I think today’s session should serve as a stark reminder that the very last thing you should ever attempt is to apply even the slightest sliver of logic to market behavior, especially during volatile periods. I’m going to make this very easy for you rats, so listen up and listen carefully now. If in doubt or if you find yourself attempting to make a prediction as to where the tape may swing in response to big news events remind yourself of the following:
Now read the line above again a few times and then write it on a piece of paper and stick it to your wall or resident shark tank if you have one handy. I prefer the latter as it serves as a proper backdrop to that message and for all you pikers I have put together a little theme pic which you can use instead
Case in point are the spoos which first gapped lower screwing anyone left long – then attempted to close the gap until the 100-day SMA (and weekly NLBLs) to then turn on a dime and continue lower. Clearly there is no explaining any of this and neither should we try. The chart above provided us with all we need to know.
So did the Zero I may add which has been pointing down all day since the open. But chances are you weren’t watching that one as you’re a nomadic ZeroEdge reading retail rat and thus can’t afford the monthly subscription for your $2000 E*Trade account.
Soybean meal – I just held my nose and take a spoon full long here with a stop below 332. 1/2R only as the daily context is looking rather bearish so odds have it I’ll be stopped out. But if not it’ll catch a bunch of folks off guard.
Euro – nice upper BB touch and I’m short here 1/2R. I do love this chart but the gap turned into a short squeeze. Why? Because a reversal higher and beyond didn’t make any sense whatsoever, which is exactly why it happened. If that confuses you please re-read the intro above.
The force today is definitely with Forex – and for my intrepid subs I have more setups waiting below the fold:
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That’s it for today – I hope none of you guys were caught off guard and are positioned nicely. Definitely no lack in volatility and odds have it that we’ll see a bit more before things quiet down for Independence Day weekend.
Last night’s dramatic gaps at the open across the board have been followed by systematic reversals. Before I went to bed my wife had actually joked that I should run to the ATM and clean it out. Well, when I got up this morning I wished that I had followed her advice:
Because that sweet EUR/USD exchange rate of 1.095 is no more. The entire gap has been filled and I can only assume that Greece suddenly doesn’t matter anymore or that a new batch of hopium has hit the streets in expectation of the July 5th referendum.
Being a proponent of game theory I personally believe that the Greeks will vote to stick with the Euro – both sides simply have too much to lose in any other scenario. I also imagine all those Greeks standing in line at the bank today during the smoldering summer heat and that may dampen their resolve to ‘stick it to the EC’ and go it on their own. Don’t get me wrong – as I suggested yesterday my notion is that Greece would actually be better off over the long term but I just don’t see it happen. Fortunately we only have a few days to wait and I’m very much looking forward for this dreaded saga to finally meet some level of resolution.
Gold also just filled its gap and we are back from whence we came (Friday). Fortunately Scalpius was able to snag a few R here (see below) – that’s certainly a good start.
Equities also on the rebound but thus far it’s been rather modest. The level we should keep our eye on is 2053.5 which marks the weekly Net-Line Sell Level (NLSL) and we traded merely two ticks above it last night. So definitely a technical level to watch and probably the last bastion of support as the 25-week SMA is currently at 2072.
Skynard grabbed a few longs at the open and that took some balls – big props for that mate. I refrained from getting involved after having spent over 25 hours last weekend coding and refining Scalpius as well as refactoring CrazyIvan into a leaner and meaner 2.0 edition (see previous post). Suffice to say I’m exhausted but clearly this will not be a week to rest or relax as volatility is upon us.
Scalpius grabbed a nice long position on Gold (and crude) near the lows – not a bad start! Unfortunately it was in a demo/test account – no real action just yet as it’s in early alpha.
Let Mrs. Evil handle the forex action moving forward.
Obviously I am not eager to touch anything right now – too much gaping action and it’s too late now to touch any of those moves. Let’s see what happens over the next few hours – I’ll be sure to put up a post later after the open once we see more participation.
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It seems that finally Greece has gone past the point of no return and events are quickly escalating. If you truly care about all the gory details then look no further than ZeroEdge which is literally bursting out of the seams with extra sarcastic coverage of the gloom & doom that is bound to descend on us starting Sunday night. Your guess of what happens next is good as mine but I’ve hired my own consultants and per Dr. Venkman the outlook is pretty grim:
So before you all resort to cannibalism (first dips on Skynard) let’s take some basic pre-cautions in anticipation of some massive volatility across Forex which will most likely affect bonds, equities, and various futures contracts as well. First up, don’t be surprised if your broker may only accept close orders tonight and tomorrow – clearly the industry has learned from the Swiss Franc debacle a few months ago.
Down here at the lair I have turned on CrazyIvan but strongly caution you subs from taking any entries until things normalize, whenever that may be. On the Thor front I will not put up any new setups tonight but revisit the situation on Monday before the roll over. Perhaps this will blow over quickly after some last minute deal but I won’t risk any exposure until we know for sure.
Message to Greece: Good riddance! I have nothing against the country or its people – quite on the contrary (although I’m partial to Moussaka). One of my relatives is actually renovating a villa in Santorini and I plan to visit soon (with my American passport – ahem). But with all due respect – I was sick of hearing about this dreaded Greek saga five years ago and since then have long ceased to care. We’ve teased this out beyond anyone’s pain threshold and we all could do well without hearing about Greece at least a week or two.
Message To All Greeks: Good luck – you’ll need it. But heck – you still have a gorgeous country at your disposal and things could be worse (just ask any Greek over 75). This may be an opportunity to turn the corner and rebuild your nation without outside interference. As the saying (kind of) goes: Be careful what you wish you for because you may have just gotten it.
CrazyIvan News: A few weeks ago I posted about some long overdue statistics I had run on my CrazyIvan results. Turns out that inside periods are a complete waste of time over the long term (as I had long suspected) and I also managed to identify a list of the highest scoring entry patterns. I have now removed those dreaded IPs and today deployed a new version which features a filter that will only permit the 12 highest scoring entry patterns. That in turn however will have implications on how we trade CrazyIvan going forward.
Each respective symbol will be taking a lot less entries on a daily basis. I can’t give you exact numbers but I expect about 1/3 of the entries in comparison with the old system.
Given the that I felt that we needed to add a bit more opportunity. So I have made the following changes:
Added the following futures contracts: Corn, the 10-Year Bond futures, Natural Gas, and the S&P E-Mini.
Added the following forex symbols: USD/CAD, EUR/JPY, NZD/USD
Removed AUD/JPY. It’s a minor one and I don’t see any advantage over the EUR/JPY for example.
For the coming weeks I recommend that you trade the new futures symbols with only 0.5R position sizes until we are sure that they flow as expected. I don’t anticipate any problems but always prefer to err on the cautious side. The new Forex symbols shouldn’t give us any trouble and those can be traded full steam ahead.
That’s it – I’m off to my training class and then I’ll have plenty more work on my plate before Monday. See you guys on the other side.
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