Now Reading
Scaring The Children
89

Scaring The Children

by The MoleFebruary 5, 2014

Scanning across the financial blogosphere I’m seeing the usual suspects pimping spurious predictions based on their respective preferred market directions. The Mole will be the first to admit out that it is impossible to know which way this puppy will swing. Market makers are having fun jamming both sides today which accounts for some of the fake out moves we’ve seen earlier in the session. If I was still wave-wanking I’d say that a fifth down may be in the cards but it’s equally possible the tape is catching ground here. Fortunately I have long given up the prediction business and have in the years since instead focused on technical inflection points. Retail however expects directional predictions and if possible for free – which is why the first floor of the woodshed usually dons longer lines than that of a Las Vegas night club. Moving on.

The subs remember this chart which I posted a few days ago – this is the zoomed out version as I wanted to provide a bit more context. The other day I pointed to the 1.0 mark of the VXV:VIX ratio indicating that anything below it suggests that a bounce is in the making. If you take a step back however you realize that we actually have been in a slowly falling channel which suggests that the pricing of three-month volatility vs. 30-days IV (i.e. the VIX) has become more sensitive on the upside and less so on the downside. In other words – it takes a lesser ratio of the VXV versus the VIX on the upside before we see a reversal. The same applies on the downside apparently however there the signal spikes produce a more uneven distribution pattern. What does that mean? The market has become more sensitive to volatility deltas since that big spike up in early 2012.

Where we are now IMNSHO delineates the zone between shallow and deep medium term corrections. Although that does not help us pick a direction right now today it does convey one important point however: IF we continue downward from here or if an ensuing bounce is weak then it’s possible that we will see a deep correction as we’ve seen in 2010 and 2011. Technically speaking this would be a healthy event and I would welcome it – if nothing else it would offer a lot of new technical context for all of us.

Alright – on to equities – the spoos are bumbling around inside their compressed 25-hour BB. As I pointed out above – very tough to pick a direction here. Bears will look at this and expect continuation lower (per the comments I have seen already), bulls will expect a bounce higher. Which is the tape MMs love and take full advantage of. I am ambivalent and technically speaking the inside day on the SPX triggered this morning and may be stopped out today. It’s a tough ride down here and it may take a few attempts to get a seat on the right bus.

The TF futures went deep today – obvious attempt to scare the children. All of it has been recovered since which does suggest that there is a buyer down here attempting to stave off more damage.

The NQ more bullish and attempting to push above an hourly Net-Line Buy Level a few ticks above the 25-hour SMA. Very notable here is the 100-day SMA which held up just famously. So that should be a support level we may be able to enjoy on the NQ while the previous two are pinned somewhere in limbo on the daily panels.

May I remind you that our P&F on the SPX is still pointing downward and based on the current formation I think that 1740 is our new inflection point on the cash. If that one goes we are visiting 1680. Of course a small bounce in between cannot be ruled out and would not disqualify this scenario. The bears are not in trouble until about 1765 after which this chart would produce a low pole reversal warning.

Gold also triggered an IP-L this morning and has since fallen back. Good news however is that the 100-day SMA has finally been touched. You may recall that I was a bit bemused by that invisible resistance line hanging just below it. At this point I will hold this position with my stop in place.

Natgas – talking about scaring the children – this is why Scott and I call it the widow maker. You recall that I advanced my stop to the 1R point last night and that’s where it got touched. Which is just fine with me – I’ll bank one unit and am happy to be alive to tell the story. You don’t mess about when trading natgas – she can be quite a bitch.

A few more futures goodies below the fold – please join me in the lair:

evil_separator

It's not too late - learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

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.
  • Rightside_ot_trade

    1st chart ( and explanation) is phenomenal

  • Darkthirty

    I’m scared, can’t get a solid read on this slop………………..

  • CorporalCarrot

    All out of bounce longs here folks. Tidy enough. But need to reassess.

  • http://dartht.blogspot.com/ Darth_Gerb

    1749, can I can an amen? heck, how about a VWAP.

  • Skynard

    New high coming, VWAP held. Lighting wick…………..

  • Skynard

    AUD wound up tight now.

  • Darkthirty

    B of C of 4 target 1753…..?

  • Rightside_ot_trade

    news tonight @ 19.30
    shees it’s just constant, no wonder there are so many news trading junkies

  • denali92

    Good post over on SoH.

    THANKS!

    -D

  • http://dartht.blogspot.com/ Darth_Gerb

    drive by pimp.
    I ought to smack you.

  • http://dartht.blogspot.com/ Darth_Gerb

    1750..

  • Darkthirty

    lol

  • http://dartht.blogspot.com/ Darth_Gerb

    a Cobra fanboy. Hmmph.

    oh, he’s a (London) Mr. Mom.
    I wonder if he’d work for Carrot? LOL

  • Skynard

    Pull it ah………………keep ya guessing

  • http://dartht.blogspot.com/ Darth_Gerb

    1745+
    Jello.

  • denali92

    It was an honest thank you for an interesting post…. I respect Molecool’s work and find it interesting.

    Not sure what your issue is today…. I am sorry for you.

    -D

  • http://dartht.blogspot.com/ Darth_Gerb

    don’t worry about me.
    I’m the attack Gerb. barks at newcomers.

  • http://dartht.blogspot.com/ Darth_Gerb

    I have an educated guess.
    =P
    but best to just trade the plans.

  • http://dartht.blogspot.com/ Darth_Gerb
  • Ronebadger

    VIX Step zero – Reset…

  • Sean

    Looks like we have a possible FO-L with a hammer on the daily chart after bouncing off the longer-term volume hole support… on the short side we could have a FH-S, and if that can push through 1730 we’ll probably get a pretty good move to the downside… on the qualitative side, talking head after talking head on CNBC has been saying “this correction is not done yet,” so if I had to make a guess before a setup triggers, I would say I like the long side a little better here, at least in the very short term… Luckily I don’t have to make that bet…

  • http://dartht.blogspot.com/ Darth_Gerb

    me thinks a bit more pushing to the down side.

    http://stockcharts.com/h-sc/ui?s=CVX&p=D&yr=3&mn=0&dy=0&id=p85952764031

  • http://dartht.blogspot.com/ Darth_Gerb
  • Sean

    My Jan’15 puts would love that, but I don’t think we can get there from here, I think we need to retest 1800-1850 at least once before we get that low.

  • SS_JJ

    LMAO at EDIT

  • http://evilspeculator.com molecool

    Can you guys stop hassling people? Unproductive.

  • CorporalCarrot

    Sean I recommended the post because I love the charts, thanks. However, I won’t be taking any “breakout” longs for want of a better word in these instances (i.e. no matter what the “rules” are, I’d be super cautious on taking an inside day long trigger or something) because I think that for once the talking heads are right and we need to revisit that next area of serious volume, 1680-1700 give or take a few points depending on whether you are talking cash or ES.

    So my playbook unless the facts change, if it breaks upwards, wait for exhaustion and sell the spikes. Buy the flushouts (eg Monday’s close, today early).

    Otherwise I have a horrible sense of people getting chopped to mincemeat here trying to play the “confirmation” trade (as they pretty much have done since 12/2013).

    In fact, now you mention CNBC, I don’t normally get to watch it, but as I am on semi-Paternity leave and sometimes finding myself quite literally holding a baby, I have seen more of it recently than I have in years, and it struck me how utterly……reasonable…they were being.

    I know zerohedge and the likes will try to make out they are panicked and desperate etc etc but the calm manner in which they were treating this as just the expected pullback, and more can be expected……….the paranoid part of me starts to think we have something more serious on our hands.

    There might be confirmation bias here, since today I decided to withdrawn some serious capital I have in a Global Macro Hedge Fund supposedly run by smart people that lost me 7% in January. I have some thoughts I want to share with you all, but I need to be fresh for it and I’m not right now so in the morning I’ll hopefully do so.

  • mothwhoflysbackwards

    Well… I can see why people wanna dump on SOH. Just popped over because I heard you posted and was STUNNED by the stupidity in the comments.

    My fave was Dollar a.k.a. “flaming skull” with his huge run in “virtual” trades. Oh yeah he made a killing holding FAZ and VXX for months. One problem: they reverse split…HELLO!

    I don’t know if “Dollar” is really that dumb, or if he is goofin’ on those fools and they don’t know it. You think some one would tell him he actually lost money before he starts to trade for real.

  • Sean

    Probably smart to wait and see how this week plays out… 20pts is a pretty expensive setup to get whipsawed and the next couple of days could be volatile with the jobs data coming out…

  • Skynard

    Time better spent trading currencies and commodities than worrying about which-way this market will turn. Try this one on for size:) .8962 next resistance. My first target now .8975, 100 BB/30 min.

  • Skynard
  • phylum

    I’m lightening up, in 5 of 3?? approaching significant resistance at the 1.503 area EURAUD, trailing with ATR stop

  • phylum

    Seems like some one here likes real music!

  • phylum

    Interesting setup on weekly, albeit a couple of sessions to go

  • phylum

    Chart

  • phylum

    I’ve just had an epiphany …. why I gelled with Ivan’s 6 & 3hr time frames is because that is the same as the tides … those who know me will know what I mean …. mmmm maybe there is something in the lunar(istics) after all….

  • Darkthirty

    The man who knows……..knows nothing. LOL let I roll, don’t fight the truth

  • phylum

    There is no truth, there’s honesty and the rest is …….

  • Darkthirty

    The truth is as you perceive it

  • phylum

    Your leading to that again …. a fool I am and it’s wise to know so:)

  • Darkthirty

    Epiphany my ass!

  • phylum

    Did you witness the freeky posts on the “super moon” last week

  • phylum

    Yep … sometimes you got to let it roll!

  • Darkthirty

    Didn’t notice, been in emergency services for 25 years, the moons definitely rule!

  • phylum

    Yep … freaky!

  • Darkthirty

    60% of the human body is water, so it is absolutely affected by the gravitational pull of the moon. Now we’re getting into EWT…….

  • phylum

    There you go:)

  • Skynard

    Any takers?

  • phylum

    Something to ponder

  • Darkthirty

    Pondering involves what you already know, epiphanys are from without

  • phylum

    Aristotle v Plato …. never the Twain shall meet….

  • Darkthirty

    what’s the trade in question?

  • Skynard

    Have a look at /SB after striking the 100 weekly and you will have your answer:)

  • Darkthirty

    Samuel Clemens lived in a different time?

  • Darkthirty

    Can’t seem to find a chart

  • phylum

    This is a waiting tape, “boring as bat shit” (EURAUD), when everyone’s given up and gone onto something else………guess what happens, if you can catch it good luck to you:)

  • Skynard

    /SB weekly, a gimme

  • Darkthirty

    No experience backtesting, but looks like a long trade………..

  • Skynard

    You will see a strong reaction off the initial target.

  • Skynard

    DB will be in play, if not falling knife to 100. Will be taking profit at my target.

  • phylum

    He would agree, a philosophy is still a philosophy, the dichotomy between Aristotle ( honesty … it is what it is) and Plato ( it is what it might be, or could be) will continue forever more…..

  • phylum

    You had your nanna nap?

  • Skynard

    Lol, yes. Getting ready for EUR session now.

  • phylum

    You’re on a roll, be careful:)

  • Skynard

    Yes, been a good week. Looking to trim position sizes, know better:)

  • phylum

    Cheers!

  • Skynard

    Always better to take profit and move on to the next trade. Do not get married:)

  • phylum

    Yep, I’ve only left one lottery ticket with an ATR stop whatever happens its still in with green tickets!

  • phylum

    Movement

  • Skynard

    hehehe, .8971 now. Declining 5 min 100 BB.

  • phylum

    Unless it breaks the LOD, then the event risk to come which may be a heads up …. hmmm check out that 30min chart i posted earlier

  • Skynard

    Waiting for that DB, it will bounce.

  • phylum

    BD?

  • Skynard

    Oh, meant DB:) 1.5029

  • phylum

    DB?

  • Skynard

    Double bottom

  • phylum

    How much sleep did you get?

  • Skynard

    About 4 hrs.

  • phylum

    Mmmmm …. breakfast

  • Skynard

    Fav meal of the day:)

  • phylum

    Look after yourself else you will not be able to look after others:)

  • Skynard

    Fortunately know what you mean, here is your DB if it happens.

  • phylum

    Out of EURAUD short, not playing any more this week

  • phylum

    happy days, I’m out

    edit: i gotta remember to refresh… refresh…refresh

  • phylum

    Just remember rats, you need to refresh this page regularly to update posts & (esp) charts

  • phylum

    hmmm I have no idea how to delete if you change the context???

  • Dyellowflash

    Shorted 1 ES contract for leisure play at 1754.5.. unfortunately, the whipsaw last session has messed up my trading system, so this is just purely a reflex play.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨

    ¨°º¤ø„¸F R E S H „ø¤º°¨

    ¸„ø¤º°¨ M E A T“°º¤ø„¸

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • Dyellowflash

    Oh gosh… I went out to buy dinner and return back 2 minutes too late to TP… damn that time spent on buying the ice-cream drumstick… 🙂