorrow morning to finish 5 waves up from thursday. ' exit bgu, get some tza, and then hunker down with the bears. (for the winter hopefully.)

  • molecool

    Thanks for this – I have been pretty prolific about various market manipulations and the Fed crutches used to prop up equities – please keep coming back. Right now everyone is a bit discouraged but that'll change soon 😉

  • molecool

    Great to see you badmouth this blog over on HOB – very classy.

  • molecool

    Well, you seem to enjoy running your mouth and complaining – thanks again for dissing ES over on HOB – very classy.

  • Scoops

    How the hell do you get points and not even have an avatar. Amokta you seem to be happy when others hold your hand so maybe it's better you head elsewhere with your order of french cries. As a parting gift, you will forever bask in frustration, denial and blame so long as you look to others to take care of your own.

  • Corto

    Mole,

    I've only subscribed to Zero for a couple weeks, but would greatly appreciate the updates you are talking about having it give out signals. Thanks.

  • yudhisthira

    Apparently full moon nailed the high of day. I'd like to see pop tomorrow morning to finish 5 waves up from thursday. ' exit bgu, get some tza, and then hunker down with the bears. (for the winter hopefully.)

  • http://evilspeculator.com molecool

    Thanks for this – I have been pretty prolific about various market manipulations and the Fed crutches used to prop up equities – please keep coming back. Right now everyone is a bit discouraged but that'll change soon 😉

  • http://evilspeculator.com molecool

    Great to see you badmouth this blog over on HOB – very classy.

  • http://evilspeculator.com molecool

    Well, you seem to enjoy running your mouth and complaining – thanks again for dissing ES over on HOB – very classy.

  • Guest

    How the hell do you get points and not even have an avatar. Amokta you seem to be happy when others hold your hand so maybe it's better you head elsewhere with your order of french cries. As a parting gift, you will forever bask in frustration, denial and blame so long as you look to others to take care of your own.

  • Corto

    Mole,

    I've only subscribed to Zero for a couple weeks, but would greatly appreciate the updates you are talking about having it give out signals. Thanks.

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