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Massive Monday Morning Briefing
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Massive Monday Morning Briefing

by The MoleAugust 4, 2014

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

It’s going to be a busy day – I got more setups this morning than I can shake stick at. Scott pointed out a possible bounce play on the ES/SPX this weekend and here is a bit more context if you want to monitor the hourly panel. The 25-day has now swung below price and if it holds into the open then that should be our line in the sand. A drop lower may bestow us one more scare to lighten the bus.

A bounce may indeed materialize but thus far the GBP/JPY correlation looks pretty meager. However, judging my last week’s push detachment I’m giving it a bit less credence this week.

But the real fun is happening on the futures and forex side this morning. Crude dropped like a rock all last week and we’re now near the lower 100-day BB. On the hourly I want to be long with a stop below 97.5. If you want to play it more conservatively put your stop below 97.05 (last week’s low).

USD/JPY – very juicy formation and I want a piece of the action. Triggers are on the chart – a short play is possible on failure but I think the 100-day SMA will be where the fun ends, so keep that in mind.

But we’re just getting warmed up – please step into my air-conditioned super luxury lair:

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Today’s event schedule:

And here’s the spike controller for you Forex traders. But please put on your sunglasses to protect your eyes – the poor girl has suffered a massive make-up accident (or is the lighting?).

You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

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.
  • Ronebadger

    Thanks Mole and Scott for your recent posts.

  • Billabong

    Here, here (clapping sound) … the weekend had a some good discussions.

  • Billabong

    And no wankers to stir the pot. I listened to an interview this weekend with Jack Schwager (Market Wizards author). He was discussing trading styles and how no two of his interviews were the same. He also discussed the actual trading styles and how people fit into their own style and their edge comes from understanding how their system works. It was interesting in that a few of the traders styles he discussed were so contrary to traditional approaches in managing their positions; he was amazed how large their returns were. It all boiled down to putting on racing gloves that fit you not your trading buddy in the end. Prior to listening to this interview, I went back to a couple of posts I had made and deleted them out (after thinking about it for almost two days). One reflected my bias against GLD … some people can trade it and do well. And the other discussed my trading style that probably wouldn’t work for somebody else. I was concerned about planting seeds in folks climbing the learning curve that don’t need those seeds planted.

  • Kidd Cudi

    I was wondering where that novel you wrote went.

  • Billabong

    :-)

  • BobbyLow

    ” He was discussing trading styles and how no two of his interviews were
    the same. He also discussed the actual trading styles and how people
    fit into their own style and their edge comes from understanding how
    their system works.”

    BINGO! I remember seeing charts that looked like a bunch of cooked spaghetti on a rectangular plate. There is no way I could ever make heads or tails out of them. But the person who drew the chart probably understood exactly what every strand meant.

    This is one of the reasons that I’m glad we’ve adapted the term “Lens of the market” here. I used to think that there was something wrong with me because I couldn’t see what that person was seeing. Now it’s a great feeling to know that I don’t have to.

  • captainboom

    FWIW, I think it’s more educational if you edit the post with an obvious EDIT: to reflect your change in thinking, instead of just deleting it. There might be someone who views the market through a similar lens that finds value.

    Also, do you have a link to the interview you listened to? I’m going to be doing some travel in the next week, and might be able to listen on the trip.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Kidd Cudi
  • BobbyLow

    True. But let’s not forget one advantage that old dudes have over young dudes. We’ve already made it to old. However, don’t worry you have a chance because as Theodore Roosevelt one said “Old age is like everything else. To make a success of it, you’ve got to start young.” :)

  • BobbyLow

    One problem that I see with Tight BB’s is although they might precede a larger move, there is really no way of knowing in which direction that move will be.

  • BobbyLow

    OK guys and gals. Monday is supposed to be a work day. :)

    I’m kind of bored but I do have two open positions Long NZD/USD carried over from last week and a new Short USD/JPY.

  • mugabe

    I think you probably need to trade them in conjunction with a set up you normally use e.g. a bull flag. I highly doubt there’s an edge just trading them for their own sake. But they can confirm of the likelihood of a breakout /breakdown pattern you normally use working.

  • BobbyLow

    Agree.

  • http://evilspeculator.com molecool

    Looks like the intellectual version of my late Squeaky.

  • http://evilspeculator.com molecool

    Participation is pitiful here today!

  • Guest

    seems shortable

  • Kidd Cudi

    seems shortable to me

    EDIT: accidentally double-uploaded. my bad

  • newbfxtrader

    not bad 440-450 is a better sell

  • newbfxtrader

    Good plan. Where do you plan to flip?

  • Kidd Cudi

    we’re all tired from that huge thread friday.

  • newbfxtrader

    https://www.tradingview.com/x/aAHG0u8y

    Pullback in a nice up trend.

  • BobbyLow

    Via my “Lens”, both have had moving averages crosses and demonstrate current buying/selling pressure in charge. When the latter reverses so will I. I’m using a 4 Hour Chart so I can get in and out quicker than on a daily chart while not being subject to as many whipsaws that an hourly or anything faster might present.

  • BobbyLow

    Nice. Did you happen to catch any of the downside after that high upper wick candle in July?

  • newbfxtrader

    Moving averages just add delay to your price….

  • newbfxtrader

    No. It didnt setup as a short yet. Now If we start breaking some support I may change my mind. At this point looking only for long trades.

  • BobbyLow

    If I’m talking about an 8 Period crossing a 15 Period on a 4 Hour Chart any delay is minimal unless there is some kind of Gap or Shock of some kind. Besides, it’s my Lens and I’m sticking to it! :)

  • BobbyLow

    I don’t have this Pair in my stable but if I did, it would have had my moving average cross on Thursday, July 17th at 9 AM and has never turned back since. That was 251 PIPs ago. Damn!

    Again different strokes for different folks. :)

  • newbfxtrader

    https://www.tradingview.com/x/yWm5UZEm

    heh yeah. Its such a nice uptrend. It would have to take out the green line for me to start changing my mind.

  • BobbyLow

    OK, that’s cool.

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

    but hey, delay CAN be a good thing.

  • mugabe

    sounds like a visit to the opticians:)

  • http://evilspeculator.com molecool

    Let me guess – nobody took a single of those juicy setups today.

  • newbfxtrader

    Take off the training wheels. See for yourself what happens. Try on paper first.

  • Kidd Cudi

    was busy closing out two short positions (0.74R and 1.35R)

  • BobbyLow

    You never explained what basis is for your entries and exits? Is it horizontal lines? Channels? Flags? Pennants?

  • newbfxtrader

    Why did you go long the kiwi? Did you see support? Did you really need the moving average to tell you what you already knew?

  • BobbyLow

    You never answered my question either.

    Look. I’ve worked on my latest system for over a year. Back tested, forward tested and it took a tremendous amount of tedious grueling fucking hard work.

    There are other factors why I went Long the KIWI involved besides moving averages. And if you think I’m going to type out a couple of thousand hours of work in the comment section, well that ain’t going to happen. Maybe Mole will type out his code for the Zero too.

    Is there any guarantee that my trade is going to work? Hell know. This is one reason why I’m reluctant to say what my positions are because of people having other lenses, time frames etc. Then I have to justify my trade? Bull Shit. If I say I’m long this or short this and these trades happen to meet somebody else’s criteria. That’s fine. If they don’t, that’s fine too. We’ve already had this discussion about having different time frames and different styles ad-neaseum. You’ve had success with yours and I’ve had success with mine. This is not a pissing contest. Why don’t we just leave it at that?

  • newbfxtrader

    Nah man just sharing ideas. Take it easy. Take a look at this one. Its the CAD weekly . Downtrend? Where would you say breakdown was at? When price is back at that level short or go long? Where do you think its headed for the next few months down or up? What would change your mind? For me 0.94 taken out to the upside would change my mind. See my comment on cable above. I cannot short it yet. Price is enough for support and resistance. Moving averages will add delay to your “conformation”.

  • newbfxtrader

    https://www.tradingview.com/x/PYDnoY5G

    From weekly then switch to daily. Every pullback is an opportunity to compound. I cannot short because I am already long. Now you know where I would bail on longs and switch sides.

  • Billabong

    I did think about the EDIT addition but not for those two posts.

    https://www.youtube.com/watch?v=AqCOw-pja7E

  • newbfxtrader

    “newbfxtrader • 8 days ago
    https://www.tradingview.com/x/BJxIVYKm
    ATM its a pullback in an uptrend. Easy to flip if it doesnt hold nearby.”
    Remember this one? Similar. Pullback in an uptrend.

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

    For those who are starting out + others perhaps …. Where to start with designing MY very own ‘unique’ RBT ?

    From my perspective, everything starts from a philosophical basis … in this case the question is … ‘Is Timing Key’ … valid or not … the answer will be different for each person.

    ‘Obviously’, from my side timing is important … timing of my entry … timing of when I move a Stop Loss … timing of when to take profits, partial or otherwise, etc…..

    Is it the be-all-and-end-all … of course not … however timing is up there in my prioritised list … this applies equally to when and where we are born as well … I cannot imagine my reality had I been born 300 years ago in (you name the country).

    Back to point, as I am wont to say … seeing that Timing is Key / important (from my biased perspective) … then the first step is to establish if ANY particular entry technique or idea is profitable … by the Close of the Bar of Entry … a very simple and ‘harsh’ a test … either 1R ISL stop out … or … Exit on the Close of Period 1, the Period of Entry.

    You cannot have a more brutal Campaign Management (CM) routine than that … either you win or lose as at the Close of the bar of your Entry … no fancy footwork … no EqC (Equity Curve) filters … or fancy CM involved! The ramifications / implications of this simple idea could be inspirational.

    The chart below depicts the outcome of a RBT created by a student … by applying this harshest of harsh exit rules to the Entry setups.

    Food for thought … perhaps?

    PS. The finalised CM rules with the corresponding ‘production’ Equity Curve will appear later.

  • BobbyLow

    Sorry for getting a little testy Newb. I’ve finally gotten to the point where I refuse to be influenced by what somebody else is doing. My lens of price is the only influence that I need or want. It took me many years to overcome my self doubt and get to the point to where I trust my system and price more than anything else. So again I’m sorry for getting a little more hot than I should have. :)

    I understand what you are doing and think it’s great. I don’t have the patience and or makeup to hold onto a position for a very long time. I don’t even want to trade a Daily Chart never mind a Weekly Chart.

    BTW, FWIW, I took a look at /6C under my 4 Hour System and I would have gone Short 7/24 at 9293 and actually covered today at 9158. If I had triggered off of my Daily, I would have gone short on 7/11 at 9298 (This was before a MA Cross BTW) and I would still be short.

  • Scott Phillips

    My copper setup is still in play but looking dicey within .2R of the stop. Has a fighting chance because the lower timeframe is a very compelling retest of the high.

    The other two I posted yesterday didn’t trigger, so it’s all on you amigo :)

  • Scott Phillips

    The last 5 days are up-down-up-down-up, which is a sign of a short term trading range. Bigger picture it’s making lower highs and lower lows, so the odds favor a downside breakout, but not by much, probably 55:45

    I think you can find a shittier, more compelling chart to short if you look :) Tim Knight, for all his faults actually posts some excellent short setups on his blog which would suit your method

  • Scott Phillips

    I use moving averages in most of my production systems. Provides a lot of structure for me, my opinion most of the time is not trustworthy.

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

    Yes, timing is important. It can be the safety net or the wind in your sails.

  • BobbyLow

    Just a quick FYI, even though I plan managing Open positions differently around major announcements, I will still limit my entries prior to these (major) announcements. Speaking of which, there is a cornucopia of 7 Major Announcements between the CAD and the Aussie beginning later on tonight and ending Friday morning.

  • http://evilspeculator.com molecool

    I posted a regular avalanche of setups this morning and as you can see it’s tumble weeds today. Well, I for one am keeping busy 😉

  • newbfxtrader

    No worries. On the CAD as you can see I am looking for short entries after the next bounce. First failure was at 0.94 second failure was inability to hold 0.92. Every failure gives you a chance to add.

  • Scott Phillips

    For tape reading indicators are absolutely not necessary.

    For trading indicators and averages absolutely ARE useful.

    I am no longer interested in knowing what the market is going to do tomorrow – that is childish stuff. I’m interested in finding a very very specific condition where I have an edge. That might be…

    – In a trading range at the upper bollinger the next short setup has an increased chance of working
    – In a trend a setup touching a moving average has a better chance of working

    Good trading has very very little to do with reading the tape. One of the things I was amazed about from meeting Van’s instructors were that I am a better tape reader than all of them. So is Mole, so is Skynard, so are a few others here.

    Tape reading is really not all that helpful in the end to actual trading.

  • captainboom

    Can you tell me what the period is that the student was using? I’m curious, simply because I’m interested in the total time it took for the full data set.

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

    The data covers about 4 months of just 1 market.

  • newbfxtrader

    I had posted the cad chart also some days ago around 0.92 ish. Got an inside day then took out to downside. So that was entry 2. Now looking for entry number three.

  • Scott Phillips

    How do you build a SYSTEM around it though?

  • Scott Phillips

    That is not an uptrend

  • Scott Phillips

    Yeah, things are starting to turn around here

  • newbfxtrader

    Work in progress. I hear you when you say you use a MA and I am sure it helps. But on the weekly and daily charts it just delays my entry. Already have a system based on 21 day MA and 200 day MA but taking them off has only been positive so far. Will tell you in a few months :)

  • newbfxtrader

    Yeah not as good and the cable but we can agree its making so far higher highs and higher lows at least.

    https://www.tradingview.com/x/kdPQRaGk

    See what its doing on the weekly. Took out 2013 high and 2012 high . PB to 2012 high which should act as support now. If it holds next target would be 2011 highs and so forth. but I prefer usd/sek and gbp/sek over this for obvious reasons. On the weekly this is good place for the eur/sek to fail if it wants to.

  • mugabe

    Right on. Unless you are someone in the top 0.1% and some sort of Al Brooks, you’re not gonna have an edge doing discretionary tape reading. You need to have a system with proven statistical merit.

  • newbfxtrader

    And I do remember you saying it could be an exhaustion move recently. Which would make sense on the weekly if it started breaking support. I am in general bearish euro, bullish USD, GBP.

  • captainboom

    Thanks for the link.

  • captainboom

    It’s unfortunate the author didn’t spell “you’re” properly. I see Steve Jobs. How old does that make me?

  • Billabong

    Ref your earlier response regarding your Kiwi trade … you don’t have to justify shite. It is what it is, My indicators said long coal and coal miners this morning. Who in their right mind would go long coal and coal miners … I would, because my system said strong move. The reason I edited out a couple of my responses the other day was because it was getting too personal…

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

    High Yield bonds could be interesting going into month end.

    http://s29.postimg.org/w80de1l47/JUNK_Chemistry.png

  • Scott Phillips

    Al Brooks is a freak of nature, and it must be said he is a very nice guy who takes the time to respond to all my emails. He has been very helpful to me understanding the nature of price action.

    A couple of people doing Van Tharp’s super trader program, which is about 4 years of work towards becoming a full time trader chose Al’s method. They were regretting it – studying hard diligently and still trading with a negative edge after a year of full time work.

  • Scott Phillips

    Do you have backtest or forward test results?

    I’ve see Bobby’s results regularly, and they are, on balance, better than mine, which takes some doing :)

  • ridingwaves
  • mugabe

    It’s a bit like anything in life -politics, religion, even music- when your lens doesn’t agree with someone else’s, things can get nasty quickly if you start thinking your lens is the only lens. Pity I missed the fireworks on the thread, though:)

  • mugabe

    You’ve told us your system gives 57% winners, so objectively any one trade would be slightly better than a coin flip- assuming the receiver of the information knew your exit criteria, both for winners and losers

  • mugabe

    Would he then run an automatic back test on masses of other 4 months periods?

  • mugabe

    That’s what I mean. The question is: Am I a freak of nature?

  • phylum

    If your foundations are not sound … however in a diverse ‘universe’ maybe there are many ways to “skin a cat”

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

    The entire Equity Curve / RBT in my example above is ‘walk-forward’ … after his regular job … about 5 – 6 hours a day … in other words he hypothesised the concept (setups and entries) and applied it totally out of sample in real time … after about a year or so of thrice weekly sessions with me via SkyPe and screen-sharing … with both of us using live data.

    This demonstrated his commitment to his goal … and provided the belief basis that what he had signed up for was / could provide a road ahead … for him to achieve his personal goals.
    ..
    This ‘brutal’ CM approach is not what his final RBT uses … however it did demonstrate the efficacy of the setups … as well as his ability to stick to his Entry criteria … by being at the helm for the hours (as chosen by him) … and working on his recognition skills.

  • mugabe

    Thanks. Sounds like he couldn’t do an automated backtest on it then if it’s a question of recognition skills.

  • mugabe

    Another BB squeeze candidate. Long on breakout- which could obviously fail.

    It’s bottoming but will it now pull away? Don’t know.

    http://scharts.co/1y0RDlY

    Has already reported earnings, which is a definite bonus.

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

    Correct … his programming skills (nor is his pocket) are up to such a ‘simple’ task.

  • http://evilspeculator.com molecool

    Clearly you have too much time on your hand :-)

  • Billabong

    Trading range since 17 July? Considered using /GC for GG move (barring a GG news event)? Newmont (a dog) had a buy signal last night…

  • Billabong

    You really didn’t miss any fireworks. I’ve worked with PM’s for many decades. I was lamenting and lecturing Kidd Cudi (per her response about a novel) about considerations when selecting PM equities to trade. It wasn’t my place since I’m here to upgrade my trading skills…

  • mugabe

    I’d say it’s been in a range since 19 June with 2 false breakouts. It’s been digesting the impulsive move up that started on 10 June (and ended on 19 June). It needs to do a fair bit before my buy is triggered.

  • mugabe

    What does ‘considered using /GC for GG move (barring a GG news event)’ mean?

  • Billabong

    Glad to see the last sentence. Almost the same price as June 19. My reference date was the tightening of the BBs.

  • Billabong

    Outside of miners leading the way like this last spring, gold/silver lead the way. I watch GC and cash gold for indications on overall moves … my lens.

  • mugabe

    Fair enough- Not mine, but why should it be? The action in GG closely reflects GDX (suprise, surprise).

    It’s still v much in the range but the bottoming process in the long term chart *could* portend a bullish breakout. The BBs are a bonus on top of that.

  • Billabong

    This can be taken one step further. Someone could take GDX and back test it against /GC for a couple of years and see the correlation. If they worked well together, then every time /GC said buy, GDX could be bought without looking at the GDX chart (this would be particularly good with 2X and 3X ETFs). The real question is whether or not folks are prepared to sit down and do the tedious extrapolation work. I know BobbyLow has done it and I know many of my evenings/weekends have been dedicated to doing it.

  • http://evilspeculator.com molecool

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    ¨°º¤ S H A K E N ¤º°¨

    ¸„ø¤º° B A K E !“°º¤ø„¸

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • mugabe

    Yep, you need to backtest to see if it works. I am right at the beginnng of the process of trying to get into automated backtesting. If something is rule based, it should be susceptible to this. I may be in for a steep learning curve!

  • mugabe

    By the way, Newmont to my *lens* looks pretty much the same as GG and GDX on the charts.

  • Billabong

    This is exciting … you’ll be amazed at how it will change how you look at the markets. Time to go and layout today’s game plan with Europe closing in a couple of hours and the US opening in 30 mins….

  • bdoone

    I saw that also. Extreme ‘buy to open’ put purchases. Part of the reason for the VIX step 2 buy signal yesterday perhaps?