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Say When!
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Say When!

by The MoleFebruary 25, 2016

Quite a violent reversal there late in the session yesterday which confirmed my suspicions regarding the possibilities of a bear trap. Clearly a u-turn bounce like that would usually shift the odds toward continuation higher, however I can’t help but remain vigilant. This tape seems to have shifted into full scale Lucy Van Pelt Fake Out mode – unless you know who the sucker at the table is, odds have it’s you, my friend.

NQ

Fortunately my trailing logic cashed out my chips just in time leaving me with a bit over 2R of realized profits – the campaign’s maximum favorable excursion (MFE) had been about 3R.

GC*

Similarly to what happened in gold by the way. I was bitching about having lost a few R there the day before but yesterday’s gyrations would have taken me out one way or the other. Which again makes the point about trading high volatility markets – either you zoom way out on your time frame or you are prepared to trail very loose and often watch significant paper profits melt away overnight.

2016-02-25_gold_LT

By the way the longer term charts suggest that gold is about to make a run for it – we may have seen nothing yet. That base it’s building above the 100-week SMA will become very handy further down the line. I regret having gotten kicked out so early, but then again that may also be a sign of more upside to come. Quite often a wild shake out like this prepared the tape for a big trend move, after the bus is almost empty of course.

CL

Talking about wild shake outs and watching paper profits disappear in highly volatile conditions. Crude is a good example of that – still scraping 1.5R right now but it had been well over 2R yesterday. It was tempting to cut out when it scraped 1R yesterday but my campaign rules kept me in the game (thus far).

2016-02-25_zero

The Zero really shone yesterday as it presented a textbook bullish divergence near the session lows. What followed was nothing short of a systematic squeeze higher. If you’re not yet a member then I strongly suggest you sign up.

2016-02-25_spoos

So you want to play? Alright, I’ll be your Huckleberry! However unlike good ole’ Doc Hollywood I am rather ambiguous about my alliance here. Meaning on a little drop lower I’ll grab a long position with a stop near 1920.

2016-02-25_NQ

Inversely I will be grabbing a short position as well but on the NQ. Once again I’m playing the stronger index for long exposure and the weaker for the short end the stick.

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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    yes, that gold has put on some Air Jordans and the hang time is incredible!

    https://s-media-cache-ak0.pinimg.com/236x/31/bc/3f/31bc3fcfe8ff61ebcd2cd76ccf61cb97.jpg

  • tradingmom

    SPX hourly now has a beautiful potential for a h&s with neckline around 1893.

  • BKXtoZERO

    nothing much i see today yet…….

  • Yoda

    In short: wait until you see the white of their eyes before shooting your load. 😉

  • BKXtoZERO

    Keeping an eye on the big picture with crude. Looks like triangle, either continuation down, or if it ain’t goin’ down, it’s goin’ up. Should be fantastic move one way or the other. Short term continuation looks more likely, zooming way out to 10 years, possible bottom looks plausible.

  • OzarkHillBilly

    Also an even larger inverted H&S in play with the right shoulder at roughly the same level. Neither formation seems “ideal,” but since we are all watching, waiting, and lurking, it might as well be mentioned.

  • ridingwaves

    Guy was a pretty good surfer while building those songwriting skills…
    https://www.youtube.com/watch?v=IhTvifGShw4

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

    Have we moved out of the pennant/triangle yet? (your pickup Styx chart)

    https://a.disquscdn.com/uploads/mediaembed/images/3255/9020/original.jpg

  • OzarkHillBilly

    I see lots of formation related rabbit holes to fall into here on multiple time frames, short term and longer term, and lots of technical indicators are resetting back to what could be considered neutral territory with plausible bearish and bullish possibilities. And gee whiz, it’s all occurring at important support / resistance inflection points. It all adds up to a giant F U kind of move.

    It’s fun for the ego to try to board this train, and I have one foot in the door, but I’d bet it’s safer to see which way the train is headed first before jumping in.

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

    TLT, continues to trend.
    http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=0&mn=3&dy=0&id=p45595087375

    JNK soggy.

    feels like a slow morning, will step out for a few hours.

  • tradingmom

    No, we’re in it.

  • mugabe

    my lens … shortish term (since beginning year), we’re at the top of the range. I think that much is indisputable … and by scott’s dictum, assume the range will continue until it doesn’t ie I would definitely short here because the set-up is very clear (I already am .. not gonna short more:))

  • BKXtoZERO

    While things are slow, a little time for study. With contract volume picking up big time on CL, I thought I would take a look at what the “Piker’s of the world” are doing. Those sad sap morons who mess with 3X ETFs 😉 anyway, as you can see, huge bets on UWTI, small bets on DWTI. Bearish pattern very possible and likely too, but waiting for confirmation.

  • OzarkHillBilly

    I’m with you on the set up here and playing it day by day. I’m still long from yesterday and added a bit just a little while ago as my lotto ticket in case the bears get skinned. As you should suspect, my position sizes are small.

    I relearned a valuable lesson lately regarding being one sided around inflection points like this (somewhat like gold a couple of weeks ago), so I plan to add a small short position as well today, timing dependent on the market. I love/hate options, but I can usually manage a proper hedge for this type of situation when necessary. If things drag out sideways for long, I’ll have to reevaluate.

  • mugabe

    volume is insane

  • BKXtoZERO

    time for Mole to post the tumbleweeds blowing across the road gif and ask where everyone is……….

  • BKXtoZERO

    somptin is gonna happen soon

  • Kato33

    Not sure if anyone trades IPs any more but a double IP showing on the hourly NQ panel. High trigger 4202.25 an low trigger 4184 roughly where the 25h and the 100h sit

  • mugabe

    usually done after being away for 3 hours at the gym

  • BKXtoZERO

    CL possible short term intraday low, and IF….. IF you wanted to “TRY” to apply EW logic to this triangle, little e up to 50dma 35ish may be it for the long side, unless it breaks oot

  • ridingwaves

    the gap up over the 1945-50 will have to be overnight or this weekend…tomorrow makes sense as it will generate a positive Feb. for the the market…funny that we started the month at 1948

  • OzarkHillBilly

    Still gotta make it past Monday, since it’s a Leap Year. I’m sure there’s a stat for that somewhere.

  • http://evilspeculator.com Sir Mole III

    Well I have been putting up a ton of quality posts on top of my coding/trading duties. Which mostly have gone ignored – yesterday I didn’t see one single comment or discussion regarding SKEW, which is actually a pretty extensive subject. Plus most of my comments here are not being responded to or I just keep getting snarky remarks (see below).

    So why bother?

  • http://evilspeculator.com Sir Mole III

    Oh and I didn’t mention the setups I’m posting which also nobody talks about let along trades.

  • ridingwaves

    holy moly, I forgot….G20 meeting to boot…

  • OzarkHillBilly

    My psychic powers must be engaged today, because I sent you an email regarding this perhaps a half hour ago. Profuse thank you’s for your patience and diligence.

  • BKXtoZERO

    did you see my response last night to you? I mentioned same exact thing, that I was VERY appreciative and that I mostly read and absorb at night. You are giving us the tools to fish for ourselves at times like that, the correct places to look and this is the best trading site on earth. Thanks.

  • BKXtoZERO

    I did, I traded against you yesterday…. Thanks for the loot!

  • ridingwaves

    actually, I moved the SKEW into my lens yesterday after your post…going to watch it and see if I can use it..

  • OzarkHillBilly

    I usually don’t have the TV on, but right now they are interviewing John McAfee on CNBC. Unusual for them, to say the least.

  • http://greenlander1.blogspot.com/ Greenlander

    Thanks for putting it up Mole, I haven’t had a chance to fully digest as it is not a simple topic (at least to me). Going to re-read over the weekend.

  • BKXtoZERO

    short crude, DWTI 238.5, small, holding w/ wide stop this time for longer term view, stop 34+ on crude

  • Yoda

    Can’t comment on SKEW because it is not a subject I am familiar with. I just absorbed the wealth of info you posted and tried somehow to figure how it works.

  • BKXtoZERO

    added .25R more to TVIX position from 8.35

  • Mark Shinnick

    …would sure be nice…maybe get some 7 handle TVIX.

  • BKXtoZERO

    chart

  • Yoda

    A big hug for all your hard work I think you need

  • Mark Shinnick

    That’s a good zone..I’ve been flat but looking to buy after seeing 8.3 again. There is also that support at 7.61 area…so I’m looking to load up a lot more somewhere closer to there.

  • BKXtoZERO

    LOL! he needs a few of these. That and a pat on the back gif. He does a great friggin job and the place is so good it can run itself at times. That is how good he is. Hugs, back pats…. I am so evil now that I traded against him and took his loot. How evil is that!!! That is evil.

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

    Captain in a sour mood alert.

    Coupons won’t cut it.
    Dude, take some time off. you hinted at it many days ago.
    You have *got* to be tired after TOS broke your systems.
    and don’t forget the Site Makeover.

    Absence makes the subs grow fonder.

  • ZigZag

    I thought I made a good response by signing up recently 😉

  • Kato33

    Short NQ 4209 ISL above 4230. This up move smells. Zero not supportive. Mole reversal signals. Resistance at hourly NLBL. SPX just under intermediate term resistance. Sweet spot to short in my book

  • jmoney3000

    Awesome post on SKEW. I knew nothing about it other than the amateur commentary on zerohedge. Thank you very much for a very informational post.

  • Objectively_Bias

    My system just painted a great reversal signal. I’m already short though and in the red from a previous signal yesterday. Let’s see if this one is any better…

  • CandleStickEmUpper

    Long NQ 4216, scalp only

  • Billabong

    SOS as yesterday’s playbook …

  • OzarkHillBilly

    Closed long options that expire tomorrow. Would be nice to hold if it keeps going up, but I won’t overstay my welcome. Added a short option as a hedge but still net long. Would like to pick up a couple more short options, but I don’t want to walk across the train tracks to get them yet.

  • CandleStickEmUpper

    Sold at 4220. Im not feelin it.

  • Yoda

    Careful with holding illiquid overnight positions. Market markers could use tomorrow morning news to swing the tape in any directions with a big opening gap. As Sir Mole say, it is better to wish to be in a trade than out of one.

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

    I suppose every retail dog is watching this line. but it’s just a line.

    aka “There is no spoon”

  • Billabong

    What news are we looking for?

  • OzarkHillBilly

    Yep, no need to press our luck too much here. Might take a stab at an overnight position depending on how the close shapes up.

  • Yoda

    GDP and Core Price Index at 8.30 am EST

  • CandleStickEmUpper

    Lets see how the last 30 mins plays out. Should give a better clue for tomorrow. Today’s been a chopfest

  • tradingmom

    Divergences abound…

  • tradingmom

    With the divergences above, I think that price would have to gap up at the open over the 50 dma to have any real chance of staying above it.

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

    TVIX’rs
    M pattern going into month end, be cautious.

  • Yoda

    Closed the long USO campaign
    Entry @ 8.10 on Feb 12, exit today @ 8.78
    Still long GDX and NEM

  • Yoda

    Too much of a coin toss for me to place a sensible trade.

  • Time Bandit

    Afternoon folks,

    Glad I missed this morning’s swirling price action. It must have been good for scalpers and congrats to those who booked some coin. Looking at price action near the end of the day, it looks like a small net gain on my 3 Long Positions in Crude, OIH, Basic Materials UYM and are correlated up the yang, yang. (It is what it is) My two Forex positions are down on the day but up overall.

  • Billabong

    Even then, it’s a question of finding the right combination to short or go long. I’ve been through tons of charts between yesterday and today. And many potential candidates on the daily went from great set-ups to neutral after two days of sell in the morning and buy in the afternoon…

  • OzarkHillBilly

    Added a little long a couple of minutes ago. If it stays up here, I’ll risk holding overnight.

  • Mark Shinnick

    Yes, agreed, thanks! Its a fascinating area of inflection.

  • Time Bandit

    This is the main reason why I wait until the end of the day to give serious looks to my charts. My positions have repeatedly come close to being stopped during the day only to come back later in the day. I realize that one of these days either one of two things are going to happen. Price doesn’t come back and I get stopped for real or price get’s out of living on the edge of demise and there are more gains that can be had.

  • Yoda

    Let us see what the tape does after the open. If we get a trend day alert, I’ll probably jump on the bandwagon and trade with the trend of the day. I must admit that I prefer right now the short side but if we gap above the volume hole, and I mean a big gap, I’d probably go long for a day trade only.

  • BKXtoZERO

    you made it through the storm I see……….

  • Billabong

    Most of my current positions are trend trades and the rest are hedges. I’m doing some refresher training on trend trading for this month. It’s always good to go back and review the books. The main part of trend trading is getting the meat of the trade. Most trend traders will miss the first 20% and lose at least the last 20% (as it rolls over).

  • Yoda

    unless they subscribe to this site to improve their entry/exit timing.

  • Time Bandit

    Yep, we dodged another bullett because there were Tornados that hit different areas of our state but missed us. We had some serius rain and wind which knocked out my power for only a couple of hours this time so we were very lucky.

  • Billabong

    Holding into the weekend after this much chaos this week on a ST trade would definitely be rolling the dice. I’ll be interested to see what you do tomorrow. I went back and reviewed my YHOO trade from last week and it tacked on $3 after executing a SL as planned… Initially got caught in the two day general market downturn it did…

  • http://evilspeculator.com Sir Mole III

    Now we’re talking :-)

  • http://evilspeculator.com Sir Mole III

    GET familiar with it then.

  • Billabong

    It’s a confirmation thing…

  • http://evilspeculator.com Sir Mole III

    You don’t know the half of it, old friend… working on a little vacation in March.

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

    But safety experts say a slip in the bathtub is six times more likely to kill the average American than a storm.

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

    good.

    May the Mole Travel Curse prevail. Hear that RATS?!?

  • Yoda

    The strength of the zero signal will be key for making a decision. I left gold miners positions running as I do not have a compelling reason to close this winning trade so far.

  • Billabong

    Do you use it as a regular tool?

  • Billabong

    Are you in the top tier miners or secondary (or junior)?

  • Time Bandit

    ” The main part of trend trading is getting the meat of the trade. Most trend traders will miss the first 20% and lose at least the last 20% (as it rolls over).”

    I might misjudge when I believe a new trend is forming but getting the middle of a trend is exactly what I try to do. This can be a difficult call when what appears to be the end of a very extended trend (by my lens) and it seems like most everyone else and all non-technical data is saying it’s not over.

  • Yoda

    I remember reading a long time ago that when you travel the market tends to crash. Will take some lottery tickets short just in case there is some truth to that.

  • http://greenlander1.blogspot.com/ Greenlander

    Trimmed back 1/2 SPY longs at close and have core position targeting 198-200 SPY

  • Yoda

    will follow it from now on

  • Billabong

    This especially showed up on the oil trade over the last 21 months. If there was a recent case study for a newbie trader, CL would be the one I’d choose because of its duration…

  • http://greenlander1.blogspot.com/ Greenlander

    Looks like someone picked up my high ask now Im flat but planning on rebuying on a non scary pullback

  • Time Bandit

    Wasn’t worried about getting hurt, I was worried about the $2,500 Deductable on my Homeowners Policy. :)

  • Time Bandit

    Exactly

  • OzarkHillBilly

    I want to know when in March. The later in the month, the more worried or excited I’d be.

  • Yoda

    Top tier with Newmont and risk diversified with GDX. Essentially playing it safe. I know there are others that give you higher returns though.

  • OzarkHillBilly

    Might happen as soon as tomorrow, but we’ll have to see if it will look tempting enough to buy right before the weekend and last day of the month. Closing at these levels today is kind of a big deal, regardless of who was leading what, and some folks will be trading weekly and possibly monthly signals tomorrow. Blah blah blah ….. we’ll have to wait and see, like always.

  • http://evilspeculator.com Sir Mole III

    Near the extremes it can be of tremendous value. It’s most certainly something professional traders consider as part of their momo analysis. Retail rats – not so much.

  • Yoda

    FOMC is on the 16th and Quadruple witching on the 18th. My little pinky tells me that we may see some real turbulence in March.

  • http://evilspeculator.com Sir Mole III

    Yup, better start buying those puts!

  • http://evilspeculator.com Sir Mole III

    You wankers.

  • http://evilspeculator.com Sir Mole III

    I’m just exhausted – I’ll snap out of it.

  • Mark Shinnick

    Yes….funny what often seems to happen when we do or don’t cross over those things :).

  • Billabong

    I traded GDX and GDXJ for a few years … In the end, it’s what works for you. It took along time for me to figure out that I like longer trades with an occasional swing trade thrown in. I still can’t for the life of me understand why people still wrap their arms around the buy and hold strategy … that’s an account killer waiting to happen.

  • http://greenlander1.blogspot.com/ Greenlander

    Fly in ointment was volume hit bottom of range. I have a checklist of go/no-go items and if one of them hits I have to lighten up 50% min. For me the volume isn’t actionable to enter a trade but I take it as caution signal to exit. So far, the non-price checklist has increased the win rate % but I have also missed out on some range but for sure it has saved me from whiplash which in my mind has value bc it saves me aggravation.

    Going to let this run for a few months and then assess whether this list is helping or hurting.

  • http://greenlander1.blogspot.com/ Greenlander

    I would love to see a low volume, small range inside day, say -.25% or so.

  • Billabong

    Leap year … Monday is EOM

  • http://greenlander1.blogspot.com/ Greenlander

    I think a lot of ppl think 1950 level was a ‘logical’ place to short. Just speculation but a good pain trade would be to drop the market just enough to lure some bears in and get longs to sell then jam it up next week. That way both sides get fcked.

  • OzarkHillBilly

    Just my two cents, but when I see the 5 min Zero essentially plugging along in positive territory all day, I take it as a sign of underlying strength (provided that price is moving accordingly), especially if the hourly Zero is positive and other indicators correspond. The inverse seems to apply as well.

  • OzarkHillBilly

    I’m thinking that some folks might be jumping the gun a little bit. Not that I trade off of monthly candlesticks, and I’m no expert, but those are some nice tails over the past couple of years that find support at the highs in 2007.

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

    *cringe*

  • OzarkHillBilly

    The weeks around the vernal equinox used to offer up some fairly consistent turning points. If memory serves, lows generally arrived up to 3 weeks or so beforehand, and highs were more likely in the weeks afterwards.

  • BKXtoZERO

    Thanks for sharing particulars once again on view, lens, rules.

  • OzarkHillBilly
  • BKXtoZERO

    I have a friend that used to write a trading letter and just that was too much for him. I have wondered how you do it. BTW, it was an EW letter, he went broke and so did anyone following him.

  • ridingwaves

    it might happen sooner than the 16th. Draghi is the 10th I believe…
    sticking to my 1975 and then open the gates to 1750….

  • CandleStickEmUpper

    Nice find. That should quiet down the permabears.

  • BKXtoZERO

    ya, I have that same old feeling. I have been screwed too many times in my old life right at spots like this. I said it near the lows and everyone hated me, but just another big abc down is quite possible. IMHO, much past here and that looks likely.

  • Billabong

    The article is a opinion piece … A prediction … Let’s look sector by sector; many have doubled for the trend traders. EMs have been in a massive bear market. Even beloved APPL is down over 20%. Oil is still in a bear market (go back and look at the last couple of years … Moves sideways for a couple of months and then another down leg … We’re about to resolve this after the last couple of months moving sideways). It goes on and on. We should look at both sides of the argument and decide which looks technically better for us and then ask what could go wrong and is the time right for action. In the end, we trade price and that’s it.

  • OzarkHillBilly

    Actually found it in a bear den in which one of the wiser, older bears was trying to calm down his younger brethren.

  • ridingwaves

    thus, why I feel comfortable in long position thru Monday…
    everyone wanting to jump in short at 1950 means pain is still to be doled out on eager bears…

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

    baby, foolish bears. why the last 3 weeks have been a huge stop run IMHO.

    easily another 60 pts up, right?

    http://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=1&mn=0&dy=0&id=p17606562389

  • Mark Shinnick

    Interesting…. all the other times cited experienced at least 2% days…but not yet 2016.

  • ridingwaves

    Demark just gave his mark on down move coming per mrktwtch headline…

    it looks like an open gap up by 2040-50 per your chart, the envelope 1975 and 2020 might be tough hurdles…any oil rally will provide some fuel…

  • http://www.ProfitFromPatterns.com/ Ivan K

    And the sample size was ?

  • Yoda

    Opened right at the volume hole. This is a short in my book.
    Just took Nasdaq short position with SQQQ
    Entry at 21.61

  • BKXtoZERO

    added other half R on long DWTI 215

  • http://evilspeculator.com Sir Mole III

    Hey gang – I’m working on a momo update – give me another 30 minutes or so.

  • BKXtoZERO

    we love Skew!

  • ridingwaves

    the only issue is if it jumps the volume hole this weekend and Mm’s let it run to 1980-90 or 2K

  • BKXtoZERO

    CL possible break out. Tentatively short, but ready to flip. Right near Horz resistance 35

  • Yoda

    let us see how the day pans out first. Dennis Gartman publicly announcing that he covered his shorts is indeed a sign that the rally is due for a pause.

  • CandleStickEmUpper

    Long nq 4248

  • ridingwaves

    yes, lots to digest here…

  • CandleStickEmUpper

    Sold 4252

  • BKXtoZERO

    got enough for a pizza on that one…….

  • Billabong

    LOL … :-)

  • tradingmom

    the 20 week EMA for SPX is 1969

  • BKXtoZERO

    OK so the suspense is killing me. Which one. Was it just like the movie trading Places?

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

    Good. we always need steering in the right direction.

    http://www.b-gdirect.com/user/products/large/MOD_30_no_buttons.gif

  • ridingwaves

    the 1990 ema (blue line) is where it dropped off last time…
    I don’t believe the mm’s are going to give up 1947 today, it took them almost 60 days to get back here and over that resistance…

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

    astute observation.
    Being near month end, anything is fair game 1990 to 1935!
    for the next few days.

  • Mark Shinnick

    Yeah….from my point of view some good opportunity to get 7 handle TVIX.

  • Yoda

    DX hit its daily 50 sma. For me it is a good place to short it.

  • ridingwaves

    my target is the 100sma at 7.74

  • BKXtoZERO

    Hey Mole, are you stopped out of CL on live campaign window? I saw your stop was 34.20 and I see they tagged 34.69 this morning. Maybe they were just coming for YOUR stop.

  • kudra

    Not buying this up move. Short the QQQ. 105 is the stop.

  • http://evilspeculator.com Sir Mole III