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State Of The Evil Lair
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State Of The Evil Lair

by The MoleAugust 26, 2011

Today’s early morning bear trap once again confirms what I have been suggesting for the past few days: Stay nimble and expect the stop bots to go after your lunch money (or worse). Fortunately the Zero continues to safe our collective asses and for that I am very grateful.

This morning everyone was focused on the verbal assurance of one man who’s holding an increasingly irate tiger by the tail and who most likely will not be treated kindly by future historians. More than happy to be but a stainless steel rat with comparatively humble ambitions (after all what is market domination compared with blowing up the world’s combined economies?) I use days like these to reflect on the bigger picture. For one – there is only edge in playing the swings, especially when emotions run high and common sense is becoming an increasingly scarce commodity – at the top and unfortunately also at the bottom of the food chain.

Rather what is really going to separate the longs from that coveted push above the 1200 mark are two 100 SMAs. So here’s this week’s State Of The Evil Lair in simple language, not requiring oracle like interpretation, and we even have pretty pictures to go along – I know you rats like pretty pictures 😉
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Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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Here’s the weekly SPX which managed to stave off 1100 and is now fighting for the 1200 mark. What stands in the way is the 100-week SMA as well as the lower 25-week Bollinger.

And here’s the monthly, on which the SPX is sitting right in between the 25-month and 100-month SMA – talking about a rock and a hard place! In order to assure any further upside we need to make it across both of them and that by Monday or Tuesday. The longer we stay up here and bumping our heads the more momentum is being wasted on just clinging to the current 100 handle range.

Bottom Line: If we make it across both of these 100 SMAs we establish a nice support platform from which to launch further short squeezes. A failure of breaching 1200 will most likely result in a steep drop – premature on my calendar but I’m not about to start arguing with the tape.

Cheers,

Mole

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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://practicalt.blogspot.com/ Gold_Gerb

    a like for you.  Mole for Prez.

    hey, remember this two days ago?

    http://tinypic.com/view.php?pic=2db53k3&s=7

    you thought I was kidding huh?
    SKYNET is real.
    be Afraid.  (mental M, YMMV.)

  • nyse

    Gold update: http://screencast.com/t/7zlE1baSai 

    How’s everyone feeling today?

  • Schwerepunkt

    Been meaning to ask you what the other pics are when I click your link to the tree rings?

  • nyse

    So you are playing this long based on the new circle? TIA

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

    ahhh, well – let’s say i’m not shorting for the end of the month duration.
    and leave it at that.

  • http://evilspeculator.com molecool

    That one girl has a nice ass…

  • http://evilspeculator.com molecool

    Feeling good but it was a busy week and I’m looking forward to my weekend.

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

    Not sure, it sure seems like a freebie flickr.

    yesterday one girl, had some big ol….err stay on topic.

    make coin.
    😉

  • Anonymous

    The first step is to stay above the 13 day MA which is 1173, so far so good.

  • raised_by_wolves

    I’ve been long gold, short equities based on the hourly chart. Obviously, I’m hoping this composite chart gets embedded to the upside:

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/ee15dcd2-de19-459e-99cf-6dd3c3b4468a/00003669.png

  • Anonymous

    biden and pelosi aprove this post!

  • Anonymous

    This was a really a stinky move today IMO. Unconvinced, so I’m still on the sidelines.

  • raised_by_wolves

    A bit tired. Time to eat the split pea carrot toasted quinoa ginger soup I made. As for gold, I find this intriguing that gold has been moving up often without silver these past weeks. Silver *should* be +5% to +8% today, but it’s under +1%.

  • Anonymous

    Actually, I have your link up from the other day in a different tab. Nice!

  • Anonymous

    Does it need some curry? 
    What is the basis for *should*?

  • Anonymous

    Does it need some curry? 
    What is the basis for *should*?

  • Fearless

    If we don’t close above the 20 day SMA today I wouldn’t be surprised to see the market puke on Monday.

  • http://thebhbgroup.com TheBHBgroup

    this week has drained my brain….tough to think about the mkts on a friday.

  • nyse

    That soup sounds good! I noticed that too. Looking at all the PMs (http://screencast.com/t/sSXaYkwe586y), Gold is definitely outperforming. These four tend to pull each other along. I try to look at these together. However, after such a dramatic correction in Gold, you would expect the bounce we have seen over the last couple of days, but the relative weakness in the other PMs leads me to believe that the move is driven more by a technical reaction to the drop, and not by general renewed strength of PMs.

  • Anonymous

    Just went short gold at the 50 mark.

  • tradingmom

    Mole — can you extend the red line on the hourly chart?

  • http://evilspeculator.com molecool

    If you ask me nicely…

  • http://evilspeculator.com molecool

    I could but I think it would be presumptuous and I want to stick with the rules.

  • tradingmom

    Pretty please with Raised by Wolves’ cookies on top :-)

  • raised_by_wolves

    Well, I loaded it with turmeric and red pepper too.

    *Should* is based on (1) what I’ve empirically seen with my own eyes this past year, and (2) the theory I’ve read that silver usually does what gold does but amplified.So, I find this anomaly unusual, amusing, and, quite frankly, enjoyable. I’m not sure I’ve drawn any conclusions from it at the moment other than there has been a lack of appetite for risk. Whether this leads to silver falling off a cliff or going exponential again to “catch up to gold”, I do not know. I do know that I would not be long silver right now.

  • Fearless

    There has been a discrepancy in money flow today with retail traders dumping SPY and commercial traders buying SPY, someone knows something we don’t?

  • tradingmom

    What rules would those be?

  • Anonymous

    almost always, when i look at finviz money flow charts, i end up surprised how retarded commercial traders can be.

  • raised_by_wolves

    Stinky for gold, equities, or both?

  • tradingmom

    How can you tell?  SPY is close to top of WSJ selling on strength list for now.

  • raised_by_wolves
  • nyse

    This looks like a great level to short it. Just peaking above that 50% retrace from the move down.

  • bshah

    r u planning to stay in GLD short ? or u r putting stop based on equities going down ?

  • Anonymous

    Yes sir, I’m on the case! Thanks for your chart.

  • nyse

    What does this tell you, that its time to reverse that trade above (i.e., long market/short gold)?

  • raised_by_wolves

    @tradingmom:disqus @molecool:disqus I forgot to mention that if you have time, you can toast the quinoa flour in the oven at ~200° F for a couple hours, spreading it out so that it is no more than 1 cm thick. This will make it taste less grassy.

  • Anonymous

    Well, went long /ES and short /GC and it is time to step away. Good weekend all!

  • Anonymous

    both

  • raised_by_wolves

    Take some profits and maybe look for a better reentry, but don’t reverse the trade. That’s me, and I could be wrong.

  • raised_by_wolves

    We must be trading against each other at least part of the time.

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

    Market close in < 20min

    SPX 1173.33

  • Fearless

    Already took half off (stopped out for a small profit when I stepped out for lunch). Stop on the other half set at 177.6

    I will explain the setup in my post this weekend.

  • tradingmom

    Thanks!  On the hourly SPX chart, do yo uthink we bounced where the red line would be if it were extended?

  • Schwerepunkt

    1180 on SPX. Doesn’t look like it will make it.

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

    confirmed.

    I’ve (however) learned to never say never on market closes.

  • Anonymous

    Hehehehe, it’s all good! Hell of a day.

  • Anonymous

    Great charts!!  Sez it all Mole.

  • raised_by_wolves

    Fun as hell! 😉

    Um, did the Fed speak already or are they doing that after market close? I guess I don’t give a damn. I just need to know when there’s a new POMO schedule to extract data from.

  • http://evilspeculator.com molecool

    ????????????????????????????????­??????????????

    D   A   I    L   Y      Z   E   R   O     H   A   S      B   E    E   N      U   P   D   A   T   E   D

    ????????????????????????????????­???????????????

  • raised_by_wolves

    LOL! So, I’m trading against Fearless too.

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

    you’re definitely F’d then.

    (Fearless’d)

  • Anonymous

    20% of my portfolio value is in options positions that are long silver.

  • http://evilspeculator.com molecool

    Dang it – I was trying to get the tea party to support the evil lair.

  • http://evilspeculator.com molecool

    That you should not connect prior lows and highs when they were massively breached in between 😉

    I have made exceptions in the past but only when the flip over was confirmed by two touches or more.

  • http://evilspeculator.com molecool

    Have a great weekend everyone!

  • raised_by_wolves

    Hmm, I understand your logic, but I’m not sure that I agree with your conclusion because of other evidence.

    (1) Gold has been the second top-performing asset this month . . .
    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/9ddc4654-97bf-4b39-bd3d-1b4b0acd0bf7/00003673.png

    (2) Mole shorted it with tactical precision, but he’s not trying to constantly reshort it, is he?

    (3) Gold recently made an all time high. Sure, that could be the top, but aren’t the odds better that it’s not? But let’s pretend it is. There’s always a retest. Why be short now until there’s, say, a retest variation sell signal?

  • Anonymous

    {comment removed}

  • Anonymous

    It looks like over the past 14 Trading Days that the “Inquestor Bots” have had a great time especially considering that the Average Daily High/Low Trading Range over this time period has been 44 SPX Points.

    Well TGIF.  Have a great weekend and good luck to all especially those of us on the East Coast.   :) 

  • Anonymous

    You too!
     

  • raised_by_wolves

    I’m 8% short silver. The plan is to close it if the silver to gold ratio closes above my magical moving average.

  • raised_by_wolves

    Would you mind posting a $BPSPX update for us, Gerb?

  • Anonymous

    I was saying more for the pile-on-RBW effect. I’m almost completely hedged with other relevant options.

  • raised_by_wolves

    At least I have the monthly VWAP, the 4-hour MA 20 (not to mention the daily MA 20), and a couple net lines under my feet. :-)

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/c6e3b37e-3361-478d-bd0d-168fda763c88/00003674.png

  • raised_by_wolves

    Capturing lots of theta, eh?

  • raised_by_wolves

    This is perhaps my only meaningful contribution of the day, and it gets ignored?

  • raised_by_wolves

    Now you have me curious.

  • raised_by_wolves

    Pile it on!

  • Anonymous

    The engineer in me says that is a recipe for the winter – to offset heating costs.
    (fall is for pumpkin cookies w/nutmeg)

  • raised_by_wolves

    Yum. I’ll have to formulate a pumpkin cookie recipe for us. Would you be open to cardamom instead of nutmeg though? I’ve probably had several lifetimes worth of nutmeg recently. That’s to say that I am all nutmegged out.

  • tradingmom

    Less grassy?  That’s not typically a flavor I associate w/ cookies.  This is gonna be interesting.

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

    I don’t like it, but there it is – Risk is ON.
    yuck.  I don’t like the idea of 20pts or more of ‘vapor’ under my feet.still..it confirms my comment of ‘not shorting into month end’ for now.don’t fight the BPhttp://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=3&dy=0&id=p91887693632
    -GG

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

    Break-Out-of-Triangle Monday? Or overthrow and breakdown?
    Zorro knows. I mean Zero will show.
    http://screencast.com/t/heCucEhCUDs

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

    Well, we are all anticipating the arrival of the best guest bear on the planet.

    so while you are waiting, enjoy the refreshments, open a copy of ZeroHedge, and please consider a donation to Evil.Speculator
    because a Speculator is a terrible thing to waste.

    SPX Big Picture update on my blog.

    Later!

  • Anonymous

    Fearless that ties in with what pure price action is telling me. Smells like a clown raping of unknown duration coming on

  • Anonymous

    hindisght: friday was a strong bullish day, as strong as it gets. there was no selling, noone was willing to sell. it was actually a first stronger clue about where are we going next.

  • Anonymous

    Everything points that way, unless we puke hard on Monday

  • raised_by_wolves

    It may not be noticeable in the cookies, but if you were making bread with quinoa flour, it would taste somewhat grassy or earthy. To eliminate that, you toast the quinoa flour as described. I recommend toasting extra quinoa flour, using some of it, and saving the rest in the freezer.

  • Anonymous

    Or we get another more 78.6% retracement of Friday…The 78.6% retrace has been ruling.  But you’re right sooner or late we break the triangle… I’m thinking to the upside for a few days.. and the the fun continues.   The Bernaker signaled more QE… but not until the markets collapse.. reverse POMO is happening.

  • Anonymous

    Medium to long term for US and Europe is going to be difficult.  Short term who knows, Monday is up in the air for the UK, its is closed untill Tuesday.

  • Anonymous

    yes, Europe is the biggest problem here. DAX weakness started it all and DAX is just painting the bear flag, while US wants to make a round bottom and run up from here.

  • Anonymous

     I think, the SPX bounced off a  key (firm) support level  Friday..get ready for a short but powerful bounce next week, maybe Monday. This should be a good place to drop longs and go short for a while.

  • Anonymous

    Dunno about adding short. Cannot hold short if Monday close is above daily 20MA..

  • Anonymous

    Yes, Germany approving Eurobonds is like Texas supporting quantitative easing.

  • Anonymous

    Germany approving Eurobnds……..LOL

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

    ..not sure about adding shorts, unless you are that far ahead of the trade game.

    I would think, watch the volume.  is it a vapors bounce? or a return to normalcy?
    seriously, what fundamental (global) economic policies have changed in the past 8 weeks?!

  • Anonymous

    I live in the Mediterranean.  And I am surrounded by empty concrete hulks.  Germany or anyone else is not buying it.  

  • Anonymous

    Germans gonna take it like anybody else. It is just that they are likely the last to do it. The last time I heard it, the banking cartel was still fully in charge.

  • Anonymous

    Yep that triangle could still go on for the next few days. Bet little and play the intraday swings?

  • Anonymous

    Yes, how is Mercul going to sell it.  Germany can not buy it all.

  • Anonymous

    Ha! Junkie!

    ;-))

  • Anonymous
  • Anonymous

    The best tool used by the Cartel is fear. Works every time.

  • Anonymous

    Still anticipating…

  • Anonymous

    True.

  • Anonymous

    True.

  • Anonymous

    True.

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

    The crowd is getting restless.
    I’ve got three people asking for their money back! (yes, I shouldn’t have taken it)
    where’s Fearless?
    hope he doesn’t have stage fright.

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

    okay, bizarre news but investment related.

    http://perezhilton.com/2011-08-27-russell-armstrongs-business-associate-commit-suicide-one-day-after-he-did

    Alan Schram, the managing partner at an LA-based hedge fund, was also found dead outside of his car on Mulholland Drive, having shot himself..

  • Anonymous

     Last time someone threatened Germany’s sovereignty, they got Hitler.

  • Fearless

    My post is under review now, should be up soon. :)

  • Fearless

    NEW POST!