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Order In My Little Trading Universe
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Order In My Little Trading Universe

by The MoleOctober 6, 2011

As a born German I have a natural disposition toward creating order in my little universe. Early in my career this sometimes posed to be a challenge as trading as an activity is not anything like solving math or physics problems. There’s a lot of chaos, randomness and emotions involved – all of which get in the way of what ‘logically is expected to happen’ based on prior observation at least. I think we all have been through this process to some extent or the other. Once you start learning what to look out for and what really works however you revert back to relying on a few selected particulars and combined with mental discipline you arrive at order in your little trading universe.

In other words – if we survive the first few years of trading we all form some type of mental paradigm that in some way or the other gives us a reliable edge. Many traders simply refer to their ‘system’ but I think it’s a lot more than that – part of it is also the ability to look at a selection of charts and to immediately get a sense of what really goes on down in the ugly underbelly of the financial markets. We would like to think it’s all based on logic and common sense but the human brain works in mysterious ways and many decisions we think are analytical at first start with some type of emotional response.

We then start to bring in logic and common sense and try to justify these emotions with the rules we have developed over time. My personal process of doing that is this very blog and writing the articles many of you have enjoyed actually help me personally to arrive at what I believe are reasaonble conclusions as to why I am taking a particular stance on the market. It also commits me to that very outlook – unless of course I decide to change my mind. As you can imagine exposing my conclusions to a critical (and also paying) audience however ups the ante by quite a bit, I can assure you that 😉

Anyway, what I in particular look out for, and what has worked quite well in the past, are inflection points where I see several unrelated markets arrive at a similar setup – you could call it synchronization points. That in itself raises the odds on not just taking advantage of each respective setup I am looking at but all across the observed vertical. Today just so happens to be a great example of a synchronization point and I give you one chat for free and the other two are for the subs only:

We start with the spoos (i.e. the E-Mini S&P 500 futures) which have been happily bubbling higher, just as proposed in yesterday’s update (but who’s boasting?). But I did also mention that we would be running into a cluster of resistance and for a more in-depth overview please refer to my post. On a more short term basis the spoos are nearing the ‘end of the easy money game’ turning point at which I would probably expect a bit of profit taking. Our candidate for a short term reversal is the 1160 mark which just so happens to be near the 100-hour SMA, the 25-day SMA, as well as the 1159.75 NLBL. A breach above that will eventually set us up for a push higher but we all know they’re not going to make it that easy for us.

Now, as hinted above, there are two more charts which seem to be in exact sync with what is happening over on the spoos:
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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 or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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The NZD/USD is also approaching resistance – in this case we have  an hourly NLBL plus the upper 25-hour BB, the upper 100-hour BB. On top of that there’s a daily NLBL tight at 0.7708 and the lower daily 100-day BB line looming above (obviously near that hourly resistance cluster). Look familiar?


The USD/CAD is painting the exact opposite with an hourly NLSL at 1.0369, near the lower 100-hour BB and the daily NLSL lurking at 1.036. Turn the chart 180 degrees and you basically have the same exact setup.

I’m going to keep a very close eye on the FX side as that is really where the game is being played and decided. And I strongly recommend you consider these three charts before structuring your positions. This is one of these moments when things all come to a point and when the odds are starting to favor those few who pay attention to those subtle synergies between what appear on the surface to be completely unrelated markets.
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My apologies for plastering all over Volar – I strongly recommend you take a look at his latest sentiment update.

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.
  • Anonymous

    Great post Mole. I had exactly the same in mind re spoos.

  • http://evilspeculator.com molecool

    Can you forgive me, Volar? 😉

  • Anonymous

    and the 20 SMA of SPX 60 min as support

  • Anonymous

    Mole how are you positioned currently?  You are long I take it?

  • Schwerepunkt

    OK, we’re at 1160. Can we drop now for a retest?

  • Anonymous

    Ja, order order we will have order! Slaps riding crop against boots for emphasis.

  • volar

    totally – not an issue with me mate 😛

    obviously i am having a good day

  • nyse

    Good luck..

  • http://evilspeculator.com molecool

    My penis pump is in the shop currently so I’m slightly above average.

  • Schwerepunkt

    some profit taking now  . . . too funny. Mole hit it on the nail.

  • http://evilspeculator.com molecool

    I actually tried to rearrange the post order but failed. If anyone knows how to do that with posts (not pages) in WP then please let me know.

  • Schwerepunkt

    You’ve been using it too much, then. 

  • Ted Gresch

    Thanks Mole, from one Kraut to another. 

  • Anonymous

    Hard to miss the 5min zero neg divergence too

  • volar

    WTF how many EOD spikes can we have? Tick looks like a ping pong table

  • Anonymous

    I don’t see it. If I had to call something, I’d say that there is a slight positive div on the 5 and a slight-er neg div on the lower hourly.

  • Schwerepunkt

    Probably means we’ll get a gap over 1160 resistance overnight and it will become near term support.

  • Anonymous

    You are right: no neg div

  • http://evilspeculator.com molecool

    Don’t complain – trade it!

  • http://evilspeculator.com molecool

    Vielen Dank Herr Gresch.

  • volar

    i am not complaining.. tape working great for me 😛

  • Anonymous

    If we get a gap over 1160 tomorrow, I’ll most likely short it.

  • http://evilspeculator.com molecool

    Tooncez – you need to schedule an eye exam at your ophthalmologist. Obvious spike on the ZL which was followed by smaller ones despite higher prices.

  • http://evilspeculator.com molecool

    Heck, you can’t fight who you are… we Krauts love order. The universe is way too chaotic for us – hehehehee

  • http://evilspeculator.com molecool

    Like a mad monkey.

  • volar

    ya a large gap up would be bad for bulls IMO

  • Anonymous

    I must have mine examined too because I don’t see the higher prices. However, the conclusion remains the same…

  • nyse

    Im trying to learn here, and always appreciate anyone’s comments critical or otherwise. Please take a look and let me know what you think. Great posts here the last couple of days. I am slowing “getting it”…
    http://screencast.com/t/eRBkpyyEd

  • Anonymous

    interesting how FCX led this charge…been backing off all day from initial runnup

  • Anonymous

    Don’t forget about the rodent’s tree rings

  • volar

    well under a normal circumstances… 2 trend days calls for a pause… scott has many comments on that one

  • Anonymous

    pssh tomorrow you no findie me trading on NotForProfits trading day.

  • Anonymous

    Are we referring to the one after ’11’ and the one after ’12’, and matches this kind of ruleset for divergence (http://evilspeculator.com/wp-content/uploads/2008/12/2010-04-08_zero_divergences.png) ?

    Perhaps you could augment my zero reality by drawing a line?

  • Anonymous

    Just thinking it could be telling us that mkt going to pb now

  • http://evilspeculator.com molecool

    Let me translate your chart in one brief sentence: Failure of the bears to resolve the trend lower.

  • http://evilspeculator.com molecool

    Scott….mmmmh – that name sounds vaguely familiar…

  • Anonymous

    (you might get it if you just ’12’ and go to ’13’ (which hasn’t painted yet)

  • Anonymous

    non-farm payrolls tomorrow…

  • http://evilspeculator.com molecool

    Maybe that’s why we all love techno 😉

  • http://evilspeculator.com molecool

    Watch the 1160 mark on the spoos folks!!!

  • http://evilspeculator.com molecool

    Why do you think they are banging the tape higher here? 😉

  • http://evilspeculator.com molecool

    This is really fucking awesome!!!

    http://www.youtube.com/watch?v=5dxXptMyhbg

  • Anonymous

    like a knife through warm butter

  • nyse

    Hot shit.

  • http://evilspeculator.com molecool

    It flows perfectly – great for trading ‘in the zone’.

  • Anonymous

    EOD looks like panic short cover and exhaustion buying. Yep. Looks like I’ll be trading the other side tomorrow.

  • http://evilspeculator.com molecool

    ????????????????????????????????­??????????????

    D   A   I    L   Y      Z   E   R   O     H   A   S      B   E    E   N      U   P   D   A   T   E   D

    ????????????????????????????????­???????????????

  • nyse

    Just thinking that!

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

    I kept waiting for the zebra lines to dance.
    so disappointed.

    I shall listen again.

  • http://evilspeculator.com molecool

    They do have visual effects like that for Winamp and other players. 

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

    with todays SPX 1.83% move.
    The /ES T has gone from candidate to certifiable.
    that does not guarantee a top price tomorrow.
    we shall see.

    http://3.bp.blogspot.com/-bzONf6MTfGU/ToxpcoQisDI/AAAAAAAAARM/qcMIpfWCvNQ/s1600/Oct05c.png

  • Anonymous

    Now that it has painted, it looks like ’13’ is higher too.

  • Anonymous

    Looks like EOD price action messed up your fib circles chart

  • http://www.facebook.com/daniel.kirstein Daniel Kirstein

    had no idea I would ever find common ground music-wise on a trading site…maybe its because of our mutual alemannic background

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

    yes indeed-e.
    stupid Market, we must have order, no CHAOS!
    😉

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

    yes.

    think of the dancing nails in this video, as individual stock prices.

    http://www.youtube.com/watch?v=mDsqpeiTqg8&feature=relmfu

  • Anonymous

    most certainly a in the zone track. one thing ive learned here is to keep my zenith,nadir

  • Anonymous

    The T’s ending is the only thing that prevents me from shorting this MF EOD move. Can’t fight the T, so I’ll sit on my hands until Monday.

  • http://pulse.yahoo.com/_N2BRXG3E35GXBXZTEBSXLUSDCM B

    Couple questions for Volar and Fearless. Fearless, given that we DID reach 20 SMA by the third bar, does that mean you don’t expect a retest of the low? Volar, on the sentiment indicators one thing I notice is that at major lows the sentiment tends to stay imbedded for a few weeks at least. We are only just now smacking those bearish readings. Perhaps we are not out of the woods yet?

  • Anonymous
  • Anonymous

     creating Ts pretty straight forward? or something else you look for.

  • Marcus Troyka

    ransquawk; 3:39; “Greece submits new austerity bill to parliament”
    My guess, just looking at the tape, is that the tweet came out at 3:36. Previous high is 1193.15, so my guess is that they’ll be able to push 1180-1190 before running out of steam.

    Nonetheless, I still hold that we will see SPX below 1050 before the middle of november. Consumer confidence is at the 2009 lows, and the seasonally adjusted sales numbers for this quarter are going to reflect that. In addition, today’s news was not. There will probably be even more extreme violence in Greece, and more massive strikes, and even less people willing or able to pay, or even collect, taxes. That, and people have already forgotten the Italian triple-downgrade.

    No amount of tape painting is going to hold off the flock of black swans that’s already beginning to hatch, although they won’t stop trying.. ever. The news about dexia from tuesday and greece from today will become the down-driving news tomorrow.

    I don’t know what I’m complaining about though, since I’m stuck in cash. I guess I’m just pissed that I’m stuck in cash rather than banking on herd stupidity :|.

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

    straight forward, yes.
    sometimes I use stochastic crossovers as validation, and statistical outliers .
    some may consider it a novelty.  

    I’ve been learning the past 16 months.
    the real widow makers are double bottoms, and unending trends.

  • Anonymous

    gothca. Thanks

  • Anonymous

    Thats the *first* thing i notice about the tape. If its to continue upward a retest is a very high probability to sucker in the remaining shorts.

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

    so that’s what I saw this morning?
    that puppy was going down!and then zoom, inverse stovepipe like it never happened.

  • Anonymous

    No wonder it is in the shop… :}
     

  • Anonymous

    2 trend days and an UNRETESTED low. 

    Psychologically the 3 updays have had breadth of 1.51,2.67,5.56

    The urge to bank short term profits will be there. Also, since the bearish thesis cannot be ruled completely invalid (but is a lower probability outcome at  this point) shorts will be looking at the bounce as an opportunity to STFR.

    5.56 stocks went up for every one that went down, unequivically bullish – but how much upside progress did we make? 20 handles (and the last rally on the 5 min chart smells like tape banging to me)

    I suspect the next day or so is the LAST CHANCE for the bears to make a stand. If they fuck it up here, its get long and stay long for a while.

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

    I almost agree with Mole.
    Failure of the bears to continue resolve the trend (pace) lower.

  • Anonymous

    Agree, gap up tomorrow would be a statistically valid shorting play. Personally I’d bank some profits on the gap fill, and hold some with a stop at the gap high.

  • nyse

    Thoughts? http://www.screencast.com/t/1bVUqWc37Ny

    p.s. I fukin love this place!

  • http://evilspeculator.com molecool

    Works for me.

  • http://evilspeculator.com molecool

    “Greece submits new austerity bill to parliament”
    Translation:

    http://www.youtube.com/watch?v=NJ6xBaZ92uA

  • Anonymous

    Thanks for the trading tip Scott

  • http://evilspeculator.com molecool

    Yup, the Krauts love their trance/techno.

  • Anonymous

    Honey badger returns :-)

  • Anonymous

    The tape is showing us that the moment between talking about it and when the flood of packets from computers is getting thin. So that why being it is NFP aka notforprofits. Im not looking forward to zigging when I should have zagged vice versa sooo Ill just wait.

  • volar

    What indicator are you referring to?  Just now smacking?  Only in 2008 was anything of mine more extreme (Ex ISEE)?  How can one bet ona 1/120 event?

    All my indicators said the embed  or “Smacking” persay moment was in August- look at the utterly lack of volume recently? The IV market? VXV, RVX, Euro IV all confirmed what i needed. VIX failed, with VXV new high and VXV buy signal is classic 2nd move buy zone.

    I could not ASK for more LACK of embedding. i am very satisfied- shortterm movements do not bother me.  I was going to wait till the 3rd week of OCT.. but NONE of my indicators embedded.  To me 10/3 was the chance. I have DIVERGENCE after the Embed? Just chart the last 25 years of VXO data and unbiasedly say the VXO just stays elevated after a spike near 50? It gets 1 to 2 chances.. otherwise MMs know the obvious….

    I admit- if you are using only 10/3 as a proxy *there is no retest of the low*, but 11/28/08 reminds me of much today….

    A bear trap after capitulation is common

    consider 1987 futures

    http://content.screencast.com/users/wprosser/folders/Jing/media/55c3ea47-44d0-4703-a1b4-ab642c935284/2011-10-06_1532.png

    and NOV 08

    http://content.screencast.com/users/wprosser/folders/Jing/media/9a593aa0-8fc5-4945-8294-2ba73eb2ed29/2011-10-06_1534.png

    sure we can make new lows.

    Sure we can retest the recent low.

    Sure everybody that MISSED the BUY can dream of the market making a nice retest …. BUT WHAT ABOUT IV??? Even if we get the retest…the VIX will be utterly lower and 1/2 of what I just made would not even be available.

    LMK if that helps

  • http://evilspeculator.com molecool

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

  • Anonymous

    Here is a chart which shows a failed round bottom.

    In fact, this is a reverse of the ES, perfect symmetrical, thus far. This reflects a cha-cha dance playing out in Europe.

    We will have a failed round top if we can’t breach the 1070 low.

    http://screencast.com/t/Hm8tswmI