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Santa Off The Launch Pad
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Santa Off The Launch Pad

by The MoleDecember 21, 2010

This season Santa got a little help from an intrepid gang of gnomes over at 33 Liberty. No big surprises here for any of us naughty rats – after all the writing has been on the wall for weeks now.

Up, up, and awaaaay!! Oh wait – that’s Superman – never mind.

The VIX buy signals have been spot on as of late – it’s like taking candy from a baby. I for sure am on the extra naughty list this year. Ooops…

See, the bulls are doing this the right way. Whereas VIX painted a panic move to the upside in late November, thus pushing outside the 2.0 BB (and producing a buy signal) the bears are slowly riding this cart down hill. That’s how you do it and that’s how you keep momentum flowing.

Here’s a little charting lesson for you noobs. See single momentum indicators in most cases have little predictive value – the VIX buy signals on the 2.0 BB is the exception. My SPX BB cross over chart shows you what happens when medium and long term momentum start pointing in the same direction. We had a similar situation early this year and it seems like 2010 will yet again paint a year of deprivation for the bears.

What’s even worse here is that both BBs are now pushing up steeply and breaching them would take quite a poke to the upside. Momentum remains to flow to the upside and in such a situation it will have to run out of fuel on its own time. So even if we get a little reversal (inside both BBs) most likely the dip buyers stream in, we get a another push higher, perhaps a third, etc. until we finally paint a high – preferably outside those two. In terms of seasonality this would tie into my thesis (i.e. fancy word for mental masturbation) that we will close the year around the highs and don’t see a meaningful correction until early 2011.

Copper has been painting a teeny weeny divergence but in the context of the minimal participation right now I won’t read too much into it. What’s more important is that it is not painting a major divergence right now, despite the fact that ole’ bucky has been holding around the 80 mark right now.

Since I’m yapping about commodities let me throw in a chart I have never shown to my stainless steel rats. This is my sweet crude crack correlation chart (love the name). Basically you got light sweet crude in blue and the crack spread (please google it if you don’t know what that is) in black. The past two years don’t provide too much insight to the untrained eye but let’s just say that crude usually follows the crack spread, so if you see a divergence (i.e. in April/May) you can expect crude to snap back in whatever direction the crack spread is leading. As you can see the crack spread is on an overdose right now – no signs of a divergence here either.

My NYMO:BPNYA chart continues to point downward – again it’s usually early but if that divergence continues the bulls will probably see a quick shake out in January. IMNSHO this is just too juicy for market makers to pass up.

Best for last. This is my long term SPX vs. SPXA200R chart (the latter being the percent of stocks trading over their 200-day MA). As you can see in the past few years every meaningful top was accompanied by a distinct divergence. The last one took a lot longer to play out but it paid off if you took an entry in April.

Only problem here is that I don’t see us above 90 right now – plus we are probably months away from coming close to a divergence. So, that may also play into my prevailing doubts about a deep retracement in the near term future (e.g. of the P3 variety). Looking at this chart – and given the obvious accuracy in predicting major turning points – I just have a hard time imagining a deep drop into the abyss here.

Bottom Line:

I have to admit that the contrarian trader in me is quite puzzled. The record bullish readings in the ISEE and other sentiment indicators as of late would have you think that a drop is just around the corner. But then I look at all the charts above and it looks like we may drop and then power higher without any care. Which sucks big time for me as I just can’t justfiy going long here – not because we’re scraping 1250 on the SPX – I just don’t like the setup. So, I’ll probably just have to keep watching this bitch grind higher until I finally get my reversal and a decent entry.

Damn you fucking trend traders – that’s exactly the kind of tape you love, don’t you? 😉

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 various social media waterholes below.
  • convictscott

    Again chatting to dudeplunger on skype while trading the euro, Im going to take this 60 min trade either long or short without bias.

    http://www.masterkillers.com/w

  • http://evilspeculator.com molecool

    Let me know if those chart were useful.

  • convictscott

    The retracement levels, yes very interesting. I will subscribe for a month and try and get a better handle on it. My idea is to use it for timing exits, which is the weakest area of my game at present.

  • convictscott

    Trade result. Got stopped in short on the restest variation sell pattern. The actual currency did not make a lower low, while the futures did, so this made it a dow theory non confirmation buy signal. I lowered the stop on my short to limit my losses to .8R if hit, and entered in an order to take it long.

    I was stopped in long after taking the .8R loss, and the long trade was an immediate multiple R winner, which I banked some at the old highs, some a few ticks above.

    Good trading for me today :)

  • convictscott

    Another short trade 30 min euro fakeout inside bar, chart attached

    http://www.masterkillers.com/w

  • allonblack

    Charts, Homework and hypotheses for Tuesday. I really like the Volume profile. Today it tagged the 125.75 CLVN to the tick. Good luck.

    http://allonblack.weebly.com/
    http://allonblack.weebly.com/d

  • allonblack

    That is 1245.75 clvn to the tick.

  • Hungry_Joe

    Nice trades, both. Was following the hourly one after the spike up and narrow range. Did not go for the 30M one. In fact, these days I am running into Inside Bars' trades whatever I reading on.

  • convictscott

    Its a higher probability trade as a fakeout inside period (the spike through the previous high first). Also, in this case the inside bar after the strong upmove caught complacent longs the wrong way and forced them to sell into a falling market. In this case the smart play was to get out at the close of the entry bar, since the selling was driven by known factors and its unclear if the downmove will bring fresh shorts into the game yet.

  • http://chartsandthat.blogspot.com/ ultra

    Not seen the crack chart before, interesting. Got any comment on the divergence USO versus $WTIC? If you plot that ratio it seems to just be a long-term down-trend – is USO devaluing the whole while or something?

  • ronebadger

    Nice group of charts and analysis, keep it up! Patience is warranted right now….I don't have much of that….

  • volar

    USO eats the crude carry- which there is little now. Similar to the VIX and VXX or UNG and natural gas.

    Nevertheless, the crack has improved, but I have some big caution flags- even sell signals- for oil like

    -contango <2% on record inventory
    -OVX < 30

  • volar

    so speaking of sentiment extremes… WTF in PHLX?

    Again not short here until the tape says to be…

    http://content.screencast.com/

    http://content.screencast.com/

  • rg64

    Great start to the day. I can't understand all the top pickers. Moving the stop up to lock in a gain!

  • http://evilspeculator.com molecool

    Yeah, that's the thing – caution flags abound while everything is gunning higher.

  • volar

    ya and crude is really breaking out in euros too

    http://content.screencast.com/

  • skynard

    Was stopped out of my shorts, will be sidelined until the Omen is actually triggered.

  • gsavli

    Yea, well, I agree totally otherwise, but these bullshit rallies like this one these days, with divergencies abound, without any volume and totally overbought on all time frames are prone to falls of 10 points/min and top picking can prove quite lucrative.

  • http://evilspeculator.com molecool

    Shorts on a POMO day?

  • gsavli

    i expected more from these 2 POMO days.

  • rg64

    Rally is Looking Tired and Overbought

    If cnbc is pushing this tired overbought crap you can bet it is getting ready to move up big. Get ready.

  • skynard

    Watching divergences and was expecting to see pullback. More than likely it will be next year it seems. Wishfull thinking does not pad my account, I know!

  • bluprint

    Does anyone know how to extract/download raw data from TOS (or anywhere else)? I would like to know how to get any option that matches screen display. E.g. intraday hourly or minute or 10-min etc for high, low, open and close. Same for daily.

    Optionally, every tick transacted along with date/timestamp so that I could then build those views.

    My intent is to test some measures, like if I wanted to test what happens after a certain type of candle or whatever, if I can download that candle info from TOS then do my tests. Or if I have the raw tick data I can build the candles then do the tests on them.

    Any suggestions on where to get that raw data?

  • skynard

    Euro reaching for frech lows.

  • captainboom

    I've looked into this a bit. You can get daily data from Yahoo Finance, maybe from Google as well. Getting a more granular time frame will likely require that you capture it yourself using the API provided for your brokerage, so you'll need some programming skillz. There doesn't seem to be a free source of this information for less than a daily time frame. The amount of data you'll collect for a short time interval will get large in a hurry, and you'll want some serious iron for processing and storing the data.

    I did a search and came up with this: http://www.gummy-stuff.org/Yah

    You can probably buy the data in the desired time frame, but that's not something I can afford. Hope this helps… I'm not an expert on the topic.

  • gsavli

    Where is the volume? HFTs on vacation already? Not, that they didn't earn it.

  • volar

    last time i checked today is 3 days bf Santa- the only elves working are at liberty 33 with POMO sprinkles

    http://www.newyorkfed.org/mark

  • rg64

    Sold for a nice gain…will wait for pullback

  • AlohaBear

    Just have to sit back and laugh in the face of this market. Some people getting blown away from where there rooted others flying high in the wind trying to figure how to get down. in the end it will all disappear and crash as if there was never anything holding it up IMO

  • EvilTrader

    http://www.freestockcharts.com/

    you can download data from this site, but the shorter the time frame you want, the shorter the available historical data.

  • bluprint

    Perfect, thanks.

    I'll put off hacking the TOS app for now. lol

  • EvilTrader

    what are other pomo days this week ?

    all days ?

  • volar
  • ricebowl

    I don't understand why anyone would pick a top before Christmas. If any sort of meaningful decline comes in Dec., it will be in the last few days.

    By the way, 6 weeks ago in early Nov. we were at 1226. Many tens of billions of dollars later, the ^SPX has only been inflated by a mere 30 points. Excuse me while I yawn. I'm not calling for a top, but this doesn't look like the rally with a tailwind that everyone has been calling for. It isn't anything like the 200+ point rally from July 2009 to January 2010, and it isn't anything like the 180 point rally from February 2010 to April 2010, and it's not even characteristic of the rally off of the 1010 low. The slope of the graph is almost flat. Don't be so sure that the bulls are in control here.

  • http://evilspeculator.com molecool

    If you want to do anything of value the data needs to be spot on, so forget about TOS, Yahoo, or stockcharts for a data feed. You can get want you need from DTN/IQFeed – you may have to write an interface but they probably have sample code.

  • http://evilspeculator.com molecool

    Santa is very busy this season – working overtime into January.

  • BobbyLow

    Well this is certainly a slow day. I happened to be killing some time and came upon this article from Bloomberg. I believe that this piece will eventually relate to trading because I question that if things that if things were going so good in America and a “Recovery” was solidly underway, would something like this even be written?

    In the short term, I'm overall market neutral but I can't help but be concerned longer term.

    http://noir.bloomberg.com/apps

    “Arming Goldman Sachs With Pistols”

    . . .”Dec. 1 (Bloomberg) — “I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.”. . .

  • ricebowl

    BAC trading up 2.3% today on below-average volume. Hmm. I just picked up May 2011 $11 BAC puts @ $76. Now to wait for the pick-5 numbers. I've got plenty of ammo left in case it shoots up past the $14-$15 range.

  • bluprint

    Thanks I'll check it out. I just want the data for now, I'll do the rest in excel or Perl. Evil's suggestion doesnt go far enough back…

  • convictscott

    Seeing today was a classic type 3 trend day I posted some quick thoughts on recognizing and trading this unique type of day on my blog. I'll add to it when I get some time during the day.

  • convictscott

    Euro is behaving exactly like it should, and has done so for some time

  • BobbyLow

    I'm tempted to take profits on PRU Long but it's walking and widening the Upper B Band upward so going to hold and re-set a trailing stop tomorrow.

  • Clint

    Not surprised. Lots of folks really pissed off at GS for getting the chance to get right back into the multi-million dollar year end bonuses for doing nothing but getting hundreds of billions of unearned free money handed to them and playing Bernankes 'buy & bid up U.S. stocks' game.And of course things in the “real world” haven't improved at all.- I would think lots of staff over at AIG would wear a gun too. A whole bunch of folks lost almost everything on that one.But the top dogs are going to make record money this year for doing absolutely nothing but getting an unconditional bailout.

  • http://chartsandthat.blogspot.com/ ultra

    This just in – day 3 confirmation of VIX sell signal all but in the bag

    http://bit.ly/fNfY4n

  • convictscott

    On any trend days you *will* get oscillator/momo divergences, and they should be ignored. Every single massive up day will give momo divergences that dont work. Type 3 trend days are a unique situation in the markets, they happen on average one in 9 trading days.

  • http://chartsandthat.blogspot.com/ ultra

    Triple bottom in GOLD:SILVER

    http://bit.ly/eCeDGV

  • volar

    MOLE's POMO chart is the best.

    Attached are charts of POMO submissions cumulative. the data I am using is found here: http://www.newyorkfed.org/mark

    http://content.screencast.com/

  • convictscott

    Whats your interpretation? I have potential daily sell signals on both gold and silver, triggered on break of the daily low. I got out of my silver long on close, and am considering taking the short in gold (weaker of the two)

  • volar

    that looks nice…

  • http://evilspeculator.com molecool

    I prefer the 20-day running total as it really nailed the prior highs.

  • http://chartsandthat.blogspot.com/ ultra

    Buy gold, sell silver for the pairs trade? As far as SPX goes, you can see that this one has been bulletproof as a long indicator (what hasn't?), but as far as the other way… it seems it can shake off pretty much anything at the moment.

  • volar

    This data may be different as it is the POMO submission amount.

    This also just looks different- Im sure yours is more correct or it includes TOMO or Repos or something- I just used this data: http://www.newyorkfed.org/mark

    http://content.screencast.com/

  • convictscott

    Its certainly a small position low prob lottery ticket type play

  • gsavli

    i read it, great stuff. any recommended literature on this?

  • http://chartsandthat.blogspot.com/ ultra

    The SPX angle? Sure, although I do have a funny feeling about 1260, so let's see. Taking the pair play.

  • convictscott

    yeah, everything corey writes at afraid to trade dot com. His paid service is well worth the money, I subscribe to it

  • gsavli

    bookmarked.

  • DudePlunger

    Was a good long overall. Nice 1.4R trade on my side, even though it reversed and had no follow through.

  • OldChicago

    Something is not right today – /ES & commodity rose with /DX. This could be due to equity breaking out of the trading range, pushing everything highers, regardless of what USD does. GS & bank, sentiment are all strong.

  • convictscott

    My take on it is that its very overextended at this point, and without artificial support this market would already have fallen over. I wouldnt be touching shorts yet, and at the same time I dont think risk reward favours long entries at this point. I'd get long after a pullback, but to me, getting long (particularly in individual equities) at this point is very risky.

  • http://zstock7.com/ zstock7

    Treasury / pomo schedule
    http://www.newyorkfed.org/mark

  • http://zstock7.com/ zstock7

    Trading stocks since 2007, your rating is Newbie, seek an advisor.
    Trading stocks since 2001, your rating is competent.
    Trading stocks since 1991, your rating is expert.
    If you have only been trading stocks since 2007, get a partner whose either, competent, or expert.

  • http://evilspeculator.com molecool

    Prime Directive: No pushing of commercial links or references.

    Come on Scott – that's the 2nd time now.

  • http://evilspeculator.com molecool

    Not different – your only looking at the same data differently.

  • volar

    Ya i forgot the sales and the MBS- whoops whats a few trillion : )

    Good work… IMO until this stops THE major top wont happen.

  • convictscott

    As in equities have achieved escape velocity from the dollar?

  • convictscott

    Sorry mate, I didnt post the actual link because I thought it would be against your rules. Its your sandbox, your rules, I guess :)

  • OldChicago

    Sign of topping? Gold is weak as USD is strong. But, Copper/Sugar hit all time high. Sugar had a mini-crash in recent month. This “could” be a last gasp, bubbly wave 5? Beta Tech woke up and rocking today, CRM, NFLX, BIDU, etc. valuation be dammed.

  • rg64

    Are we approaching a runaway to the upside after a small correction> I bet yes as many are hanging their hat on going lower than the march lows. As markets move forward you must be willing to change views. I will do that if it calls for it but at this point a small correction and runaway to the upside looks like it will happen into march or even june of 2011

  • rg64

    more speak of this topping it will get you killed my boy

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

    The eclipse was really cool. As it came back, it truly was blood red, although the camera refused to work, I guess just not enough light. The last one on the solstice was in the 1600's, but for the next one, you only have to wait 80 years. Better eat some healthy food!
    Pix here

    http://oahutrading.blogspot.co

  • ds2

    Small POMO tomorrow. NO Pomo on the 23rd or the 27th – could be interesting to see if the market reacts or if there is some $ in reserves. Market closed on the 24th – FYI

  • Hungry_Joe

    CS, as per your trend day post, the key is early recognition. I do get it that one ignores the divergences and buy on pullbacks, but the problem is how to recognize it EARLY ENOUGH if I don't have the TICK indicator for my market. Gap up or extreme breadth may give me a clue but still, in your opinion, what would be the key in the absence of TICK indicator?

  • allonblack

    homework and hypotheses for tomorrow. I will not be trading much as I am busy in the am. thanks.

    http://allonblack.weebly.com/d
    http://allonblack.weebly.com/

  • http://chartsandthat.blogspot.com/ ultra

    SPX daily channel

    http://bit.ly/fjY5HY

  • http://chartsandthat.blogspot.com/ ultra

    NYA200R (beartard remix)

    http://stockcharts.com/h-sc/ui

    #justsayin'

  • volar

    WTF is with the PHLX call option volume?

    http://content.screencast.com/

    http://content.screencast.com/

  • http://chartsandthat.blogspot.com/ ultra

    FTSE at the 76.4% retrace from 2007 here

  • amokta

    Santa Nikolaus ist commen to town!
    We seem to just keep going up!

  • raised_by_wolves

    (Risk on)/(Risk off) has a well-defined range:

    http://content.screencast.com/

  • amokta

    Based on google chart, i computed 75.6%

  • raised_by_wolves

    And $NDX is slightly under the 5-year high!

    http://content.screencast.com/

  • http://chartsandthat.blogspot.com/ ultra

    Fat finger

  • http://chartsandthat.blogspot.com/ ultra

    Aw… Would be a shame to miss it – especially at Christmas and all

  • http://chartsandthat.blogspot.com/ ultra

    FTSE reversing a little, breaking lower this hour

  • Thomas Paine

    ERX Current Price: 56, Target Price: 70

    http://chartingsense.blogspot….

  • rg64

    This divergence lasted for 3-4 years from 2004….just saying

  • gsavli

    http://finviz.com/quote.ashx?t

    what does a stock baloon look like. PE 75, science-fiction PE 50 and PEG 2.62. It can only go up from here. When this shit falls, it will probably be some sort of 2008 revival. I know, I know, it's hard to believe this when facing this relentless rally and bull market since 2009 and even I don't believe my words, but the theoretic signs are here. It's a stock market baloon and it seems just so improbable that it will deflate as always before shit hits the fan.

  • EvilTrader

    shorted spy on this small pomo day.

    small position
    entry price 125.45 stop@126

  • volar

    I wonder what is really driving the AMZN to the moon…

    http://content.screencast.com/

  • gsavli

    i'd really like to think if fund managers see AMZN as part of their portfolio. I mean, is this thing really such a buy, as the market, which is never wrong, is saying?

  • volar

    The market is never wrong… that does not mean it is rational.

    The market does not care what you or I think it is worth. Today it is worth 184. I think it is worth, $50 at best, but Im not short, as I would have been bankrupt 150 points ago…

    “A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.”

    -JLL

  • gsavli

    there are times, when market is just horribly wrong. like that peak of nasdaq bubble, just before the crash – market went just up and up and didn't know, that it would crash just a week later.

  • volar

    I never argue with the tape. It is what it is. Was the Nas bubble a bubble- yes- but you have to make money. And thus, you are subject to the market. So it is never wrong- irrational- yes.

  • gsavli

    and, what is this tape telling you right now?

    i really have to ask you, when you are just not letting it go with Yogi Berra, JL, Keynes or whoever made a catchy phrase about the market in the history. :)

  • ds2

    NDX hit 2239 – 2007 high and bounced off.

  • BobbyLow

    Got Stopped on Long of PRU for +2R Gain

    Went Long EXC (Utility) – Still Short MCD with tight stop (I think Cramer Pumped it last night) so I might be OK. :) Next up to bat is possible short on WMT.

  • volar

    No i am a bear. A big time bear… :) BUT

    BUT I am a trader who makes his living from the market.

    The market is overvalued as hell.. just like it was from 96… to 99…

    If you were short- you went home and told your wife how wrong the market is… and you lost $$$

    Im still here.

    The tape says the trend is higher- and it is higher until it is no longer higher.

    When the trend changes I will go short- AND trust me I will be VERY short.

    Many spend all day trying to tell the market it is wrong… and it just gets more irrational and the crowd runs over them and they lose it all.

    Markets have emotion and dont ever underestimate the stupidity and emotion of crowds.

    I recommend these as a trader's bible:

    Reminiscences of a stock operator (J.L.Livermore)

    Extraordinary Popular Delusions and the Madness of Crowds (C. MacKay)

    Market Wizzards (both new and old) – Jack D. Schwager

  • gsavli

    i'm just asking you, if you are long and why not, when this market is telling you to go long (it is closing higher every day, and as you say, market is never wrong).

    i know all of this catchy phrases, i even know, what yogi berra would probably say, had he been trading: “if you see a fork in the market, take it” and i come from europe and don't know anything about baseball. my point was, they mostly are just catchy phrases, (even though i must say i like, what keynes said about markets 😉 ).

    market is certainly telling me to go long, creeping higher every day, but i instead go for my own catchy phrase “markets don't know shit. they climb just to the point they start falling and they go down just to the point they start climbing again and this is as dumb as it gets.” and opt to stay out from long term trades, just as you did.

    it's just this thing i have regarding these phrases and when someone starts qouting them like they are pure gold. :)

  • BobbyLow

    I remember the insanity of the Tech Bubble very well and I was fortunate to be Long during the manic phase of that market. Of course I didn't know shit back then. It was only when I thought I knew something that things started to go bad. :)

    Seriously though, you are absolutely correct. I think the worse thing I ever did was to totally underestimate the irrationality of this market over the past 2 years. Time will tell if I have realized this soon enough.

    For now, I can't go heavily Long or Short so I've gone back to trading individual stocks that are balanced in such a way that I have different sectors involved. It takes a little more work but I've found that in just about every Sector there are a few under performing weak stocks (nowhere near as many strong stocks but a few). There are also stocks that have performed very well and look like they can go even higher. As Jesse said “Remember that stocks are never too high for you to begin buying or too low to begin selling”. I know this might just be another cliche but there is a reason why these quotes have withstood the task of time.

    Anyhow, all I'm trying to do is cull out the Strong and the Weak. I'm trying to stay balanced so that the probabilities of not getting croaked on a large gap down or a large gap up are in my favor. And above all watch my position size for the same reasons.

  • volar

    I hear you, trust me…

    First off, F*** Kenyes and Yogi- they have nothing to do with this conversation, and personally I could care less with what either of them had to say.

    I am not long bc my sentiment indicators are too extreme, and thus the risk is too high to be long. Also some breadth indicators have divergence. I like to sleep and have big winning positions- nothing more or less. I think fundamentals are terrible, but that is not a trading strategy- it is an irrelevant opinion.

    It may gap down limit tom- but who knows…If the trend changes tom- we will get a retest and i will short then. Mole said same thing- dont over think it.

    That being said u are implying the market has an opinion-“Markets dont know shit.” True. The market does not know shit…bc it is a market not a person. The market has no opinion- there are more buyers than sellers today- period- that has nothing to with being wrong or not. The market cannot be wrong bc it is not an opinion, but a function of more buyers (including liberty 33) than sellers. It may be worth X and it may GO TO X next march, but it is not wrong today and correct then.

    JLL's quote is better than gold bc gold has the same problem stocks due… crowds of morons. There is never a reason to argue with the tape- in fact if the market did not get irrational, how would a speculator make money? I WANT and NEED this POS to go higher so I can short it higher and make more $$$$ just as the crowd runs out of buyers.

    I do live by that quote- it sits on my wallet, my screen. I have lost enough money to learn to be disciplined-which is why my cards are few right now. Markets are about making $ to a speculator- nothing more or less.

    Trust me I cant wait to short AMZN.. I hate that POS. But im not going bankrupt bc I think it is “wrong.” When the crowd runs out of buyers i will take their money.

  • gsavli

    yea, i agree with you totally. i am just allergic to these quotes, be it from jesse, warren, john or whoever when they start appearing in abundance. i mean, i can't imagine we haven't all read reminiscensces and market wizards here.

  • volar

    true.. im allergic to alot too… especially Warren.

    I would say that “keep your stops tight, and dont fight trends” is more of a rule (maybe a law) in trading than say a quote.

    I have tried way too many times to call tops… and it just got old for me. I remember commodities in 08- hell today for that matter- they go parabolic until they dont anymore. I have found the market will always give you 1 day- and that includes both the flash and 87.

  • amokta

    Surprising – seems the Irish banks are need more bailouts – AIB case in point.

  • BobbyLow

    Now Long EXC and MON and am Short WMT and MCD

  • gsavli

    yea, just keep that fresh cash from ECB coming. there is a reason, why EUR is worth less and less every day. looks like FED will have to throw another trillion at the markets if you americans will want to have a shitty currency too in this currency war. :)

  • amokta

    Loks like a race to the Top (or bottom?) of the currency ladder. Don't tell me, Prechter is wrong again with his deflation call. Mind you if currencies are relative, then the exchange rates might look similar, but it might it might cost $1000000 to buy a loaf of bread.

  • malverd

    what broker you guys use for forex. TOS seems pretty high. thanks

  • EvilTrader

    kept my short spy.

    I doubt we gap much higher tomorrow.

    Lets see what this non-pomo day brings.

    Im a skeptical, but i see a good reward-risk in shorting now, even if i get stopped.

  • malverd

    what techniques you all use to trade eur/jpy. it's a volatile pair it seems.

  • gsavli

    absolute numbers aren't so important, if every currency inflates and fx pairs remain the same, then inflation is pretty much a non-event. Prices and salaries in this kind of hypothetical environment would rise at the same rate. It might be that salaries would lag, but they have to lag in the future anyway, cause someone has to pay for all this amassed debt.

    loaf of bread: 1.000.000? No problem with my say 2.000.000.000 salary. :)

    of course, if this is the case, AMZN will soon be at 185.000.000 or so. :)

  • amokta

    Indeed :)

  • amokta

    Ok, when wll we see spx 1300 – before the Feast of St. Stephen, or after the Feast of the Epiphany? (somebody has to ask this question – no point ducking head in Sand)

  • Eva S

    Amokta, why are you excluding the 12 days of Christmas? Market will be open during that time… I personally don't think we'll get to 1300 before year's end.

  • amokta

    :-) Anyway, how have you been, you seem to have been taking time out for Shopping!

    Yes, i think 1300 before End of Year is unlikely, but the real question is are we in a longer-term uptrend – i think so (of course no one knows for sure)
    By the way, AIB looking fatally flawed – IRE might be a 'safer' (!) play (should one even venture in to the Irish banks!)
    I thought i had some BAC shares – but just realised i had sold them a while ago (damn!)

  • Eva S

    You sounded so religious when you mentioned St Stephen and Epiphany. You must be Catholic to celebrate Christmas the proper way. (i.e. not with Santa at the mall) :-)

    Financial ETFs (FAS, KRE etc) do look good and so does BAC. The Irish banks are only good for 1-day pops I'm afraid…..

  • amokta

    I was just trying to sound knowledgeable with the religious terms!
    Anyway, yes, financials US etfs worth a look
    Also, WNR made major moves up – but usually drops back again
    Any further picks you have in mind (before they pop!)

    Ok, now 1am here in UK, so off to sleep now, Good Night!

  • Eva S

    OK, sweet dreams! Ciao!

    P.S. We can talk about pop candidates tomorrow.

  • convictscott

    FWIW there was clear sign of surgical market intervention at the low of the intraday fall today.

  • convictscott

    “I am not long bc my sentiment indicators are too extreme, and thus the risk is too high to be long. “

    This is one of the most intelligent things I've seen posted in a while.

    The quality of posts here overall seems to be declining. We have bulls all happy about the situation, and top picking shorts complaining about it. Whats particularly annoying to me is when people talk their own positions and get upset that anyone is on the opposite side of their trade.

    You dont have to be in the market all the time. Voltar has it *exactly* right. To be long stocks at this point (if your horizon is anything under a few months) is *ludicrous* right now. We are approaching unsustainable extremes, and there will be a shakeout, even if we are in a long term bull market (which appears to be the highest probability right now)

    To be short at this point is equally retarded. The collapse of the bond market, POMO, seasonal bullishness, and “hit the bid” euphoria are driving prices upward and causing a continual slow-motion short squeeze. The only thing that matters here is price.

    There are a few smart plays in this market. To me if you are a long you should be at least trimming back your positions, and thinking about banking a great profit, congratulating yourself on a job well done, and taking a week or two off. Chasing that top tick is being motivated by greed, and that never ends well.

    The tape gets SCREWY around turning points.

    The smart play on the shortside is to wait for the first decent shakeout and then an upmove that fails to break the old high, in other words a failed retest.

    The smart play on the longside is to wait for a pullback and get long.

    If you have to play – currencies and bonds are where its at right now. There are good setups in silver and gold too

  • convictscott

    Its not a 3 line answer, hit me up on skype and I'll fill you in

  • convictscott

    latest stu available

  • volar

    😛

  • Joe_Jones

    For the real rats out here: copper is showing the way.

    http://finviz.com/futures_char

  • Hungry_Joe

    Ok, CS, will do that. Thanks. I have been trying to get a handle on that question. Somehow, I find identifying a trend soon enough and getting on to it to be more difficult than finding the retracement kind of plays. Have checked out on Raschke, Bollinger and the walk in the bands, the site that you choose not to mention, etc. But still, EARLY recognition eludes me. Btw, you have any suggestions on something to read on that?

  • rg64

    Not a ew expert but doesn't his wave C look really short compared to the A wave. Could wave C not extend much much higher over the next 6 months? These guys have called so many tops it is a wonder they still have subscribers.

  • convictscott

    Or put more simply. EWI started with a big picture view, and collect evidence to reinforce that view. They used to talk a lot about non-conformations with trans, etc. You dont hear them talk about how those non-confirms are all erased. You dont hear them mention any of the very bullish evidence that abounds right now.

    Personally you couldnt pay me to still be long here, but there is no way I'd get short yet either. Cash is a position.

  • rg64

    sometimes cash is the best position

  • allonblack

    Fascinating (to me) Volume Profile Template from 8/28/08. On this day ES traded between 1254 & 1266. I've also included a daily composite which shows the high of 1279.25 during this time period in 2008. With this volume I'm not saying we will go there tomorrow – just something I am keeping my eyes on. Personally, I think there is a lot of work to do below. Either way I will trade where the market takes us.

    http://allonblack.weebly.com/d

    http://allonblack.weebly.com/i

  • average_minimalist

    can you elaborate?

  • average_minimalist

    it's funny, they always say “markets don't move in a straight line…”

    i beg to differ.

  • rg64

    Oh my god I cannot believe all the post I am reading of an impending jan crash…….I really really find it hard to believe that we will not continue right on up. I am looking for a small pullback to get back long. These bears are crazy and this market is going up till at least march. forget all the sentiment readings etc after a small pullback to reset the reading get ready for another ride up.

  • raised_by_wolves

    Here's my wave count. How do I get paid?

    http://content.screencast.com/

  • Bob the Horse

    Are you suggesting the 1.3% decline overnight is more relevant than the 55% rally since June? Or the 18.5% rally in the last month?

  • rtlguru

    Have to agree.

    I am mainly a sentiment trader. I read all the major blogs, message boards, CNBC, friends, family and other traders. Everyone – bulls and bears alike are saying we will have a significant selloff in January. We all know, markets never reward the masses.

    Hell, I've been long for the most part since June and even I am itching to sell my longs before the predicted selloff into jan earnings season. Instead, I've been holding my nose and buying financials the last couple weeks on every dip because I'm hearing so many people poo-pooing this rally and saying the risk/reward is clearly to short.

    Am I nervous being long? Of course I am. I see the same things everyone else does. We're way overextended, tons of stocks are up 50% in the last 3 months and people are starting to get bullish. But guess what, most people still do not believe in this rally. Ask yourself this simple question. What is the scarier trade right now? Buying stocks tomorrow or shorting stocks?

    I have one finger on the eject button but if you had a gun to my head and asked for a prediction, I'd have to agree with rg64. Now if i start seeing more people agreeing with me, I'll have to reconsider my longs. :)

  • http://chartsandthat.blogspot.com/ ultra

    Gonna mortgage the house on the next pullback and buy SPY calls.

    I humbly suggest everyone joins me. It's free money, you know..

  • raised_by_wolves

    In the unlikely event that those calls expire worthless, I would suggest bulldozing the house.

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

  • raised_by_wolves

    SPX to SLV ratio analysis:

    http://content.screencast.com/

  • http://chartsandthat.blogspot.com/ ultra

    Haha – legendary. Although maybe he would have been better just challenging them in court. I wonder where that guy is living now..

  • raised_by_wolves

    He's better off than me if he can afford to rent.

    To one up him, you could always bulldoze a bank.

  • raised_by_wolves

    It's 3:21 AM here. Time for a nap. Ultra, my friend, have a better one.

  • http://chartsandthat.blogspot.com/ ultra

    Sleep well mate – I am off to finish the Christmas shopping, personally.

  • amokta

    Ultra – any view on Allied Irish vs Bank of I !

  • http://chartsandthat.blogspot.com/ ultra

    Buying climax and waning against backdrop of market strength is not the most encouraging behaviour.

    http://stockcharts.com/h-sc/ui

    What say you? And why the obsession with the Irish financial sector?

  • volar

    For RBW.. here is my sentiment index.. this is so extreme… A train wreck will come if this sh*** keeps going.

    http://content.screencast.com/

  • convictscott

    My short just got triggered in both silver and gold, si h1 short 29225 stop 29490

  • EvilTrader

    how do you play silver and gold ?
    any ETF in particular ?

  • average_minimalist

    what's different about right now versus last april?

  • Joe_Jones

    Not more relevant…

    Short term trend up is broken.

    Let see where we get support.

  • ronebadger

    Latest AAII results: 63.3% Bull/16.4% Bear. You have to go back 5 years to see anything near that bull/bear extreme. AND, the closest extreme you'll see the other way was Mar 5, 2009 (70% Bears/19% bulls. (remember then?)
    http://www.aaii.com/sentiments

  • volar

    see my index posted below which includes II, AAII, NAAIM, and TSP. MY index is weighted, and adjusted for the quality of the signal and bollinger bands

  • amokta

    Thanks. Im just looking for something that might bounce back like a revist of March 2009
    – i think AIB is a fail, but whether BKIR is being dragged down because of AIB, and might jump up later

  • ronebadger

    I'm sorry, I don't have a decoder card…. what's AIB and BKIR?

  • Bob the Horse

    Allied Irish Bank and Bank of Ireland.

  • raised_by_wolves

    Cool.

    Do I assume rightly that your stop is 1 tick above yesterday's close?

  • raised_by_wolves

    Damn son!

  • volar

    So updated it for the last survey this week- NAAIM.. damn is even more damn

    Also regarding POMO (I believe you posted that chart first).. look at this juicy… i think the submitted matters more than the “settled”

    http://content.screencast.com/

    http://content.screencast.com/

  • raised_by_wolves

    I held off on an entry because (1) I slept through the first 30 minutes of the US session and (2) the intraday charts have been disagreeing with the daily chart since I woke up.

  • http://evilspeculator.com molecool

    Thanks mate, much obliged.

  • http://evilspeculator.com molecool

    Yeah, that's basically my chart. POMO rules the tape basically.

  • http://evilspeculator.com molecool

    Ilike the sentiment chart a lot – is that an average of all four?

  • http://evilspeculator.com molecool

    Must agree – although people profess to be bullish everyone (me included) expected a sell off. I don't like it when too many traders agree with me – time to consider an alternate scenario.

  • http://evilspeculator.com molecool

    Very nice chart.

  • volar

    I weight each survey by my opinion of its accuracy. So I have it 27% NAAIM 28% AAII 13% TSP and 32% II.

    I use the Bull-Bear spread for all but NAAIM bc it does not have a bull-bear spread

    I mathematically adjust them all so that -35% is very bearish and +35% is very bullish. i also adjust the data for stdev.. or if they all dont say bullish (with respect to their weight) – it does not say bullish.

    It is a work in progress.. but fun nevertheless

  • volar

    thx.. wish I had more data.. kind of like the ISEE- who knows how extreme it really is? dont have 87 or 99 or 03 for that matter

  • raised_by_wolves

    I'm trying to decide on a rule (from least to most strict):

    (1) Don't position short if the last POMO is less than 20 days ago.

    (2) Don't position or swing short if the last POMO is less than 20 days ago.

    (3) Don't position, swing, or scalp short if the last POMO is less than 20 days ago.

    I'm applying rule (1) already but am thinking about adopting rule (2).

  • Bob the Horse

    2004 was not a great time to get uber-short equities. These sentiment readings work in ranging markets, not trending ones.

  • raised_by_wolves

    My risk on/risk off indicator painted a quad bottom (whereas SPX painted a double bottom) on the 1 minute chart.

    http://content.screencast.com/

  • volar

    agree.

    that being said… if the POMO is running high, but the sub/acc ratio is low it is less effective…. Or the $ amount over subscribed is telling a different story than the $ pomo accepted. just food for thought- could be hogwash and just never ever fight the fed

    http://content.screencast.com/
    http://content.screencast.com/

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

    which means what just exactly?

  • ricebowl

    IIRC there was a guy who did this in 2008, and he simply built an igloo on his property. Would work for a few months at least…

  • ricebowl

    Something is up with BAC. That's a nasty-looking red candle.

    Edit: grr… I was looking at stale data from the open. Nevermind!

  • Clint

    So true…and this is the epitome of a trending market. The other hitch here is that I don't think the 'public' has been a very big part of this market rally for last 2 years.The federal government has been responsible for a huge part of the buying,accumulating,and holding U.S. shares to keep them propped up.It would also appear that they have virtually done away with computerized sell programs triggered by an S&P figure being hit. Probably part of the “deal” with the central banks for getting free money just to buy stock. The message from Bernanke would be…”Buy it…but don't sell it…if you do..you're out of the program…and you get no more free money”.Very nice racket if you're in on it from the inside. It sucks being here on the outside,trying to be a trader, and really having no idea how big the corruption and collusion going on within our Fed Gov is, just to keep the DJIA looking pretty. Like a lot of traders…I thought we were going to be 'range bound' for a couple of years after the crash..like maybe between 8500 and 10500 on the DJIA. Could not have been more wrong about that.Boo Freakin' Hoo.

  • raised_by_wolves

    It meant don't short.

  • BobbyLow

    How to keep things in Balance 101? Rotate, Rotate, and Rotate.

    So far today it's Materials – Up, Utilities – Up, and Retail – Up

    Financials – Down, Consumer Discretionary – DOWN and Homebuilders – Down.

    And Tomorrow the Rotation will be . . .?

  • volar

    Oh and i use a weighted 4 week average for the AAII and TSP bc they are so volatile

  • raised_by_wolves

    From my point of view, there's still no point shorting.

    http://content.screencast.com/

  • TWD

    Wear some pants, oil skin lined…

  • raised_by_wolves

    I love you Trans World Depravity. Too bad you're not a woman.

    Hey, have you ever tried drawing trend lines from Bollinger Bands?

    http://content.screencast.com/

    Crossing the trend line wouldn't necessarily entail a downtrend though.

  • TWD

    I'm long the moon and short the sun :)

    http://stockcharts.com/h-sc/ui

  • TWD

    You may glance longingly at the avatar if that'll suffice :)

    I've noticed your ratios have gone plaid, beyond light speed. Nice work, however spacially changed I seem to be when trying to interpret them. You may need to provide me a legend as I've reverted back to primitive mode.

  • raised_by_wolves

    Is that a poetic way of saying, “I'm long silver and short gold”?

  • average_minimalist

    finally! i've waited so long for this selloff.

  • average_minimalist

    btw anyone know what caused this blood bath? was it the portugal debt downgrade?

  • Wave_Surfer

    Time to bounce after all of this negative Nelly stuff?
    About a day and a half of not climbing has me feeling all depressed.
    On the serious side though, does it look like Russell is possibly ending some kind of flat correction to anyone else?

  • raised_by_wolves

    I suppose glances will suffice. The cool tones make her appear sad as well as beautiful. In addition to beauty, I'm attracted to sadness.

    As for providing a legend, how's this for starters?

    http://content.screencast.com/

  • raised_by_wolves

    How about puts on a leveraged inverse oil ETF to capture some leveraged ETF price decay as well as the oil uptrend?

  • Joe_Jones

    rg64 gone silent.

    How come I am not surprised.

    Must be too busy shorting the market

  • average_minimalist

    VIX up 7%??? wow! everyone is expecting a big down day monday i guess.

  • Joe_Jones

    No POMO on the 27th

  • average_minimalist

    well after this massive correction today, i can only guess monday starts our next leg up.

  • skynard

    Hum, Is Santa still coming this year? That figures just stopped out of my short yesterday.

  • EvilTrader

    Is today a bloodbath day ?

    Well, i guess ppl are too much POMOnized and every 0.3% dip becomes hellish.

    Wait for the real selloff to start…everybody waiting it in 2011, but market loves to surprise folks…

    My short spy is now above water…think will keep it, with stops at 126…we may very well have seen the highs of 2010.

  • convictscott

    Stock picking isnt my forte, but there are a *lot* of shares to choose from, why would you go long something that isnt in an uptrend?

  • average_minimalist

    are you pure short? cuz today would be the worst day to buy puts. VIX up 8%, and you got 4 days of theta burn ahead of you. no thanks. will take my chances to buy puts monday morning. the greatest christmas gift would be a gap up monday.

  • convictscott

    Yes it is, and of the short in silver and short in gold, silver is in small loss, gold is in small profit.

  • Joe_Jones

    mmmhhh, upper BB breached. Last 1/2 h should be fun

  • BobbyLow

    Watching the 3:30 15 Minute ES Candle trying to crawl above VWAP and didn't make it. Last 15 Minutes should do it . :)

  • EvilTrader

    it may very well gap up on monday, but im actually short Spy since yesterday, i did not buy puts.

    What i think is that this market has little room to upside before we have a 1-2% correction.

  • Joe_Jones

    Longs will have a nervous Christmas.

  • Clint

    Just making the rounds here and pretty much everybody who has been hardcore bearish and erroneously calling tops for the last several months is exhausted and speechless.Understandable.Took a few bad hits myself.Relentless and unforgiving is about all that comes to mind. It's hard to believe 2011 will be any easier.

  • rtlguru

    “average_minimalist” – what's different about right now versus last april?

    Sorry for the late reply. Slept in and watched the last hour of action. I'm becoming a complacent bull and that worries me a little.

    What's different? Some things off the top of my head:

    – POMO/QE2
    – Europe scare in April complete with pictures of rioting greeks. As I've said in the past, once a market experiences a negative event and survives, that same event has less and less impact in the future. Europe crisis, 9/11 etc etc.
    – Patterns don't often repeat. The key to trading is to recognize patterns and know when you're being set up. Don't fall into the ovbious trap. You are seeing the same pattern from April right now but will the market really make it that easy for you?
    – In the same vein, because the bulls got burned last april, they do not believe this rally. They are not jumping into the market even though it has broken out. Yes, you're seeing high bullishness readings but that doesn't mean people are excited and blindly buying stocks. Think about the flash crash. If you really believe in conspiracy theories, you could say the flash crash was orchestrated to blow out the retail investor and buy shares cheap from them. The retail investor started to come back in early 2010 and look what happened to them. I know so many people who said F this market, I'm never buying back again and sold all their longs in disgust after the flash crash. They are still not back. When they come back, start looking to short.

    But you make a good point as well. There are alot of similarities to April, and therefore, we should all be careful if we're long.

    Bears shouldn't get too excited about today's action. Mainly opex driven. I've been an option seller for years and the popularity of weekly options has really impacted the market action. Every week the casino is open and I'm noticing a pattern. In this bull run from summer, more often than not, the rallies occur early in the week then peter out on thurs/fri as the MMs kill off the calls that they sold to the lemming bulls who get too excited and buy at the top of the weekly action.

    In a market where there is very little volume and real selling of shares, the only selling pressure you see is from the at the money call buyers who see their premium eroding and dump. Go to yahoo finance and take a peek at some of the financials and the weekly options open interest. You'll see they basically killed off all the gamblers with today's little down move.

    A couple things about vix.

    One, someone mentioned not buying puts today because of the theta burn over the 3 day weekend. That is generally priced in throughout the week so that most the the burn is gone by end of trading day before the long weekend. In other words, there is no difference if you buy a put at 3:59 today and 6:30 on monday morning all things being equal.

    Don't pay too much attention to vix moving up today. Vix is low because right now because of two reasons.

    One, the january options that are used to price vix has 5 weeks, but 2 of those weeks are holidays with historically low volume and low volatility. The prices reflect that, artificially driving vix lower into xmas. As we're halfway through the holidays you'll see vix slowly creeping back up as most of the remaining days in the jan options become “regular” trading days with normal volatility.

    Two, realized volatility has actually been in the mid single digits recently. So if you think about it, vix at 15-19 has actually been EXPENSIVE if we look back on december so far. Options sellers have made a killing. I always anticipate these vix holiday moves and sold a crap load of january puts on my favorite longs 2 months ago.

  • convictscott

    Nothing overly bearish about this yet.

    http://www.masterkillers.com/w

  • gsavli

    enjoy your holidays.

  • amokta

    Happy Yuletide everyone!!

  • amokta

    So when would you go consider shorting? – billion dollar question, i know :-)

  • amokta

    You seem to be making Hay at both ends of the candle (going long, and selling puts agaist them). NIcely done!

  • ricebowl

    After the holidays at a minimum. I'll be getting short on Dec. 30 for a couple of days in the hopes that funds sell on Dec. 31 to lock in profits.

  • SW6

    Our beloved Convict is a futures trader Evil, you should know that.

  • http://evilspeculator.com molecool

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