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Strategic Inflection Point
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Strategic Inflection Point

by The MoleSeptember 6, 2016

I really hope you enjoyed your Labor Day weekend because things are heating up fast now and it’s finally time to get back to work and earn our keep. We’ve got a few weeks of quiet but before you know it they’ll shift all gears into Christmas season, and you better make sure Santa has  you on his VIP list (yes, he is a man – suck it). Time to stop slacking around, let’s bank ourselves some coin.

The spoos look like one big mess at first, but maybe a bit of time off re-sharpened my senses because it suddenly made complete sense to me. Since you’re probably still recovering from employing over generous quantities of cheap American beer to wash down way too many of those greasy hot dogs, let me make it easy for you and just focus on the skinny:

2016-09-06_spoos_inflection_point

Before the long weekend we started to see a pretty wild but pronounced series of higher highs and higher lows on the short term panel. That is a bearish pattern which is currently in the process of being challenged. A breach above 2182 would most likely unleash more short squeeze momentum and, barring any event based surprises, put us on the road to exiting the ongoing trading range from hell and a push into new highs. At least one would hope – we have been waiting for months now.

On the downside of course we are coiled up for more extended correction, which finally appeared to be in the works two weeks ago. But then, just like Congress, everyone suddenly took off and the final vote got postponed for after the summer break. At this very moment I believe that a short position here is warranted and could succeed. However it comes with a caveat:

2016-09-06_events

Be aware that we’ve got a bit of event risk here at about 10:00 which could be used as an excuse to bang the tape around a little and run some stops. So if you make a play here before 10:00am EDT then be prepared for that.

In A Nutshell

I believe that we are currently sitting at a very exciting strategic inflection point with its separation point at around ES 2181.5 (i.e. the Sep contract). If you are new here then be advised that we stainless steel rats at Evil Speculator live for such precious moment, as they represent a momentary state of equilibrium between bullish and bearish market forces. Getting positioned here is rather tricky as more often than not market events are skillfully used to clear out the ranks and then ultimately resolve the stalemate. Thus initiating a new medium term market phase which may last weeks and in some rare cases also have the potential to trigger long term trend changes.

2016-09-06_gold_update

Last Thursday I put on my old prospector hat hoping for an opportunity to snag a position on gold near 1305. Fortunately GC got dangerously close on Friday and I hopped on the bus with a stop a few ticks below the 1300 mark. I truly hope some of you guys did as well as gold seems to be off the hook and pointing upwards.

2016-09-06_silver_update

The subs and I actually snagged an early entry on Thursday courtesy of silver which seemed to point the way. Our stop was below the 18.4 mark (mistyped on the chart – 18.7 was the entry) and boy it’s been printing money ever since. My trailing stop is now at below 19.1, which is rather conservative but I think silver is just getting warmed up for a Bolt style sprint to the upside. Given all that this may be a good time for a …

Public Service Announcement

As the saying goes: ‘Sell in May and go away, come on back on St. Leger’s Day.‘ Of course the blog isn’t spared the low summer participation which expresses itself in a more subdued comment section as well as a drop in subscriptions. If that is you then I strongly encourage you to once again support the blog in whatever fashion you deem fit.

At minimum help this community by helping yourself. Of course I am talking about participation in the comment stream, the sharing of charts and pertinent analysis, or perhaps spending a few minutes to point a promising noob in the right direction. It goes both ways really and quite often you are being rewarded with constructive input and sometimes criticism that aid your own trading activities. If nothing else, we’re here for you if you’re having a shitty day. At times you may not like what you’re hearing, but be advised that the truth is a dish often requested but rarely appreciated. Either way – we aim to keep it real here at Evil Speculator.

Signing up again for one of the core services offered here – either the Gold sub or the Zero indicator – is of course always welcome. Consider this a friendly reminder of the fact that this place doesn’t run itself. There is a ton of my own time and effort that goes into keeping things humming, interesting, productive, and at times just entertaining to keep everyone’s spirit up. As you can imagine that proves to be challenging sometime but as of now we are counting eight glorious years. Can we try to shoot for a decade? 

 


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

    GLD ratio,
    5.15 – has a shot of getting back above waterline.
    http://stockcharts.com/h-sc/ui?s=GLD%3AUUP&p=D&yr=1&mn=0&dy=0&id=p67874146445

  • Tomcat

    Closed my short CL with a much smaller profit compared to my original objective. I still see it heading to $40 but my conviction is not as strong given the shenanigans that russians and arabs may pull…

  • Tomcat

    GG, I thought you would point at resistance in this chart:
    http://schrts.co/YSZwNO

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

    55 is showing promise
    (it’s weekly chart, so let’s no get *too* excited)
    [BPGDM]
    http://stockcharts.com/h-sc/ui?s=%24BPGDM&p=W&yr=5&mn=0&dy=0&id=p17713748407

  • ridingwaves

    Maybe Nasdaq leads the way, I have it topping this month and a long ride down over 8 months…..thought it would start a bit later in the month though…

  • kudra

    GDX thoughts? seems to be some selling above $28.

  • http://evilspeculator.com Sir Mole III

    I usually don’t touch the miners.

  • OJuice

    Anyone want to place side bets on when we break the range? I’ll put a penny on never. We will trade here indefinitely…

  • AboveTheNoise

    In the spirit of participation and helping oneself, I have a question for the community. I currently swing trade pullbacks on the 4H timeframe taking partial profits at 1.2R, and then moving the initial stop loss to BE minus 2-3 pips. I then start trailing once I achieve 2R. My campaign management has been greatly influenced by this site which has helped tremendously with making campaign management consistent. This works great when market goes in my direction, however, when the position starts to falter, is it better to move the ISL (perhaps applying a time stop or ratcheting the stop according to a trailing methodology), or is it best to leave the ISL where it was initially set and take the 1R loss? I initially open up positions with wider stops, about 2x ATR (4h timeframe).

  • kudra

    smart. crazytown. was in NUGT as of Tues. added Wed. Sweating bullets as Miners fell. By 10 AMEST on Thursday, miners took off and haven’t looked back. The ole “they might actually raise rates . . . nahhh. just joking” play.

    entered DUST today at GDX $28+

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

    the 50 *is* resistance, but what if it doesn’t hold?
    the MACD histogram is about to cross the zero line.
    dangerous time either way IMHO.

  • AcoBrasil

    ISM miss today lower the chance of the September rate hike by 15% according to the media reports.

    Bad is good.

  • Yoda

    Back to work slackers!! 😉

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

    You could analyze your track record and find the best answer.
    But will future Market trends match the past?

    To channel the spirit of Ivan. *There is no perfect answer, only Optimals*
    Pick what is best for you.

  • Yoda

    Gold trade is making my year.

  • AboveTheNoise

    Thanks for the quick reply. I am currently testing the above, but wanted to see if anybody had any experience testing the two. Without any programming skills (I’m working on it), the testing is very, very slow.

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

    so my /CL long from 43.62 last week hit a high of 46.53 on Sunday morning at 5 am, but what would I be doing except sleeping at that time? So I missed taking an insane profit and it immediately reversed back down to the current 44.30’s area. ugh. I am still holding the long, as long as the 44.00 area holds into the next 2-3 days.

  • Mark Shinnick

    :….in some rare cases also have the potential to trigger long term trend changes.”

    Ohh…I like the sound of that.

  • Yoda

    When I see something worth posting, I’ll do it. Right now, I don’t have much to add to what is already posted.

  • http://evilspeculator.com Sir Mole III

    emphasis on the ‘rare cases’

  • http://evilspeculator.com Sir Mole III

    Yes, that is a bitch of a problem we had to deal with ourselves. It’s all hunky dory until things get choppy, right? This was discussed in much detail between Scott and I and it basically boils down to this:

    1) You cannot know if there will be a u-turn in your favor – EVER. Don’t fall prey to hindsight.
    2) There is no magic inflection point before about 1.2R MFE. At this point you can move your stop to -0.7R as a retrace that deep from +1.2R MFE most statistically suggests more downside.
    3) Choppy tape sucks – deal with it. Many systems break during that time. We may have to stop trending system during that time or switch to swing trading systems (which exhibit completely different campaign management rules)
    4) Trading systems are HARD.

  • ridingwaves

    MSTX might be in play over next 3 trading days…results due on Sickle cell drug candidate, sitting at 52 wk high at .65, shake down occurred earlier in July….target is 1.20 if data is good…large float…
    accumulation since shake down has been impressive…L at .61, S at .55

  • http://evilspeculator.com Sir Mole III

    Yes, FOREVER. 50 years from now mutant cockroaches who inherited the earth will still be trading in this very range.

  • http://evilspeculator.com Sir Mole III

    Reduce position sizing until regular sleep cycles return. Emotions = bad trading decisions.

  • http://evilspeculator.com Sir Mole III

    Good for you, but don’t forget to leave some of the pulp – you need the fiber. Also be advised that juicing leads to increased sugar intake. Don’t overdo it.

  • kudra

    so true. one can gauge the appropriateness of the position size based on stress levels.

  • Yoda

    and if I may add:” do not juggle with live hand grenades”. 😉

  • AboveTheNoise

    Thanks Mole. Appreciate the reply.

  • Yoda

    My little pinky tells me you are on the path to blow up your account again.

  • OJuice

    I will refer to this as the “Bad Blow-Job Range”. It will get you excited. But, it’ll never finish the job. Only disappointment.

  • Mark Shinnick

    I’d imagine max stress right about now….so I might now even join you in this trade.

  • Tomcat

    OK twist my arm…trying a small short here on $ES.

  • Mark Shinnick

    So, the deed was done… sitting in good profit at the moment… see what happens.

  • Mark Shinnick

    Yeah…looks like a point of max inflection right around here (maybe tad higher) so tight stop/reverse is natural.

  • Mark Shinnick

    Probably don’t want to wear out my welcome with a counter-trend short here so I might just scalp this.

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

    everything’s up, even TLT!
    hey wait a minute….I’ve seen this before…yep. Soggy dollar.

    [UUP]
    http://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=6&dy=0&id=p02872347775

  • Billabong

    What you least expect is when you get it …

  • Billabong

    GC / SI has been on a tear all day … Many years ago I read a really good piece on when the system was setting up for a rough period and one of the indicators was gold daily moves of $25 or more on a regular basis…

  • Billabong

    Trend is your friend until it isn’t…

  • Mark Shinnick

    Yes, so far no abnormal $ pullback and TLT still range bound.

  • Yoda

    that’s right

  • Yoda

    I beg to differ. DX’s drop today did some technical damage to the dollar’s bullish scenario. A breach of last month’s low would be a very bad omen for King $ in the medium term.

  • Mark Shinnick

    Yeah, that would be below the present trendline.

  • ridingwaves

    its the only thing holding the market up…..it has to go lower to keep the mirage afloat…….
    96.43 is solid resistance, see old post….it’s over for the dollar bulls…..

  • Yoda

    It looks like it, but I think we’ll get confirmation of that before the week is over.

  • http://evilspeculator.com Sir Mole III

    Extremely interesting: http://tinyurl.com/zhwa23p

  • http://evilspeculator.com Sir Mole III

    Okay, so did ANYONE here get into gold or silver last week? PLEASE don’t tell me I was the only one, or I’m taking a week off.

  • http://evilspeculator.com Sir Mole III

    Happy to help.

  • http://evilspeculator.com Sir Mole III

    And she scraping with her teeth – ever had one of those?

  • http://evilspeculator.com Sir Mole III

    Sounds like you’re out of your depth, Kudra. Scale it back, learn the lesson – meditate on what you did wrong. Just watch the tape for a while and then resume trading with smaller position sizing. The fuck up has already happened – whether or not you come out in the plus or minus is irrelevant. Remember that bad habits can form patterns that will affect you negatively further down the line.

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

    GG – Thank you for your honourable mention … spot on regarding the expressed sentiment !

  • Billabong

    You weren’t the only one … Yoda and I are trend guys.

  • Yoda

    almost +6R since last week long entry in GDXJ 🙂

  • Edd

    Long by proxy thru NUGT. That said I continuously flip trade NUGT and DUST mechanically as one of the pairs I use in my trading system.

  • http://evilspeculator.com Sir Mole III

    One guy? Jeeezzes… well, congrats Edd.

  • OJuice

    Gonna have to read this again tomorrow morning. Couple beers deep and I can’t make heads or tails of what they are talking about.

  • OJuice

    One time in my early 20’s. Couldn’t keep up with that girl. Lucky for me in the long run, I’m sure.

  • http://evilspeculator.com Sir Mole III

    Event risk resulting in stop outs. It seems that shit is mostly being played over in the U.S. – so if you want to avoid it and enjoy a smoother trading experience go international.

  • Edd

    Sorry I answered, does this mean you can`t take off now!

  • http://evilspeculator.com Sir Mole III

    YOU BASTARD!! 😉

  • OJuice

    Surprisingly I did manage to grab that part. I assumed this is do to dark pools, HFT, etc primary operating on US equities.

    edit: they should have asked you to write the synopsis because their jargon makes it almost unreadable for the casual glance.

  • almez

    I wrote in a post that I was positioned in GDX

  • http://evilspeculator.com Sir Mole III

    Exactly – U.S. players have all but perfected the monkey business.