Surprise Monday Wrap Up

The May indecision run continues unabated. Today’s session was treacherous to say the least but I think the Zero signal gave us enough edge to keep us from falling into any nasty traps:

Was it a picture perfect signal day? Far from it – but if you pay attention and watch the beginning it’s clear that the ZL told us right away that we may have a drop and stop day on our hands.

Before I run here are two sweet setups for the subs:

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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This entry was posted on Monday, May 23rd, 2011 at 6:43 pm. Both comments and pings are currently closed.

  • Kudos

     Great setups framed in amazing clarity. Kudos to you Mole. May have to forgo sleep to get the entries, but such is trading.

  • Anonymous

     Agreed.  Thanks for the setups.

  • jigdaddy

     mole, we did not get first step of equity buy signal on vix correct?

  • Anonymous

    Picture tells a thousand words. Thanks Mole.

    Gold has been racing with /DX since late last week. It is now dropping with Euro. Finally.

  • http://evilspeculator.com molecool

    According to what rules? Seriously – rarely have I seen such a simple concept being misunderstood for such a long time by so many…

  • jigdaddy

    Thats what i thought. Another author on another blog mentioned it.

  • http://evilspeculator.com molecool

    That’s what you get for slumming on other blogs.

  • jigdaddy

    LOL, gotta see what the suckers are doing :-)

  • Anonymous

    Good stuff, Mole, thanks!

  • Anonymous

    zerofx=stuck

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

    SLV, emotional? yes.
    going anywhere, not fast on the weekly.

    Fibonacci Fans, yes – I’m a big fan.
    http://tinypic.com/r/15s1m6o/7

  • Anonymous

    Where to read about these Net Line Buy/Sell levels??

  • http://twitter.com/Scrillhound Scrillhound

    I’ll be watching these levels tomorrow:

    /ES
    1335
    1329.5-1330
    1324.5-1325
    1307.5-1309
    1303

    EUR/USD
    1.4199
    1.4020
    1.3961 

  • http://evilspeculator.com molecool

    13 comments – you got to be kidding me with all the good stuff I posted today… wtf…

  • Anonymous

    thanks from here too –

  • Anonymous

    thanks Mole. most of us don’t want to post useless drivel so we don’t bother posting. But thanks for the goodies today. 

  • Bob the Horse

    Off to LA today for 10 days.  Good luck trading all – I am still running my put spreads on FTSE and DAX and long USD bets.

  • OllyVaradi

    Tough one to call this – many possibilities but here’s what I consider the strongest:

    Got the Vix spike I was looking for, unfortunately, that means that the short-term bottom was either yesterday or will be today. Looking for a close of between 12,433-12,468 today on DJ. Wednesday would appear to be a move higher of at least 1% but probably nearer 1.5% (so 12,568-12,629). I see a high this week of greater than 12,636 and marginally favour a green close so I expect either a doji or a hammer on the weekly. It isn’t common to have three weeks on the bounce of nominal upside on the weekly candle and we’ve had two weeks already (in last 10 years). It did happen the once though, 10/10/08, remember THAT week? That said, I’d be looking for more volatility in the weeks prior for something like that.

    I think the next big move down will happen in market open hours also, whenever that may be.

    Summary: Up into Wednesday but finishing week flat to slightly higher. Based on current data, two weeks up after that. The w/c 20th June keeps cropping up on my raw data AND chart studies as some sort of turning point. Very short term is still calling for 12,100 area so that’s confusing me a little – might go down hard today/tomorrow but recover it all to end green.

    Gameplan: Move positions to flat on any decent downside today (based on VIX really needs to be today) or tomorrow. Put tin hat on and wife’s underwear and wait……..

    EDIT: If red close this week, that’s 4 weeks down (last in June 10). 5 weeks down or more occurred in 04 and twice in 02. Even during the great sell-off of 08, we didn’t have a sequence greater than 4 weeks down. Not saying that predicts the future, but it guides.

  • OllyVaradi

    P.s. Tell your Obama that they drive tractor’s in Ireland so your rootin’ tootin’ flash wagon ain’t gonna work on their roads. And it didn’t!

  • Anonymous

    Guys.

    The choppy hard to trade day was to be expected after a big gap down. Think about it. We have conflicting forces at play.

    - Dip buying longs who are forced to get out at the open as their stops get hit
    - Shorts who didnt get set waiting for the slightest bounce to get short
    - Shorts who are nervous taking immediate profits on a big gap down
    - Gap fill phenomenon

    Its no surprise today looked like wind against tide type of choppy action going nowhere. Buyers and sellers cancelling each other out.

    The inverse equivalent of a ramp n camp day.

    What can we conclude from the fact that it was a gap n hold and not a gap n go? To me this tells me that participation was very low and there wasnt any bullish capitulation yet. Some stops were hit but nothing like the sort of panic which would mark the fadeable hyper bearishness at the end of a move.

    What can we see? Breadth of -3.87 stocks going down for every one stock going up is an increase. Therefore downside breadth is increasing, and market internals are confirming the downmove.

    As an aside the high of the day corresponded with a +1300 tick reading therefore I’d consider any tick moves of 1300 in either direction to be fadeable for tomorrow.

    We have increasing range to the downside, and increasing volume to the downside. This is bearish.

    Unless the market rallies hard from here odds favour more downside

  • OllyVaradi

    I would far prefer for Scott’s perspective to play out & would not dare to go against his experience. Personally, I don’t feel or see how what I’ve posted should play out, but that’s just what the data tells me and it has been more right than me recently.

    That said, I’m always wary that the data I use, back to ’68 on the monthlies, is mostly in relation to a bull market, and has reduced forecasting ability for a turn of the magnitude we will almost inevitably have.

  • Anonymous

    Olly,

    I dont forecast long term, its not my game :) Keep using whatever you obviously have been using for a long time. 

    My stuff only gives an edge for 1-3 days typically, so you cant really read much into it

    One of the truly verifyable things about markets is that trends persist more often than they change

    Scott

  • http://thebhbgroup.com TheBHBgroup

    Been on vacation since it was Victoria day here in Canada…looks like the mkts always move when we are away from the office.  In any case still long the DX and holding unless 7560 breaks on the downside then we are out.  DX is ruling the mkts right now so watch it closely still.

  • Anonymous

    Mole
    some good lookin setups, major moves ahead it seems

  • nyse

    We’re still reeling from the post ;)

  • OllyVaradi

    Just a thought before we get going………if that Icelandic volcano is so dangerous to aircraft, then who the fcuk is taking all those aerial shots of the plume. Man on bungee rope? Big crane man?

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

    it’s the dude with an ipod sitting on the plane, while the pilot caught in the coincidental situation prays & puckers out of area. ;-)

  • Anonymous

    SLV is simple. It *should* have bounced, but hasnt really? What does that tell you?

  • Anonymous

    Isn’t up 3.5% so far today a bounce?  What am I missing?

  • jigdaddy

    expect a bigger move in the opposite direction :-)
    im learning CS!!

  • Anonymous

    Do we have a divergence here?  Higher high on the 5minES from about 4 hours ago, meanwhile the Zero posted a lower high.  AND, something else to watch:  5minES Zero bottoms trending up from about 4.5 hrs ago.  Any concurrent observations?

  • OllyVaradi

    http://www.youtube.com/watch?v=7Cc7U_D9-m0
    Just me and the badger then? 

  • OllyVaradi

    Looks like a triangle on ZL + bear flag on charts = Wave 4 thus I conclude, down?

  • Anonymous

    Mornin folks.

    As of 11:10 AM, once again it’s all about the dollar.   

    And when considering that the “market” was due for a DCB anyway, it appears to be laboring just to stay positive.  Without Oil and Oil Services, it would be Red.     

  • OllyVaradi

    Should go down from here if I’ve read it right. Still learning mind.

  • Kudos

    I wonder if this is the type of trading that will be standard for the summer. We’ve had 3 days in the last week like this. Yesterday during the day was the same, the market had its move before it even opened.

  • OllyVaradi

    In a word: Dunno. Lower volumes over the summer will have you wishing for those gap ups and downs.

    However, I think volatility will increase during market hours in the coming months. We need to widen those bollies on the VIX and be allowed to have movement without triggering buy/sell signals in the opposite direction.

  • Anonymous

    Got ourselves a real Z-WEDGE right now…fasten your seatbelts

  • OllyVaradi

    Just one final plan B. Really cannot see it happening but I’ll put it out there anyway. We could end up down today and be closing at the lows. I’d like this to be a silly amount down but just cannot see it from here. Like we need to drop 280pts. It still works closing at or around the lows provided we make a new low for the week. That then switches the high for the week to be Friday.

    Just saying, since I feel like the only one in here, talking to missen, might even get mi’ kit off an dance naked……

  • Anonymous

    280 Dow points, right?  :)

  • Anonymous

    Nice triangle on the ZL…

  • OllyVaradi

    It’s plan B. More likely we’ll just get new low. As I say, just can’t see it
    happening.

  • OllyVaradi

    Triangle breakdown and back test done – we’ll see what Mr. Dow et al really wants to do now.

  • Anonymous

    CPCE at a point of capitulation (.70) might be a ST bottom here.

  • OllyVaradi

    Small H&S targetting approx 12,324 on DJ. Neckline back test nearly done. 15-30mins time we should see a bit of movement (down if I’m reading these shapes correctly).

  • OllyVaradi

    Ding, ding. Take your seats ladies and gentlemen, no standing at the back, and please fasten and secure all loose garments & articles.

  • Anonymous

    Our Z-Wedge-Triangle has resolved itself…..to ZERO……

  • Anonymous

    where we going? 

  • OllyVaradi

    May be a 2nd backtest but we’re stretching it here. If the Dow is going down of any magnitude, needs to get a wiggle on now. Otherwise plan A of green close around 12,433 seems to be on the cards.

  • OllyVaradi

    Well, the destination changes by the minute due to our crack-addicted Geithner driving. That said, we’re riding on Bernanke’s Space Rocket so I guess the next stop is the Sea of Tranquility.

  • Anonymous

    …and slightly above, but the amplitude of this signal is minuscule.

  • Anonymous

    by my calculations, by 2PM EDT, that triangle will have to resolve itself

  • Kudos

    And we wait, and wait and wait and wait. 

  • OllyVaradi

    Haven’t had a “world is ending” tweet from Zerohedge for over an hour now. Bullish?

  • Anonymous

    Well, it’s never happened when they predicted it.  Perhaps it’s the ultimate contrarian indicator.  LOOK OUT BELOW!!! :o ;)

  • Kudos

    Divergence? With so little movement on the ES and the zero lite signal it may be meaningless

  • Anonymous

    very bearish.

  • Kudos

    anyone have any clue why yields plummeted in the last 15 minutes?

  • tradingmom

    auction?

  • OllyVaradi

    Right, gonna watch the fish in in the fish tank for a bit of excitement. Back before the close, maybe…..

  • tradingmom

    Just taking a step back to look at a chart of the daily SPX here and I think the picture is very bearish.  Price is below the 20 and 50 DMAs.  Price rallied back up to the 50 today and couldn’t break through.  The 20 is pointing down now.  There was a triangle, broke to the downside. 

  • http://evilspeculator.com molecool

    LOL :-)

  • Anonymous

    Your’e gonna miss it….

  • http://evilspeculator.com molecool
  • OllyVaradi

    Bollocks. They’ve just tweeted: Is the human race doomed?

    Here come the bulls….

  • http://thebhbgroup.com TheBHBgroup

    too funny!  Loving the zero again today in terms of keeping me out of trouble!

  • http://evilspeculator.com molecool

    Yeah, those trend lines were awesome – drew them just in time!

  • Anonymous

    FWIW, I agree with you.   

    Even though I’m currently positioned net short, I’ve been conditioned to expect the unexpected.  I’ll be glad if and when the type of Ambiguity caused by the Fed has been diminished.   

  • Anonymous

    Just in case anybody is bored watching this market you can watch this instead.   

    http://www.southdacola.com/blog/wp-content/uploads/2009/04/paint_drying.jpg

  • Anonymous

    they just had to do it. grrr

  • http://thebhbgroup.com TheBHBgroup

    I kind of like having this algo as “my” little secret….its just too damn good to not use daily!

  • volar

    nice..

    Guess who does not like to buy no participation days after large gaps down after broken channels….

    http://content.screencast.com/users/wprosser/folders/Jing/media/70bfe47a-85de-4606-b215-1306b6f1db7b/2011-05-24_1240.png
     

    I could not go to sleep at night and be long that…

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
    ¨°º¤ø„¸  N E W  „ø¤º°¨
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    I don’t know what’s wrong with you guys – this is very very important and critical tape.




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